Document:

CDEX INC.
                                              THE TECHNOLOGY DEVELOPMENT COMPANY

                             CDEX INC.

                             2002 STOCK OPTION PLAN

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                                TABLE OF CONTENTS
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                                                                                                   Page
<S>   <C>                                                                                           <C>
1.    PURPOSE........................................................................................4
2.    DEFINITIONS....................................................................................4
3.    ADMINISTRATION OF THE PLAN.....................................................................6
      3.1      Board.................................................................................6
      3.2      Committee.............................................................................6
      3.3      Grants................................................................................7
      3.4      Deferral Arrangement..................................................................8
      3.5      NO Liability..........................................................................8
4.    STOCK SUBJECT TO THE PLAN......................................................................8
5.    GRANT ELIGIBILITY..............................................................................8
      5.1      Employees and Other Service Providers.................................................8
      5.2      Successive Grants.....................................................................8
      5.3      Limitations On Incentive Stock Options................................................8
6.    AWARD AGREEMENT................................................................................9
7.    TERMS AND CONDITIONS OF OPTIONS................................................................9
      7.1      Option Price..........................................................................9
      7.2      Vesting...............................................................................9
      7.3      Term..................................................................................9
      7.4      Exercise of Options On Termination of Service.........................................9
      7.5      Limitations On Exercise of Option.....................................................10
      7.6      Exercise Procedure....................................................................10
      7.7      Right of Holders of Options...........................................................10
      7.8      Delivery of Stock Certificates........................................................10
8.    TRANSFERABILITY OF OPTIONS.....................................................................10
      8.1      Transferability of Option.............................................................10
      8.2      Family Transfers......................................................................10
9.    RESTRICTED STOCK...............................................................................11
      9.1      Grant of Restricted Stock.............................................................11
      9.2      Restrictions..........................................................................11
      9.3      Restricted Stock Certificates.........................................................11
      9.4      Rights of Holders of Restricted Stock.................................................11
      9.5      Termination of Service................................................................12
      9.6      Purchase and Delivery of Stock........................................................12
10.   FORM OF PAYMENT................................................................................12
      10.1     General Rule..........................................................................12
      10.2     Surrender of Stock....................................................................12
      10.3     Cashless Exercise.....................................................................12
      10.4     Promissory Note.......................................................................13
11.   WITHHOLDING TAXES..............................................................................13
12.   RESTRICTIONS ON TRANSFER OF SHARES OF STOCK....................................................13
      12.1     Right of First Refusal................................................................13
      12.2     Repurchase and Other Rights...........................................................13
      12.3     Payments for Repurchase...............................................................14
      12.4     Publicly Traded Stock.................................................................14
      12.5     Legend................................................................................14
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July 1, 2002

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<S>   <C>                                                                                           <C>
13.   PARACHUTE LIMITATIONS..........................................................................14
14.   REQUIREMENTS OF LAW............................................................................15
      14.1     General...............................................................................15
      14.2     Rule 16B-3............................................................................15
      14.3     Financial Reports.....................................................................15
15.   EFFECT OF CHANGES IN CAPITALIZATION............................................................15
      15.1     Changes in Stock......................................................................15
      15.2     Reorganization in Which the Company is the Surviving Entity and in Which No
               Change of Control Occurs..............................................................16
      15.3     Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of Control....16
      15.4     Adjustments...........................................................................17
      15.5     No Limitations On Company.............................................................17
16.   DURATION AND AMENDMENTS........................................................................17
      16.1     Term of the Plan......................................................................17
      16.2     Amendment and Termination of the Plan.................................................17
17.   GENERAL PROVISIONS.............................................................................17
      17.1     Disclaimer of Rights..................................................................17
      17.2     Nonexclusivity of the Plan............................................................18
      17.3     Captions..............................................................................18
      17.4     Other Award Agreement Provisions......................................................18
      17.5     Number and Gender.....................................................................18
      17.6     Severability..........................................................................18
      17.7     Pooling...............................................................................18
      17.8     Governing Law.........................................................................18
18.   EXECUTION......................................................................................19
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                                   CDEX, INC.
                            2002 STOCK INCENTIVE PLAN

     CDEX, Inc., a Nevada  corporation  (the  "COMPANY"),  sets forth herein the
terms of its 2002 Stock Incentive Plan (the "PLAN") as follows:

