Document:

INSITUFORM EAST, INCORPORATED
                            1999 BOARD OF DIRECTORS'
                                STOCK OPTION PLAN

1.       Purpose.

         The  purpose  of  the  Insituform  East,  Incorporated  1999  Board  of
Directors  Stock  Option Plan (the  "Plan") is to promote the growth and general
prosperity of Insituform  East,  Incorporated  (the "Company") by permitting the
Company, through the granting of Options to purchase shares of its Common Stock,
par value $.04 per share (the  "Common  Stock"),  to attract and retain the best
available  persons  as  members  of the  Company's  Board of  Directors  with an
additional  incentive  for such  persons  to  contribute  to the  success of the
Company.

2.       Administration.

         The  Board of  Directors  shall  administer  the Plan  and  shall  have
exclusive  authority to interpret,  construe and implement the provisions of the
Plan, except as may be delegated in whole or in part by the Board to a committee
of the Board (the "Committee") which shall consist of two or more members of the
Board.  Each  determination,  interpretation  or other  action that may be taken
pursuant to the Plan by the Board or the  Committee  shall be final and shall be
binding and conclusive for all purposes and upon all persons.

3.       Eligibility.

         All members of the Board of Directors shall receive Options pursuant to
the terms of the Plan, as set forth herein.

4.       Shares of Common Stock Subject to Options.

         Subject to the  provisions  of Sections  10 and 11 hereof,  the maximum
number of shares of Common  Stock which may be optioned  and sold under the Plan
is 525,000  shares of authorized but unissued,  or reacquired,  shares of Common
Stock of the  Company.  In the event any  shares of Common  Stock  subject to an
Option are not issued for any reason at the  expiration or  termination  of such
Option, such shares may again be subject to an Option under the Plan.

5.       The Options.

         Each  Director  granted an Option  under  this Plan shall  enter into a
separate  written Option  Agreement  with the Company  covering each such Option
granted,  in  such  form  containing  such  terms  and  conditions  as  are  not
inconsistent  with the Plan,  as the Board or the  Committee  shall from time to
time  determine.  Except  as  provided  in this  Section,  each  Option  granted
hereunder and pursuant to each such agreement will entitle each Director to whom
such  Option is granted  the right to purchase  15,000  shares of the  Company's
Common Stock at the Option Price,  at any time and from time to time, up to five
(5) years from the date of grant. Options will be granted hereunder each year to
each member of the Board of Directors of the Company serving as such on the date
of grant.  The first Option  grant will be made on December  10,  1999,  and the
Option Price with respect to such Option  shall be  determined  as of such date,
subject to  approval  of the Plan by the  Company's  Stockholders  at the Annual
Meeting of  Stockholders to be held on December 10, 1999. Each of the succeeding
grants will be made on the date of each succeeding  Board of Directors  meeting,
which follows each  succeeding  Annual Meeting of  Stockholders,  and the Option
Price shall be determined as of each such respective date.

6.       Option Price.

         The Option  Price for each share of the Common  Stock to be issued upon
exercise of Options  under the Plan shall be  determined on the date of grant in
the  following  manner:  (i) if the  trading  prices  for the  Common  Stock are
reported on the consolidated  transaction  reporting  system (the  "consolidated
system")  operated  by the  Consolidated  Tape  Association,  whether or not the
Common Stock is traded on an exchange, the average of the high and low prices at
which the  Common  Stock is  reported  in the  consolidated  system to have been
traded on such date;  (ii) if the  principal  market for the Common  Stock is an
exchange and if the trading  prices for the Common Stock are not reported in the
consolidated  system, the average of the high and low prices at which the Common
Stock is  reported to have  traded on such  exchange on such date;  (iii) if the
principal market for the Common Stock is otherwise than on an exchange,  trading
prices for the Common Stock are not  reported on the  consolidated  system,  and
bids and offers for such security are reported in the automated quotation system
operated by the National Association of Securities Dealers, Inc. ("NASDAQ"), the
mean between the highest  current  independent  bid price and the lowest current
independent  asked price reported on "level 2" of the NASDAQ on such date;  (iv)
if the principal  market for the Common Stock is otherwise  than on an exchange,
trading prices for the Common Stock are not reported on the consolidated system,
and bids and offers for the Common  Stock are not  reported in NASDAQ,  the mean
between the highest current  independent bid and the lowest current  independent
asked price on such date,  determined on the basis of reasonable inquiry; or (v)
if there is no  market  for the  Common  Stock,  such  price as the Board in its
discretion,  acting in good faith, shall determine,  but not less than the price
of any  contemporaneous  sales of the Common Stock. If there is a market for the
Common Stock and if, on the  pertinent  date, no  transactions  or bid and asked
prices, as the case may be, are reported for the Common Stock under the relevant
clause  above,  the Option Price of the Common Stock shall be  determined on the
next day on which  transactions or bid and asked prices, as the case may be, are
reported  for the Common  Stock  under such  clause.  The Option  Price shall be
subject to adjustment as set forth in Section 10 hereof.

