Document:

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                                                                    EXHIBIT 10.2

                       ECLIPSE SURGICAL TECHNOLOGIES, INC.
                        1996 EMPLOYEE STOCK PURCHASE PLAN

                            (AS RESTATED, JUNE 2003)

         The following constitute the provisions of the 1996 Employee Stock
Purchase Plan of Eclipse Surgical Technologies, Inc.

         1.       Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

         2.       Definitions.

                  (a)      "Board" shall mean the Board of Directors of the
Company.

                  (b)      "Code" shall mean the Internal Revenue Code of 1986,
as amended.

                  (c)      "Common Stock" shall mean the Common Stock of the
Company.

                  (d)      "Company" shall mean Eclipse Surgical Technologies,
Inc. and any Designated Subsidiary of the Company.

                  (e)      "Compensation" shall mean all base straight time
gross earnings, commissions, overtime, shift premium, incentive compensation,
incentive payments, bonuses and other compensation.

                  (f)      "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from. time to time in its sole
discretion as eligible to participate in, the Plan.

                  (g)      "Employee" shall mean any individual who is an
Employee of the Company for tax purposes whose customary employment with the
Company is at least twenty (20) hours per week and more than five (5) months in
any calendar year. For purposes of the Plan, the employment relationship shall
be treated as continuing intact while the individual is on sick leave or other
leave of absence approved by the Company. Where the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.

                  (h)      "Enrollment Date" shall mean the first day of each
Offering Period.

                  (i)      "Exercise Date" shall mean the last day of each
Offering Period.

                  (j)      "Fair Market Value" shall mean, as of any date, the
value of Common Stock determined as follows:

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

                           (2)      If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the

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Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;

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

                           (4)      For the purposes of the Enrollment Date
under the first Offering Period under the Plan, the Fair Market Value of the
Common Stock shall be the price to public as set forth in the final prospectus
included within the Registration Statement on Form S-1 filed with the Securities
and Exchange Commission for the initial public offering the Common Stock.

                  (k)      "Offering Period" shall mean a period of
approximately six (6) months, commencing on the first Trading Day on or after
May 16 and terminating on the last Trading Day in the period ending the
following November 15, or commencing on the first Trading Day on or after
November 16 and terminating on the last Trading Day in the period ending the
following May 15, during which an option granted pursuant to the Plan may be
exercised; provided, however, that the first Offering Period shall be the period
of approximately seven (7) months, commencing with the first Trading Day on or
after the date on which the Company's Registration Statement on Form S-1 is
declared effective by the Securities and Exchange Commission and terminated on
the last Trading Day in the period ending November 15. The duration of Offering
Periods. may be changed pursuant to Section 4 of this Plan.

                  (l)      "Plan" shall mean this Employee Stock Purchase Plan.

                  (m)      "Purchase Price" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment Date or on
the Exercise Date, whichever is lower.

                  (n)      "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.

                  (o)      "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting Shares are held by the Company
or a Subsidiary whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.

                  (p)      "Trading Day" shall mean a day on which national
stock exchanges and the Nasdaq System are open for trading.

                  3.       Eligibility.

                  (a)      Any Employee (as defined in Section 2(g)), who shall
be employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.

                  (b)      Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the went that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.

         4.       Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after May 16 and November 16 each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof; provided, however, that the first Offering Period shall be
the period of approximately seven (7) months,

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commencing with the first Trading Day on or after the date on which the
Company's registration statement on Form S-1 is declared effective by the
Securities and Exchange Commission and terminating on the last Trading Day in
the Period ending November 15. The Board shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without shareholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.

         5.       Participation.

                  (a)      An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's payroll
office prior to the applicable Enrollment Date.

                  (b)      Payroll deductions for a participant shall commence
on the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.

         6.       Payroll Deductions.

                  (a)      At the time a participant files his or her
subscription agreement, he or she shall elect to have payroll deductions made on
each pay day during the Offering Period in an amount not exceeding fifteen
percent (15%) of the Compensation which he or she receives on each pay day
during the Offering Period; provided, however, that with respect to the first
Offering Period under the Plan a participant may elect to deduct an amount not
to exceed twenty percent (20%) of the Compensation such participant receives on
each pay day during the first Offering Period.

                  (b)      All payroll deductions made for a participant shall
be credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments in to such
account.

                  (c)      A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or
decrease the rate of his or her payroll deductions during the Offering Period by
completing or filing with the Company a new subscription agreement authorizing a
change in payroll deduction rate. The Board may, in its discretion, limit the
number of participation rate changes during any Offering Period. The change in
rate shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.