1.   PURPOSE

     The Plan is intended  to enhance  the  Company's  and its  Affiliates'  (as
defined  herein)  ability  to  attract  and retain  highly  qualified  officers,
directors,  key  employees,  and other  persons,  and to motivate such officers,
directors,  key  employees,  and  other  persons  to serve the  Company  and its
Affiliates  and to expend  maximum  effort to improve the  business  results and
earnings of the Company, by providing to such officers, directors, key employees
and other  persons an  opportunity  to acquire or increase a direct  proprietary
interest in the operations  and future success of the Company.  To this end, the
Plan provides for the grant of stock options and restricted  stock in accordance
with the terms hereof.  Stock options granted under the Plan may be nonqualified
stock options or incentive stock options, as provided herein.

2.   DEFINITIONS

     For  purposes of  interpreting  the Plan and related  documents  (including
Award Agreements), the following definitions shall apply:

     2.1 "AFFILIATE"  means,  with respect to the Company,  any company or other
trade or business that  controls,  is  controlled by or is under common  control
with the  Company  within  the  meaning  of Rule 405 of  Regulation  C under the
Securities Act, including, without limitation, any Subsidiary.

     2.2 "AWARD  AGREEMENT" means the stock option  agreement,  restricted stock
agreement  or other  written  agreement  between the Company and a Grantee  that
evidences and sets out the terms and conditions of a Grant.

     2.3  "BENEFIT  ARRANGEMENT"  shall have the meaning set forth in SECTION 13
hereof.

     2.4 "BOARD" means the Board of Directors of the Company.

     2.5 "CAUSE" means, as determined by the Board and unless otherwise provided
in an applicable  employment  agreement  with the Company or an  Affiliate,  (i)
gross  negligence or willful  misconduct in connection  with the  performance of
duties;  (ii)  conviction  of a  criminal  offense  (other  than  minor  traffic
offenses); or (iii) material breach of any term of any employment, consulting or
other  services,  confidentiality,   intellectual  property  or  non-competition
agreements,  if  any,  between  the  Service  Provider  and  the  Company  or an
Affiliate.

     2.6 "CHANGE OF CONTROL"  means (i) the  dissolution  or  liquidation of the
Company or a merger, consolidation, or reorganization of the Company with one or
more other  entities in which the Company is not the  surviving  entity,  (ii) a
sale of  substantially  all of the assets of the  Company  to another  person or
entity,  or (iii) any  transaction  (including  without  limitation  a merger or
reorganization  in which the Company is the  surviving  entity) which results in
any person or entity  (other than  persons who are  shareholders  or  Affiliates
immediately  prior to the  transaction)  owning  [50%]  or more of the  combined
voting power of all classes of stock of the Company.

     2.7 "CODE" means the Internal  Revenue Code of 1986, as now in effect or as
hereafter amended.

     2.8  "COMMITTEE"  means a committee of, and designated from time to time by
resolution  of the Board,  which  shall  consist  of one or more  members of the
Board.

     2.9 "COMPANY" means CDEX, Inc.

July 1, 2002
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     2.10  "DISABILITY"  means the  Grantee  is unable  to  perform  each of the
essential   duties  of  such  Grantee's   position  by  reason  of  a  medically
determinable  physical or mental  impairment  which is potentially  permanent in
character or which can be expected to last for a  continuous  period of not less
than 12  months;  PROVIDED,  HOWEVER,  that,  with  respect  to rules  regarding
expiration of an Incentive Stock Option  following  termination of the Grantee's
Service,  Disability  shall  mean  the  Grantee  is  unable  to  engage  in  any
substantial gainful activity by reason of a medically  determinable  physical or
mental  impairment  which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.

     2.11  "EFFECTIVE  DATE"  means  December  28,  2001,  the  date the Plan is
approved by the Board.

     2.12 "EXCHANGE  ACT" means the  Securities  Exchange Act of 1934, as now in
effect or as hereafter amended.