7.       Exercise of Option.

         (a) An Option may be exercised at any time and from time to time within
a period of five (5) years from the date of grant of such Option with respect to
all or part of the shares  covered  thereby,  subject  however,  to the  further
restrictions contained in this Section 7.
                  In the event the  Company or the  Stockholders  of the Company
enter into an agreement to dispose of all or substantially  all of the assets or
stock of the Company by means of a sale,  a  reorganization,  a  liquidation  or
otherwise, each outstanding Option shall be exercisable with respect to the full
number of shares subject to that Option, notwithstanding the preceding paragraph
of this Section 7(a),  only during the period  commencing as of the date of such
agreement and ending when the disposition of assets or stock contemplated by the
Agreement is consummated.

         (b) An Option  shall be deemed to be exercised  when written  notice of
such exercise has been given to the Company at its principal  business office by
the person  entitled to exercise the Option and full payment for the shares with
respect to which the Option is exercised  has been  received by the Secretary of
the Company.  As soon as practicable after the date an Option is exercised,  the
Company  shall  deliver to the Director a certificate  or  certificates  for the
number of shares of Common Stock acquired upon such exercise,  registered in the
name of the Director or the name of any other person  entitled to such shares as
contemplated by Section 7(c).

         (c) An Option may be exercised by the optionee only (i) if the optionee
has served continually as a Director of the Company or its Successor Company for
at least six  months  following  the date of grant and (ii) (x) while he is, and
has  continually  been since the date of the grant of the Option,  a Director of
the Company or its Successor Company,  or (y) for a period ending six (6) months
after the Director has terminated his services in all of such capacities; except
that if a Director's  continuous service terminates by reason of his death, such
Option may be exercised  within six (6) months after the death of such Director,
but in no event  later  than  five  (5)  years  after  the date of grant of such
Option,  by (and only by) the  person or  persons  to whom his right  under such
Option shall have passed by will or by laws of descent and distribution.

         (d) An Option may be exercised in accordance  with this Section 7 as to
all or any portion of the shares  subject to the Option  from time to time,  but
shall not be exercisable with respect to fractions of a share.

8.       Options not Transferable.

         Options  under  the  Plan  may  not  be  sold,  pledged,   assigned  or
transferred  in any  manner  otherwise  than by will or the laws of  descent  or
distribution,  and may be exercised  during the lifetime of an optionee  only by
such optionee.

9.       Amendment or Termination of the Plan.

(a) The Board of Directors  may amend the Plan in such respects as it shall deem
advisable;  provided  that,  no change  shall be made that  increases  the total
number of shares of Common Stock  reserved  for issuance  under the Plan (except
pursuant  to  Section  11),  or  materially  modifies  the  requirements  as  to
eligibility for  participation in the Plan,  unless such change is authorized by
the Stockholders of the Company. An amendment of the Plan shall not, without the
consent of the Director,  adversely  affect a Director's  rights under an Option
previously granted to him or her.

         (b) The Board of Directors may at any time terminate the Plan. Any such
terminations  of the Plan  shall not affect  Options  already  granted  and such
Options  shall  remain  in full  force  and  effect as if this Plan had not been
terminated.