                  (d)      Notwithstanding the foregoing to the extent necessary
to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at such
time during any Offering Period which is scheduled to end ,during the current
calendar year (the "Current Offering Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan in a
prior Offering Period which ended during that calendar year plus all payroll
deductions accumulated with respect to the Current Offering Period equal
$21,250. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.

                  (e)      At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal. state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but shall not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.

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         7.       Grant of Option. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an option to purchase on the Exercise Date of such Offering Period (at
the applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than a
number of shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Notwithstanding anything to the contrary in this paragraph,
with respect to the first Offering Period under the Plan, an Employee shall not
be permitted to purchase more than the number of shares determined by dividing
$25,000 by the Fair Market Value of a share of the Company's Common Stock on the
Enrollment Date, except that such purchase shall be subject to the limitations
set forth in Sections 3(b) and 12 hereof Exercise of the option shall occur as
provided in Section 8 hereof, unless the participant has withdrawn pursuant to
Section 10 hereof. The Option shall expire on the last day of the Offering
Period.

         8.       Exercise of Option. Unless a participant withdraws from the
Plan as provided in Section 10 hereof his or her option for the purchase of
shares shall be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated payroll deductions in his
or her account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof My other monies left over in a participant's account after the
Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.

         9.       Delivery. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a Certificate representing the shares
purchased upon exercise of his or her option.

         10.      Withdrawal; Termination of Employment.

                  (a)      A participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written notice
to the Company in the form of Exhibit B to this Plan. All of the participant's
payroll deductions credited to his or her account shall be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period shall be automatically terminated,
and no further payroll deductions for the purchase of shares shall be made for
such Offering Period. If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.

                  (b)      Upon a participant's ceasing to be an Employee (as
defined in Section 2(g) hereof) for any reason, he or she shall be deemed to
have elected to withdraw from the Plan and the payroll deductions credited to
such participant's account during the Offering Period but not yet used to
exercise the option shall be returned to such participant or, in the case of his
or her death, to the person or persons entitled thereto under Section 14 hereof,
and such participant's option shall be automatically terminated. The preceding
sentence notwithstanding, a participant who receives payment in lieu of notice
of termination of employment shall be treated as continuing to be an Employee
for the participant's customary number of hours per week of employment during
the period in which the participant is subject to such payment in lieu of
notice.

                  (c)      A participant's withdrawal from an Offering Period
shall not have any effect upon his or her eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in succeeding
Offering Periods which commence after the termination of the Offering Period
from which the participant withdraws.

         11.      Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.

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         12.      Stock.

                  (a)      The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be 850,000
shares, subject to adjustment upon changes in capitalization of the Company as
provided in Section 18 hereof. If, on a given Exercise Date, the number of
shares with respect to which options are to be exercised exceeds the lesser of
(i) 62,500 shares or (ii) the number of shares then available under the Plan,
the Company shall make a pro rata allocation of the shares up to the lesser of
(i) or (ii) in as uniform a manner as shall be practicable and as it shall
determine to be equitable.

                  (b)      The participant shall have no interest or voting
right in shares covered by his option until such option has been exercised.

                  (c)      Shares to be delivered to a participant under the
Plan shall be registered in the name of the participant or in the name of the
participant and his or her spouse.

         13.      Administration.

                  (a)      Administrative Body. The Plan shall be administered
by the Board or a committee of members of the Board appointed by the Board. The
Board or its committee shall have full arid exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.

                  (b)      Rule 16b-3 Limitations. Notwithstanding the
provisions of Subsection (a) of this Section 13, in the event that Rule 16b-3
promulgated under the Securities Exchange Act of 1034, as amended (the "Exchange
Act"), or any successor provision ("Rule 16b-3") provides specific requirements
for the administrators of plans of this type, the Plan shall be administered
only by such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.

         14.      Designation of Beneficiary.

                  (a)      A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.

                  (b)      Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

         15.      Transferability. Neither payroll deductions credited to a
participants account nor arty rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

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         16.      Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

         17.      Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

         18.      Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.

                  (a)      Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the Reserves, as well as the price
per share and the number of shares of Common Stock covered by each option under
the Plan which has not yet been exercised, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.

                  (b)      Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Period shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.

                  (c)      Merger or Asset Sale. In the event of a proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"). The
New Exercise Date shall be before the date of the Company's proposed sale or
merger. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

         19.      Amendment or Termination.

                  (a)      The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as provided in Section 18
hereof no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders, except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423) of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.