     2.13 "FAIR MARKET VALUE" means the value of a share of Stock, determined as
follows: if on the Grant Date or other determination date the Stock is listed on
an established national or regional stock exchange,  is admitted to quotation on
The  Nasdaq  Stock  Market,  Inc.,  or is  publicly  traded  on  an  established
securities  market,  the Fair  Market  Value  of a share  of Stock  shall be the
closing  price of the Stock on such exchange or in such market (if there is more
than one such  exchange  or market the Board  shall  determine  the  appropriate
exchange  or market) on the Grant Date or such other  determination  date (or if
there is no such reported closing price, the Fair Market Value shall be the mean
between the highest bid and lowest asked prices or between the high and low sale
prices on such trading day) or, if no sale of Stock is reported for such trading
day, on the next  preceding day on which any sale shall have been  reported.  If
the Stock is not listed on such an exchange,  quoted on such system or traded on
such a market,  Fair Market Value shall be the value of the Stock as  determined
by the Board in good faith.

     2.14 "FAMILY MEMBER" means a person who is a spouse,  former spouse, child,
stepchild,   grandchild,   parent,  stepparent,   grandparent,   niece,  nephew,
mother-in-law,  father-in-law,  son-in-law,  daughter-in-law,  brother,  sister,
brother-in-law,  or  sister-in-law,  including  adoptive  relationships,  of the
Grantee,  any person  sharing the  Grantee's  household  (other than a tenant or
employee),  a trust in which any one or more these  persons have more than fifty
percent of the  beneficial  interest,  a foundation  in which any one or more of
these persons (or the Grantee)  control the management of assets,  and any other
entity in which one or more these  persons (or the  Grantee) own more than fifty
percent of the voting interests;  provided, however, that to the extent required
by applicable  law, the term Family Member shall be limited to a person who is a
spouse,  former  spouse,  child,  stepchild,   grandchild,  parent,  stepparent,
grandparent, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother,
sister, brother-in-law,  or sister-in-law,  including adoptive relationships, of
the Grantee or a trust or  foundation  for the  exclusive  benefit of any one or
more of these persons.

     2.15  "GRANT"  means an award of an Option or  Restricted  Stock  under the
Plan.

     2.16 "GRANT DATE" means, as determined by the Board, the latest to occur of
(i) the date as of which the Board approves a Grant,  (ii) the date on which the
recipient of a Grant first  becomes  eligible to receive a Grant under SECTION 5
hereof, or (iii) such other date as may be specified by the Board.

     2.17 "GRANTEE" means a person who receives or holds an Option or Restricted
Stock under the Plan.

     2.18 "INCENTIVE  STOCK OPTION" means an "incentive stock option" within the
meaning  of  Section  422 of the Code,  or the  corresponding  provision  of any
subsequently enacted tax statute, as amended from time to time.

     2.19  "NONQUALIFIED  STOCK  OPTION"  means  a stock  option  that is not an
Incentive Stock Option.

     2.20  "OPTION"  means an option  to  purchase  one or more  shares of Stock
pursuant to the Plan.

     2.21  "OPTION  PRICE"  means the  purchase  price  for each  share of Stock
subject to an Option.

     2.22  "OTHER  AGREEMENT"  shall  have the  meaning  set forth in SECTION 13
hereof.

July 1, 2002
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     2.23 "PLAN" means this CDEX, Inc. 2002 Stock Incentive Plan.

     2.24  "PURCHASE  PRICE"  means the  purchase  price for each share of Stock
pursuant to a Grant of Restricted Stock.

     2.25  "REPORTING  PERSON"  means a person who is required  to file  reports
under Section 16(a) of the Exchange Act.

     2.26  "RESTRICTED  STOCK"  means  shares  of  Stock,  awarded  to a Grantee
pursuant to SECTION 9 hereof,  that are subject to restrictions and to a risk of
forfeiture.

     2.27 "SECURITIES ACT" means the Securities Act of 1933, as now in effect or
as hereafter amended.

     2.28  "SERVICE"  means service as an employee,  officer,  director or other
Service Provider of the Company or an Affiliate.  Unless otherwise stated in the
applicable Award  Agreement,  a Grantee's change in position or duties shall not
result in interrupted or terminated  Service,  so long as such Grantee continues
to be an employee, officer, director or other Service Provider of the Company or
an  Affiliate.  Subject to the  preceding  sentence,  whether a  termination  of
Service  shall have occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final, binding and conclusive.

     2.29  "SERVICE  PROVIDER"  means an  employee,  officer or  director of the
Company or an Affiliate, or a consultant or adviser currently providing services
to the Company or an Affiliate.

     2.30 "STOCK"  means the common  stock,  $0.001 par value per share,  of the
Company.

     2.31 "SUBSIDIARY" means any "subsidiary  corporation" of the Company within
the meaning of Section 424(f) of the Code.