10.      Adjustments Upon Changes in Capitalization.

         If all or any  portion of the  Option is  exercised  subsequent  to any
stock dividend, split-up,  recapitalization,  combination or exchange of shares,
merger,  consolidation,  acquisition  of property or stock,  reorganization,  or
other similar change or  transaction of or by the Company,  as a result of which
shares of any class  shall be issued in  respect  of  outstanding  shares of the
class covered by the Option,  or shares of the class covered by the Option shall
be changed  into the same or  different  number of shares of the same or another
class or  classes,  the  person or persons so  exercising  such an Option  shall
receive,  for the  aggregate  option  price  payable  upon such  exercise of the
Option, an aggregate number and class of shares equal to the number and class of
shares he would have had on the date of exercise  had the shares been  purchased
for the same  aggregate  price at the date the Option was  granted  and not been
disposed  of,  taking  into  consideration  any such stock  dividend,  split-up,
recapitalization,  combination  or  exchange  of shares,  merger,  consolidated,
acquisition of property or stock,  separation,  reorganization  or other similar
change or transaction;  provided,  however,  that no fractional  shares shall be
issued  upon  any  such  exercise,   and  the  aggregate  price  paid  shall  be
approximately reduced on account of any fractional shares not issued.

11.      Changes in Capital Structure of Company.

         In the event of a change in the capital  structure of the Company,  the
number of shares  specified  in  Section  5 of the  Plan,  the  number of shares
covered by each  outstanding  Option and the price per share  shall be  adjusted
proportionately  for any increase or decrease in the number of issued  shares of
Common Stock  resulting from the splitting or  consolidation  of shares,  or the
payment of a stock dividend or effected in any other manner  without  receipt of
additional or further consideration by the Company.

12.      Agreement and Representations of Director.

         As a condition to the exercise of any portion of an Option, the Company
may require the person  exercising  such Option to represent  and warrant at the
time of any  such  exercise  that  the  shares  are  being  purchased  only  for
investment and without any present  intention to sell or distribute  such shares
if, in the opinion of counsel for the Company, such a representation is required
under the Securities Act of 1933, as amended,  or any other applicable law, rule
or regulation.

13.      Reservation of Shares of Common Stock.

         The Company,  during the term of this Plan,  will at all times  reserve
and keep  available,  and will seek or obtain  from any  regulatory  body having
jurisdiction any requisite  authority in order to issue and sell, such number of
shares of its Common Stock as shall be sufficient to satisfy the requirements of
the Plan.  Inability  of the Company to obtain from any  regulatory  body having
jurisdictional  authority deemed by the Company's counsel to be necessary to the
lawful  issuance  and sale of shares of Common  Stock  under the Plan  shall not
result in any liability of the Company in respect of the  nonissuance or sale of
such stock as to which such requisite authority shall not have been obtained.

14.      Term.

         The Plan shall be effective upon its adoption by the Board of Directors
and approval by the Company's  Stockholders.  It shall  continue in effect for a
term of ten (10) years unless sooner terminated under Section 9.

15.      Definitions.

         As used herein, the following definitions shall apply:

         (a) "Common  Stock" shall mean Common Stock,  par value $.04 per share,
of the Company.

         (b) "Continuous Service" shall mean service as a member of the Board of
Directors, without interruption, of the Company or its Successor Company.

         (c) "Option" shall mean a stock option granted pursuant to the Plan.

         (d)  "Option  Price"  means  the  purchase   price,  as  determined  in
accordance with Section 6 of the Plan, for each share of the Common Stock issued
upon the exercise of Options.

         (e) "Plan"  shall mean the  Company's  Board of  Directors'  1999 Stock
Option Plan.

         (f) "Stockholders"  shall mean the holders of outstanding shares of the
Company's Common Stock and Class B Common Stock.

         (g)  "Successor  Company"  means  any  company  which  acquires  all or
substantially all of the stock or assets of the Company.

                                                       Dated:  September 7, 1999INSITUFORM EAST, INCORPORATED
                           EMPLOYEE INCENTIVE PROGRAM

                         1999 EMPLOYEE STOCK OPTION PLAN

         INSITUFORM EAST, INCORPORATED,  a Delaware corporation (the "Company"),
does hereby adopt an Employee  Stock  Option Plan with the terms and  conditions
set forth below (the "Plan").

                                   SECTION ONE

                       Designation and Purpose of the Plan

         A.   Designation.   The  Plan  is  designated  the  "INSITUFORM   EAST,
INCORPORATED 1999 EMPLOYEE STOCK OPTION PLAN."

         B.  Purpose.  The  purpose  of the Plan is to  promote  the  growth and
general prosperity of the Company by permitting key management  employees of the
Company and its Subsidiary Companies to purchase shares, by grant of options, of
the Company's Common Stock. The Plan will serve as an incentive for employees to
maximize  their efforts on the Company's  behalf and will increase the Company's
ability to attract and retain the most competent professionals, thus serving the
best interest of the Company's customers and Stockholders.