                  (b)      Without shareholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to change the Offering
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such

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other limitations or procedures as the Board (or its committee) determines in
its sole discretion advisable which are consistent with the Plan.

         20.      Notice. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

         21.      Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
off any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

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

         22.      Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.

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                                                                    EXHIBIT 10.3

                            CARDIOGENESIS CORPORATION
                           DIRECTOR STOCK OPTION PLAN

                            (AS RESTATED, JUNE 2003)

         1.       Purpose of the Plan. The purposes of this Director Stock
Option Plan are to attract and retain the best available personnel for service
as Directors (as defined herein) of the Company, to provide additional incentive
to the Directors of the Company to serve as Directors, and to encourage their
continued service on the Board.

All options granted hereunder shall be nonstatutory stock options.

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

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

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

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

                  (d)      "Company" means CardioGenesis Corporation, formerly
known as Eclipse Surgical Technologies, Inc., a California corporation.

                  (e)      "Continuous Status as a Director" means the absence
of any interruption or termination of service as a Director.

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

                  (g)      "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.

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

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

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

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

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

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

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

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                  (l)      "Optionee" means an Outside Director who receives an
Option.

                  (m)      "Outside Director" means a Director who is not an
Employee.

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

                  (o)      "Plan" means this Director Stock Option Plan.

                  (p)      "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.

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

         3.       Stock Subject to the Plan. Subject to the provisions of
Section 10 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 575,000 Shares of Common Stock (the "Pool").
The Shares may be authorized, but unissued, or reacquired Common Stock.

         If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided however, that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan.

         4.       Administration and Grants of Options under the Plan.

                  (a)      Procedure for Grants. The provisions set forth in
this Section 4(a) shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. All grants of Options
to Outside Directors under this Plan shall be automatic and nondiscretionary and
shall be made strictly in accordance with the following provisions:

                           (i)      No person shall have any discretion to
select which Outside Directors shall be granted Options or to determine the
number of Shares to be, covered by Options granted to Outside Directors.

                           (ii)     Each Outside Director elected to the Board
after June 1, 1996, shall be automatically granted an Option to purchase 22,500
Shares.

                           (iii)    Each Outside Director shall be automatically
granted an Option to purchase 7,500 Shares (a "Subsequent Option") on the date
of such Outside Director's annual re-election to the Board, if on such date, he
or she shall have served on the Board for at least six (6) months.

                           (iv)     The terms of a First Option granted
hereunder shall be as follows:

                                    (A)      the term of the First Option shall
be ten (10) years;

                                    (B)      the First Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 8 hereof;

                                    (C)      the exercise price per Share shall
be the Fair Market Value per Share on the date of grant of the First Option; and

                                    (D)      the First Option shall become
exercisable as to 1/3rd of the Shares subject to the First Option on each of the
first, second and third anniversaries of the date of grant.

                           (v)      The terms of a Subsequent Option granted
hereunder shall be as follows:

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                                    (A)      the term of the Subsequent Option
shall be ten (10) years;

                                    (B)      the Subsequent Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 8 hereof;

                                    (C)      the exercise price per Share shall
be the Fair Market Value per Share on the date of grant of the Subsequent
Option; and

                                    (D)      the Subsequent Option shall become
exercisable as to all of the Shares subject to the Subsequent Option on the
first anniversary of its date of grant.

                           (vi)     In the event that any Option granted under
the Plan would cause the number of Shares subject to outstanding Options plus
the number of Shares previously purchased under Options to exceed the Pool, then
the remaining Shares available for Option grant shall be granted under Options
to the Outside Directors on a pro rata basis. No further grants shall be made
until such time, if any, as additional Shares, become available for grant under
the Plan through action of the shareholders to increase the number of Shares
which may be issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.

         5.       Eligibility. Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms of
Section 4 hereof. An Outside Director who has been granted an Option may, if he
or she is otherwise eligible, be granted an additional Option or Options in
accordance with such term.

                  Neither the Plan nor any Option shall confer upon an Optionee
any right to be nominated or continue to serve as a Director, nor shall they
interfere in any way with any right that the Director or the Company may have to
terminate the Directors directorship at any time.