     2.32 "TEN-PERCENT  STOCKHOLDER"  means an individual who owns more than ten
percent (10%) of the total  combined  voting power of all classes of outstanding
stock of the  Company,  its parent or any of its  Subsidiaries.  In  determining
stock  ownership,  the attribution  rules of Section 424(d) of the Code shall be
applied.

3.   ADMINISTRATION OF THE PLAN

     3.1 BOARD.

     The  Board  shall  have  such  powers  and   authorities   related  to  the
administration  of the Plan as are consistent with the Company's  certificate of
incorporation  and by-laws and  applicable  law. The Board shall have full power
and  authority  to take all actions and to make all  determinations  required or
provided for under the Plan,  any Grant or any Award  Agreement,  and shall have
full power and  authority to take all such other actions and make all such other
determinations  not  inconsistent  with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate  to the  administration
of  the  Plan,  any  Grant  or  any  Award  Agreement.   All  such  actions  and
determinations  shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous  consent of the Board executed in
writing in  accordance  with the  Company's  certificate  of  incorporation  and
by-laws and applicable law. The  interpretation and construction by the Board of
any  provision  of the Plan,  any Grant or any Award  Agreement  shall be final,
binding and conclusive.  To the extent  permitted by law, the Board may delegate
its authority under the Plan to a member of the Board or an executive officer of
the Company who is a member of the Board.

     3.2 COMMITTEE.

     The Board from time to time may  delegate  to one or more  Committees  such
powers and authorities  related to the  administration and implementation of the
Plan, as set forth in SECTION 3.1 above and in other applicable

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provisions,  as the Board shall  determine,  consistent  with the certificate of
incorporation  and by-laws of the Company and applicable  law. In the event that
the Plan, any Grant or any Award Agreement  entered into hereunder  provides for
any action to be taken by or determination to be made by the Board,  such action
may be taken by or such determination may be made by the applicable Committee if
the power and  authority  to do so has been  delegated  to the  Committee by the
Board as provided for in SECTION 3.1. Unless otherwise  expressly  determined by
the Board,  any such action or  determination  by the Committee  shall be final,
binding and  conclusive.  To the extent  permitted  by law,  the  Committee  may
delegate its  authority  under the Plan to a member of the Board or an executive
officer of the Company who is a member of the Board.

     3.3 GRANTS.

     Subject to the other terms and conditions of the Plan, the Board shall have
full and final authority to:

     (i)  designate Grantees,

     (ii) determine the type or types of Grants to be made to a Grantee,

     (iii) determine the number of shares of Stock to be subject to a Grant,

     (iv) establish the terms and conditions of each Grant  (including,  but not
          limited to, the Option Price of any Option, the nature and duration of
          any restriction or condition (or provision for lapse thereof) relating
          to the vesting,  exercise,  transfer,  or forfeiture of a Grant or the
          shares of Stock subject thereto,  and any terms or conditions that may
          be necessary to qualify Options as Incentive Stock Options),

     (v)  prescribe the form of each Award Agreement evidencing a Grant, and

     (vi) amend, modify, or supplement the terms of any outstanding Grant.

     Such authority specifically includes the authority,  in order to effectuate
the  purposes of the Plan but without  amending  the Plan,  to modify  Grants to
eligible  individuals  who are  foreign  nationals  or are  individuals  who are
employed  outside the United States to recognize  differences  in local law, tax
policy,  or custom. As a condition to any Grant, the Board shall have the right,
at  its  discretion,  to  require  Grantees  to  return  to the  Company  Grants
previously  awarded under the Plan.  Subject to the terms and  conditions of the
Plan, any such  subsequent  Grant shall be upon such terms and conditions as are
specified  by the Board at the time the new Grant is made.  The Board shall have
the right, in its discretion, to make Grants in substitution or exchange for any
other grant under another plan of the Company,  any  Affiliate,  or any business
entity to be acquired by the Company or an Affiliate. The Company may retain the
right in an Award  Agreement  to cause a  forfeiture  of the gain  realized by a
Grantee on account of actions  taken by the Grantee in violation or breach of or
in  conflict  with any  non-competition  agreement,  any  agreement  prohibiting
solicitation of employees or clients of the Company or any Affiliate  thereof or
any  confidentiality  obligation  with  respect to the Company or any  Affiliate
thereof or otherwise in competition  with the Company or any Affiliate  thereof,
to the extent  specified  in such Award  Agreement  applicable  to the  Grantee.
Furthermore,  the Company may annul a Grant if the Grantee is an employee of the
Company or an Affiliate  thereof and is  terminated  for Cause as defined in the
applicable Award Agreement or the Plan, as applicable.