                                   SECTION TWO

                                   Definitions

         As used herein, the following definitions shall apply:

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

         (b)  "Committee"  means the Stock  Option Plan  Committee  appointed to
administer the Plan pursuant to Section Four of the Plan.

         (c) "Common  Stock" means either  authorized and unissued or reacquired
shares of the Common Stock , par value $.04 per share, of the Company.

         (d)  "Company"  means   INSITUFORM  EAST,   INCORPORATED,   a  Delaware
corporation.

         (e)  "Eligible  Employee"  means  any key  management  employee  of the
Company or its wholly-owned Subsidiary Companies.

         (f)  "Incentive  Stock  Option"  means an option as  defined in Section
422(b) of the Code and any other applicable provisions of the Code and includes,
without  limitation,  any portion of an Incentive Stock Option remaining after a
Participant  has  exercised  such Option with respect to only part of the shares
covered  by the  Option  Agreement  (within  the  meaning  given that term under
Section Six of the Plan).

         (g)  "Nonstatutory  Stock  Option"  means a stock option that is not an
Incentive  Stock  Option and  includes,  without  limitation,  any  portion of a
Nonstatutory  Stock Option  remaining  after a Participant  has  exercised  such
Option with respect to only part of the shares  covered by the Option  Agreement
(within the meaning given that term under Section Six of the Plan).

         (h) "Option"  means either an Incentive  Stock Option or a Nonstatutory
Stock Option or both, as the context shall indicate.

         (i) "Option  Price" means the price,  as set forth in Section  Seven of
the Plan, of an Option granted pursuant to the Plan.

         (j)  "Participant"  means an Eligible Employee who is granted either an
Incentive Stock Option or a Nonstatutory Stock Option.

         (k) "Stockholder" means any holder of an outstanding share or shares of
the Company's Common Stock.

         (l)  "Subsidiary  Company"  means any  present  or  future  "subsidiary
corporation"  of the Company as defined in Section  424(f) of the Code and which
the Company has determined to include under the Plan.

                                  SECTION THREE

                             Stock Subject to Option

         A. Total  Number of Shares.  The total number of shares of Common Stock
which may be issued by the Company to all Participants under the Plan is 350,000
shares, which may be increased only by a resolution of the Board of Directors of
the Company and approved the Stockholders.  Such shares may be either authorized
and unissued or reacquired Common Stock.

         B.  Expired  Options.   If  either  an  Incentive  Stock  Option  or  a
Nonstatutory  Stock Option  granted  under the Plan is terminated or expires for
any reason whatsoever,  in whole or in part, the shares (or remaining shares) of
Common Stock subject to such Option again shall be available for grant under the
Plan.

                                  SECTION FOUR

                           Administration of the Plan

         A.  Appointment  of  Committee.  The Board of  Directors of the Company
shall appoint a Stock Option Plan Committee  which shall consist of at least two
members  selected from the Board of Directors  each of whom is a  "disinterested
person" as defined in Rule 16b-3 as  promulgated  by the Securities and Exchange
Commission ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended.
The Board of  Directors  shall  designate  a member of the  Committee  to act as
Chairman of the Committee. The Board of Directors, in its discretion, may at any
time remove any member of the Committee and may fill the resulting  vacancy with
any director who is a "disinterested  person".  Any member of the Committee who,
after  having  been  designated  a  member  of the  Committee,  is no  longer  a
"disinterested  person" immediately shall cease to be a member of the Committee'
the  vacancy  created  thereby  shall be  filled by the  Board of  Directors  as
hereinabove described.

         B. Committee  Meetings.  The Committee  shall hold its meetings at such
times and places as  specified  by the  Committee  Chairman.  A majority  of the
Committee shall constitute a quorum. All actions of the Committee shall be taken
by a majority  of a quorum  present at a meeting  duly  called by the  Committee
Chairman;  provided,  however,  that any  action  taken  without a  meeting  but
consented  to in  writing  by a  majority  of the  Committee  members  shall  be
effective as action taken by the Committee at a meeting duly called and held.