         6.       Term of Plan. The Plan shall become effective upon the earlier
to occur of the Plan's adoption by the Board or it's approval by the
shareholders of the Company as described in Section 16 of the Plan; provided,
however, that the Plan shall be null and void if an underwritten, initial public
offering of the Company's Common Stock does not occur before April 1, 1997. This
Plan shall continue in effect until March 31, 2006 unless sooner terminated
under Section 11 of the Plan. Termination of this Plan shall not affect rights
and obligations heretofore granted under this Plan and then in effect.

         7.       Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall consist of (i) cash, (ii) check, (iii) promissory note, (iv) other shares
which (x) in the case of Shares acquired upon exercise of an Option, have been
owned by the Optionee for more than six (6) months on the date of surrender, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, (v)
delivery of a properly executed exercise notice together with such other
documentation as the Company and the broker, if applicable, shall require to
affect an exercise of the Option and delivery to the Company of the sale or loan
proceeds required to pay the exercise price, or (vi) any combination of the
foregoing methods of payment.

         8.       Exercise of Option.

                  (a)      Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

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

                  An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and fall payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate, entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other

                                       3

<PAGE>

rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. A share certificate for the number
of Shares so acquired shall be issued to the Optionee as soon as practicable
after exercise of the Option. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of the Plan.

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

                  (b)      Rule 16b-3. Options granted to Outside Directors must
comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder to qualify Plan
transactions, and other transactions by Outside Directors that otherwise could
be matched with Plan transactions, for the maximum exemption from Section 16 of
the Exchange Act.

                  (c)      Termination of Continuous Status as a Director. In
the event an Optionee's Continuous Status as a Director terminates (other than
upon the Optionee's death or total and permanent disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option, but
only within sixty (60) days from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

                  (d)      Disability of Optionee. In the event Optionee's
Continuous Status as a Director terminates as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code) or such disability
occurs within sixty (60) days following the termination of Optionee's Continuous
Status as a Director, the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.

                  (e)      Death of Optionee. In the event of an Optionee's
death during or within sixty (60) days of the termination of Optionee's
Continuous Status as a Director, the Optionee's estate or a person who acquired
the right to exercise the Option by bequest or inheritance may exercise the
Option, but only within twelve (12) months following the date of death, and only
to the extent that the Optionee was entitled to exercise it on the date of death
(but in no event later than the expiration of its ten (10) year term). To the
extent that the Optionee was not entitled to exercise an Option on the date of
death, and to the extent that the Optionee's estate or a person who acquired the
right to exercise such Option does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.

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

         10.      Adjustments Upon Changes in Capitalization, Dissolution,
Merger, Asset Sale or Change of Control.

                  (a)      Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, the
price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other

                                       4

<PAGE>

increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.

                  (b)      Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an Option
has not been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

                  (c)      Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding option may be assumed or an
equivalent option may be substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, each outstanding Option shall become fully vested and exercisable,
including as to Shares as to which it would not otherwise be exercisable. If an
Option becomes fully vested and exercisable upon a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For the purpose of this paragraph,
an Option shall be considered assumed if, following, the merger or sale of
assets, the Option confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares).

         11.      Amendment and Termination of the Plan.

                  (a)      Amendment and Termination of the Plan. Except as set
forth in Section 4, the Board may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act (or any other applicable law or regulation), the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.

                  (b)      Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted,
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated.

                  (c)      Shareholder Approval Required. Unless approved by the
holders of a majority of the shares present and entitled to vote at a duly
convened meeting of shareholders, the Company shall not: (i) grant any stock
option, including a stock appreciation right, with an exercise price that is
less than 100% of the fair market value of the underlying stock on the date of
grant; or (ii) reduce the exercise price of any stock option, including a stock
appreciation right, outstanding or to be granted in the future; cancel and
re-grant options at a lower exercise price (including entering into any "6 month
and 1 day" cancellation and re-grant scheme), whether or not the cancelled
options are put back into the available pool for grant; replace underwater
options with restricted stock in an exchange, buy-back or other scheme; or
replace any options with new options having a lower exercise price or
accelerated vesting schedule in an exchange, buy-back or other scheme. This
Section 11(c) may not be further amended or repealed without the affirmative
vote of the holders of a majority of the shares present and entitled to vote at
a duly convened meeting of shareholders.

         12.      Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section 4
hereof.

         13.      Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the

                                       5

<PAGE>

Exchange Act, the rules and regulations promulgated thereunder, state securities
laws, and the requirements of any stock exchange upon which the Shares may then
be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

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

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

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

         15.      Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

         16.      Shareholder Approval. Continuance of the Plan shall be subject
to approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting, of an Option hereunder.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law.

                                       6

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