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     3.4 DEFERRAL ARRANGEMENT.

     The Board may permit or require the  deferral of any award  payment  into a
deferred  compensation  arrangement,  subject to such rules and procedures as it
may  establish,  which may include  provisions  for the payment or  crediting of
interest  or  dividend  equivalents,  including  converting  such  credits  into
deferred Stock  equivalents  and  restricting  deferrals to comply with hardship
distribution rules affecting 401(k) plans.

     3.5 NO LIABILITY.

     No member of the Board or of the  Committee  shall be liable for any action
or  determination  made in good faith  with  respect to the Plan or any Grant or
Award Agreement.

4.   STOCK SUBJECT TO THE PLAN

     Subject to adjustment  as provided in SECTION 15 hereof and the  limitation
of the next  paragraph  relating to  Restricted  Stock,  the number of shares of
Stock  available for issuance  under the Plan shall be 3,500,000  (Three Million
Five  Hundred  Thousand).  Stock  issued or to be issued under the Plan shall be
authorized but unissued  shares or, to the extent  permitted by applicable  law,
issued shares that have been reacquired by the Company. If any shares covered by
a Grant are not purchased or are forfeited,  or if a Grant otherwise  terminates
without  delivery  of any Stock  subject  thereto,  then the number of shares of
Stock counted  against the aggregate  number of shares  available under the Plan
with  respect  to such Grant  shall,  to the  extent of any such  forfeiture  or
termination,  again be  available  for  making  Grants  under the  Plan.  If the
exercise  price of any Option  granted  under the Plan is satisfied by tendering
shares of Stock to the Company (by either  actual  delivery or by  attestation),
only the number of shares of Stock  issued  net of the shares of Stock  tendered
shall be deemed  delivered  for purposes of  determining  the maximum  number of
shares of Stock available for delivery under the Plan.

5.   GRANT ELIGIBILITY

     5.1 EMPLOYEES AND OTHER SERVICE PROVIDERS.

     Grants  (including  Grants of Incentive  Stock Options,  subject to SECTION
5.3) may be made  under the Plan to any  employee,  officer or  director  of, or
other Service Provider  providing  services to the Company or any Affiliate.  To
the extent required by applicable state law, Grants within certain states may be
limited to employees and officers or employees, officers and directors.

     5.2 SUCCESSIVE GRANTS.

     An  eligible  person  may  receive  more than one  Grant,  subject  to such
restrictions as are provided herein.

     5.3 LIMITATIONS ON INCENTIVE STOCK OPTIONS.

     An Option  shall  constitute  an  Incentive  Stock  Option  only (i) if the
Grantee of such Option is an employee  of the Company or any  Subsidiary  of the
Company;  (ii)  to  the  extent  specifically  provided  in  the  related  Award
Agreement;  and  (iii)  to the  extent  that the  aggregate  Fair  Market  Value
(determined  at the time the  Option is  granted)  of the  shares of Stock  with
respect  to which  all  Incentive  Stock  Options  held by such  Grantee  become
exercisable  for the first time during any calendar year (under the Plan and all
other  plans of the  Grantee's  employer  and its  affiliates)  does not  exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

July 1, 2002
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6.   AWARD AGREEMENT

     Each Grant  pursuant to the Plan shall be evidenced by an Award  Agreement,
in such form or forms as the Board  shall  from  time to time  determine,  which
specifies the number of shares  subject to the Grant and provides for adjustment
in accordance with SECTION 15. Award Agreements  granted from time to time or at
the same time need not contain  similar  provisions but shall be consistent with
the terms of the Plan. Each Award Agreement  evidencing a Grant of Options shall
specify  whether such Options are intended to be  Nonqualified  Stock Options or
Incentive Stock Options,  and in the absence of such  specification such options
shall be deemed Nonqualified Stock Options.