         C.  Committee  Power.  Subject to the terms and provisions of the Plan,
the Committee,  in its sole  discretion,  shall have full power and authority to
(a) designate  Eligible  Employees to whom either an Incentive Stock Option or a
Nonstatutory  Stock Option shall be granted,  (b) determine the number of shares
to be made  available  under any Option  granted,  (c)  determine  the period or
periods in which a Participant may exercise his Option, (d) determine the Option
Price,  and (e)  determine  the date on  which  any  Option  shall  expire.  The
Committee shall have all such additional rights,  power and authority  necessary
or appropriate to administer  the Plan in accordance  with its terms  including,
without limitation, the power to make binding interpretations of the Plan and to
resolve all  questions,  whether  express or implied,  arising  thereunder.  The
committee may prescribe such rules and regulations for administering the Plan as
the Committee, in its discretion, deems necessary or appropriate.

                                  SECTION FIVE

                            Selection of Participants

         A.  Discretion  of  Committee.  To  determine  to which of the Eligible
Employees either an Incentive Stock Option or a Nonstatutory  Stock Option shall
be granted, and the terms and conditions of any Option so granted, the Committee
shall  evaluate,  among other  things,  (i) the duties and  responsibilities  of
Eligible Employees, (ii) their past and prospective contributions to the success
of the Company,  (iii) the extent to which they are performing and will continue
to perform  outstanding  services for the benefit of the Company,  and (iv) such
other factors as the Committee deems relevant.

         B. Limitation on Grant of Incentive  Stock Options.  An Incentive Stock
Option may not be granted to any Eligible Employee if (i) such grant (regardless
of when granted) would cause the aggregate fair market value of the Common Stock
granted under the Plan (or any other stock option plan required to be taken into
account under Section  422(d) of the Code) to exceed  $100,000 plus the relevant
"unused limit carryover"  provided for under prior tax law or (ii) the aggregate
fair market value (determined in accordance with paragraph A. of Section Seven),
determined as of the date an Incentive Stock Option is granted (where the Option
is granted after December 31, 1986),  of the Common Stock for which any Eligible
Employee may be awarded  Incentive Stock Options which are first  exercisable by
the Eligible  Employee  during any  calendar  year under the Plan ( or any other
stock option plan required to be taken into account under Section  422(d) of the
Code) exceeds  $100,000  (without  regard to options  granted  before January 1,
1987).

         C.  Determination of Common Stock  Ownership.  For purposes of the Plan
(and especially of Section Eight hereof), a participant's Common Stock ownership
shall be determined by taking into account the rules of  constructive  ownership
set forth in Section 424(d) of the Code.

                                   SECTION SIX

                                Option Agreement

         A. Form of  Option.  Each  Option  granted  to a  Participant  shall be
designated  either an Incentive Stock Option or a Nonstatutory  Stock Option.  A
written agreement  incorporating the provisions of the Plan and such other terms
and  conditions as the Committee  determines  shall  identify any Option granted
pursuant to the Plan as either an Incentive Stock Option or a Nonstatutory Stock
Option, as the case may be. In the event that both an Incentive Stock Option and
a Nonstatutory  Stock Option are granted to a Participant the written  agreement
shall identify the respective Options and the terms and conditions thereof.

         B.  Date of  Grant  of  Option.  The date of the  grant  of  either  an
Incentive  Stock Option or a Nonstatutory  Stock Option is the date specified in
the Option Agreement described in this Section Six and signed by the Participant
and the Company.

                                  SECTION SEVEN

                                  Option Price

         A. Determination of Stock Option Price. The Option Price for each share
of the Common Stock to be issued on exercise of either an Incentive Stock Option
or a Nonstatutory  Stock Option under the Plan shall be fair market value of the
Common Stock determined on the date of grant in the following manner: (i) if the
trading prices for the Common Stock are reported on the consolidated transaction
reporting system (the  "consolidated  system") operated by the Consolidated Tape
Association, the average of the high and low prices at which the Common Stock is
reported in the  consolidated  system to have been traded on such date;  (ii) if
the  principal  market for the Common  Stock is an  exchange  and if the trading
prices for the Common Stock are not  reported in the  consolidated  system,  the
average of the high and low prices at which the Common Stock is reported to have
traded on such  exchange  on such date;  (iii) if the  principal  market for the
Common  Stock is  otherwise  than on an  exchange  and bids and  offers for such
security are reported in the automated quotation system operated by the National
Association of Securities Dealers, Inc. ("NASDAQ"), the mean between the highest
current  independent  bid price and the lowest current  independent  asked price
reported on "level 2" of the NASDAQ on such date;  (iv) if the principal  market
for the Common  Stock is  otherwise  than on an exchange and bids and offers for
the Common  Stock are not  reported  on NASDAQ,  the mean  between  the  highest
current  independent bid price and the lowest current independent asked price on
such date,  determined on the basis of reasonable inquiry; or (v) if there is no
market for the Common Stock, such price as the Board of Directors of the Company
in its discretion,  acting in good faith, shall determine, but not less than the
price of any contemporaneous sales of the Common Stock. If there is a market for
the Common Stock and if, on the pertinent date, no transactions or bid and asked
prices, as the case may be, are reported for the Common Stock under the relevant
clause  above,  the Option Price of the Common Stock shall be  determined on the
next day on which  transactions or bid and asked prices, as the case may be, are
reported  for the Common  Stock under such  clause.  Such Option  Price shall be
subject  to  adjustment  as set forth in  Paragraph  B. of this  Section  Seven.
Notwithstanding  the foregoing,  the Option Price with respect to each Incentive
Stock Option granted to an individual described in Section 422(b)(6) of the Code
(relating  to certain 10 percent  owners)  shall not be less than 110 percent of
such fair market value.

         B. Adjustments Upon Changes in Capitalization. If all or any portion of
an  Option  is   exercised   subsequent   to  any  stock   dividend,   split-up,
recapitalization,  combination  or  exchange of shares,  merger,  consolidation,
acquisition  of property or stock,  reorganization,  or other similar  change or
transaction of or by the Company, as a result of which shares of any class shall
be issued in respect of outstanding shares of the class covered by the Option or
shares of the class  covered  by the Option  shall be  changed  into the same or
different  number of shares of the same or another class or classes,  the person
or persons so exercising such an Option shall receive,  for the aggregate Option
Price payable on such exercise of the Option,  the aggregate number and class of
shares  equal to the number and class of shares he would have had on the date of
exercise had the shares been purchased for the same aggregate  price at the date
the Option was granted and not been disposed of, taking into  consideration  any
such stock  dividend,  split-up,  recapitalization,  combination  or exchange of
shares,  merger,  consolidation,  acquisition of property or stock,  separation,
reorganization or other similar change or transaction;  provided,  however, that
no fractional  share shall be issued upon any such  exercise,  and the aggregate
price paid shall be reduced appropriately on account of any fractional share not
issued.

                                  SECTION EIGHT

                                 Term of Option

         No Incentive Stock Option,  by its terms, may be exercised more than 10
years after the date of its grant;  provided,  however,  that no Incentive Stock
Option  granted to an  individual  described  in Section  422(b)(6)  of the Code
(relating to certain 10 percent  owners),  by its terms,  may be exercised  more
than five years from the date of its grant. The term of any  Nonstatutory  Stock
Option shall be determined by the Committee.

                                  SECTION NINE

                               Exercise of Option

         A.  Limitation  of Exercise  of Option.  Except as  otherwise  provided
herein,  the  Committee,  in  its  sole  discretion,  may  limit  an  Option  by
restricting its exercise in whole or in part for a specified period or periods.

         B. Method of  Exercising  an Option.  Subject to the  provisions of any
particular Option  Agreement,  a Participant may exercise his Option in whole or
in part any time during its term by written  notice to the  Company  stating the
number of shares of Common Stock such  Participant  elects to purchase under his
Option.

         C. No  Obligation  to  Exercise  Option.  A  Participant  is  under  no
obligation to exercise an Option or any part thereof.

         D.  Payment for Option  Common  Stock.  Upon  exercise of an Option,  a
Participant  shall be  required  to pay, in cash or by good check or money order
made  payable to the  Company,  the  exercise  price for the number of shares of
Common Stock which the Participant elects to purchase.

         E. Delivery of Common Stock to Participant. The Company shall undertake
and follow all necessary  procedures to deliver promptly the number of shares of
Common  Stock that the  Participant  elects to purchase on exercise of an Option
granted under the Plan. Such delivery,  however,  may be postponed,  at the sole
discretion of the Company,  to enable the Company to comply with any  applicable
procedures,  regulations or listing  requirements  of any  governmental  agency,
stock exchange or regulatory authority.

                                   SECTION TEN

                          Nontransferability of Option

         During  a  Participant's  lifetime,  an  Option  granted  to him may be
exercised  only  by him.  It may  not be  sold,  exchanged,  assigned,  pledged,
discounted,  hypothecated or otherwise transferred except by will or by the laws
of descent and distribution;  provided however, that the Committee, after giving
due  consideration  to the  applicable  rules under the Code,  may permit  other
transfers  to the  extent  consistent  with Rule  16b-3.  No Option or any right
thereunder  shall be subject to execution,  attachment or similar  process.  Any
attempt to so sell, exchange, assign, pledge, discount, hypothecate or otherwise
transfer any such Option,  or any right  thereunder,  contrary to the provisions
thereof   immediately  shall  nullify  and  void  such  Option  and  all  rights
thereunder.

                                 SECTION ELEVEN

                           Tax Withholding by Company

         In every case of an exercise by a Participant of a  Nonstatutory  Stock
Option,  the Company  shall deduct and withhold  from the  Participant's  salary
payable at the end of the payroll period during which exercise is made an amount
calculated  in  accordance  with Section 3402 of the Code. In the event that the
Company is unable to withhold funds  sufficient to satisfy the  requirements  of
Section 83(h) of the Code,  the  Participant  promptly  shall pay to the Company
such additional amount as may be necessary to enable the Company to satisfy such
requirements.

                                 SECTION TWELVE

                         Compliance with Securities Laws

         A. Written Agreement by Participants.  Unless a registration  statement
under the  Securities  Act of 1933 is then in effect with  respect to the Common
Stock a Participant receives upon exercise of his Option, the Committee,  in its
discretion,  may require,  at the time that a Participant  exercises his Option,
that the  Participant  agree  in  writing  to  acquire  such  Common  Stock  for
investment  and not for  resale or  distribution,  or to  consent  to such other
agreement as the Committee, in its discretion, may deem necessary to comply with
the  requirements  of  the  Securities  Act of  1933  or  any  applicable  state
securities  laws.  A reference to any such  agreement  shall be inscribed on the
Common Stock certificate(s).

         B. Registration  Requirement.  Each Option granted pursuant to the Plan
shall be subject to the requirement  that, if at any time the Board of Directors
of the Company determines that the listing, registration or qualification of the
shares  subject  to the  Option  upon any stock  exchange  or under any state or
federal law is necessary or desirable as a condition of, or in connection  with,
the issuance of shares  thereunder,  the Option may not be exercised in whole or
in part unless  such  listing,  registration  or  qualification  shall have been
effected or obtained  (and the same shall have been free of any  conditions  not
acceptable to the Board of Directors of the Company).

                                SECTION THIRTEEN

                     Changes in Capital Structure of Company

         In the event of a change in the capital  structure of the Company,  the
number of shares  specified in Section  Three of the Plan,  the number of shares
covered by each  outstanding  Option and the price per share  shall be  adjusted
proportionately  for any increase or decrease in the number of issued  shares of
Common Stock  resulting from the splitting or  consolidation  of shares,  or the
payment of a stock dividend,  or effected in any other manner without receipt of
additional or further consideration by the Company; provided,  however, that any
such  adjustment  shall be made so as not to result in a  "modification"  of any
Incentive Stock Option within the meaning of Section 424(h) of the Code.

                                SECTION FOURTEEN

                  Consolidation, Reorganization or Liquidation

         In the event the  Company  or any  Subsidiary  Company  is a party to a
corporate merger,  consolidation,  acquisition of property or stock, separation,
reorganization  or  liquidation,  within the meaning of Section 424 of the Code,
all outstanding Options shall thereupon terminate;  provided,  however, that the
Company  shall  give at  least  fifteen  days'  written  notice  to  holders  of
unexercised  Options prior to the effective  date of such merger,  consolidation
acquisition, separation,  reorganization or liquidation; provided further, that,
unless such Options are assumed or  substitutes  therefor are issued (within the
meaning of Section 424(a) of the Code) by the surviving or acquiring corporation
in  any  such  merger,  consolidation  or  other  reorganization,   all  Options
previously issued shall accelerate upon such notice, and the holders thereof may
exercise such Options prior to such  effective  date,  notwithstanding  any time
limitation  previously placed on the exercise of such Options but subject to the
provisions of Section Nineteen.

                                 SECTION FIFTEEN

                              Employment Agreement

         Each Participant  shall agree to remain with and render services to the
Company or any  Subsidiary  Company for a period of not less than 24 months from
the date of grant of an Option,  and further shall agree during such  employment
(subject  to death,  disability,  retirement,  vacations,  sick  leave and other
absences in accordance with the Company's regular policies) to devote his entire
time,  energy and skill to the service of the Company or any Subsidiary  Company
and the promotion of its interest. Nothing in the Plan or in any Option shall be
construed as constituting a commitment, guarantee, agreement or understanding of
any kind or nature that the Company or any Subsidiary  Company shall continue to
employ any  individual;  nor does the Plan or any Option granted under it affect
in any way the  Company's or any  Subsidiary  Company's  right to terminate  the
employment of any individual at any time. Participation under the Plan shall not
affect eligibility for any profit-sharing,  bonus,  insurance,  pension or other
extra-compensation  plan  which  the  Company  or  any  Subsidiary  Company  has
heretofore adopted or may at any time adopt for Eligible Employees.

                                 SECTION SIXTEEN

                            Termination of Employment

         A.  Severance.  Subject to the  subsequent  provisions  of this Section
Sixteen in the event that a  Participant's  employment  with the  Company or any
Subsidiary Company terminates for any reason, any Option, to the extent to which
it has vested,  granted to him  terminates  three  months after the date of such
termination of employment.  Transfer of employment  between  corporations in the
group comprised of the Company and its Subsidiary  Companies shall not be deemed
a termination of employment.

         B. Death.  Subject to the  provisions  of  Paragraph C. of this Section
Sixteen if a Participant dies while an employee of the Company or any Subsidiary
Company,  his Option may be  exercised  within six months after his death by the
executor or  administrator  of the estate of the Participant or by the person to
whom the Option  shall pass by will or by the laws of descent and  distribution,
but only to the extent the  Participant  was  entitled to exercise the Option on
the date of his death.

         C.  Limitation.  In no event may an Option be exercised by anyone after
the  expiration  date provided for in Section Eight of the Plan or, if a shorter
term is specified in the Option Agreement, the date specified therein.

                                SECTION SEVENTEEN

                              Application of Funds

         All proceeds received by the Company from the exercise of Options shall
be paid into its  treasury.  Such proceeds  shall be used for general  corporate
purposes.

                                SECTION EIGHTEEN

                   Participant's Rights as a Holder of Shares

         A Participant, or other person authorized to exercise the Participant's
Option  pursuant  to  paragraph  B.  of  Section  Sixteen  has  no  rights  as a
Stockholder  with  respect to any shares of Common  Stock  covered by his Option
until  the date a  certificate  is  issued  to him for such  shares.  Except  as
otherwise  provided in Section Thirteen of the Plan, no adjustment shall be made
for dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.

                                SECTION NINETEEN

                 Approval, Amendment and Termination of the Plan

         A. Effective  Date of the Plan. The Plan shall become  effective on the
date that it is approved by the Stockholders.

         B. Discretion of the Board of Directors.  The Board of Directors of the
Company may amend or terminate the Plan at any time; provided, however, that (i)
any such  amendment  or  termination  shall not  adversely  affect the rights of
participants  who were granted  Options prior  thereto;  (ii) any such amendment
shall not result in a  "modification"  of any Incentive  Stock Option within the
meaning  of  Section  424(h) of the Code;  (iii)  any such  amendment  shall not
change,  modify or otherwise  alter the  provisions  of the Plan  applicable  to
Participants  who are both officers and directors;  and (iv) any amendment which
increases the total number of shares of stock covered by the Plan or changes the
definition  of Eligible  Employee  shall be subject to  approval  thereof by the
Stockholders.

         C. Automatic  Termination.  In any event,  the Plan shall  terminate 10
years after its  approval by the  Stockholders  or its  adoption by the Board of
Directors of the Company, whichever is the earlier. Options may be granted under
the Plan at any time and from time to time before the Plan is  terminated  under
this  Paragraph  C. Any Option  outstanding  at the time the Plan is  terminated
under this Paragraph C. shall remain in effect until it is exercised or expires.

                                 SECTION TWENTY

                                     Notices

         All notices and elections by a Participant or any person  succeeding to
his  right to an  Option  as a result  of the  Participant's  death  shall be in
writing and  delivered in person or by mail to the President or Secretary of the
Company at the Company's principal office.

                                                    Dated:  September 7, 1999

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