7.   TERMS AND CONDITIONS OF OPTIONS

     7.1 OPTION PRICE.

     The Option  Price of each Option  shall be fixed by the Board and stated in
the Award Agreement  evidencing  such Option.  In the case of an Incentive Stock
Option  the Option  Price  shall not be less than the Fair  Market  Value on the
Grant  Date of a share of Stock;  provided,  however,  that in the event  that a
Grantee is a  Ten-Percent  Stockholder,  the Option Price of an Incentive  Stock
Option  granted to such  Grantee  shall be not less than 110 percent of the Fair
Market  Value  of a  share  of  Stock  on  the  Grant  Date.  In the  case  of a
Nonqualified Stock Option, the Option Price shall be not less than 85 percent of
the Fair Market Value on the Grant Date of a share of Stock; PROVIDED,  HOWEVER,
that in the event that a Grantee is a Ten-Percent Stockholder,  the Option Price
shall be not less than 110 percent of the Fair Market  Value of a share of Stock
on the Grant Date.  In no case shall the Option Price of any Option be less than
the par value of a share of Stock.

     7.2 VESTING.

     Subject to SECTIONS 7.3 and 15.3 hereof, each Option granted under the Plan
shall become  exercisable  at such times and under such  conditions  as shall be
determined by the Board and stated in the Award Agreement.  For purposes of this
SECTION 7.2, fractional numbers of shares of Stock subject to an Option shall be
rounded  down to the next  nearest  whole  number.  To the  extent  required  by
applicable  law, each Option shall become  exercisable  no less rapidly than the
rate of twenty  percent (20%) per year for each of the first five (5) years from
the Grant Date based on continued  Service.  Subject to the preceding  sentence,
the Board may provide,  for example,  in the Award Agreement for (i) accelerated
exercisability  of the Option in the event the Grantee's  Service  terminates on
account of death,  Disability or another  event,  (ii)  expiration of the Option
prior to its term in the  event of the  termination  of the  Grantee's  Service,
(iii) immediate  forfeiture of the Option in the event the Grantee's  Service is
terminated  for Cause or (iv)  unvested  Options to be exercised  subject to the
Company's right of repurchase with respect to unvested shares of Stock.

     7.3 TERM.

     Each  Option  granted  under the Plan  shall  terminate,  and all rights to
purchase  shares of Stock  thereunder  shall cease,  upon the  expiration of ten
years from the Grant Date,  or under such  circumstances  and on such date prior
thereto  as is set forth in the Plan or as may be fixed by the Board and  stated
in the Award Agreement relating to such Option;  provided,  however, that in the
event that the Grantee is a Ten-Percent  Stockholder,  an Option granted to such
Grantee  that  is  intended  to  be an  Incentive  Stock  Option  shall  not  be
exercisable after the expiration of five years from its Grant Date.

     7.4 EXERCISE OF OPTIONS ON TERMINATION OF SERVICE.

     Each Award  Agreement shall set forth the extent to which the Grantee shall
have the right to exercise the Option  following  termination  of the  Grantee's
Service.  Such  provisions  shall be  determined  in the sole  discretion of the
Board,  need not be uniform among all Options  issued  pursuant to the Plan, and
may  reflect  distinctions  based on the  reasons  for  termination  of Service.
Notwithstanding the foregoing each Option shall provide that the Grantee

July 1, 2002

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shall  have the right to  exercise  the vested  portion  of any  Option  held at
termination  for at least sixty (60) days following  termination of Service with
the Company for any reason  (other than for Cause),  and that the Grantee  shall
have the right to  exercise  the Option for at least  twelve  (12) months if the
Grantee's Service terminates due to death or Disability.

     7.5 LIMITATIONS ON EXERCISE OF OPTION.

     Notwithstanding any other provision of the Plan, in no event may any Option
be exercised, in whole or in part, prior to the date the Plan is approved by the
shareholders  of the Company,  or after ten years  following  the Grant Date, or
after the  occurrence of an event referred to in SECTION 15 hereof which results
in termination of the Option.

     7.6 EXERCISE PROCEDURE.

     An Option that is exercisable may be exercised by the Grantee's delivery to
the Company of written  notice of exercise on any business day, at the Company's
principal  office.  Such notice shall specify the number of shares of Stock with
respect  to which the  Option is being  exercised  and shall be  accompanied  by
payment in full of the Option  Price of the shares for which the Option is being
exercised. The minimum number of shares of Stock with respect to which an Option
may be  exercised,  in whole or in part,  at any time shall be the lesser of (i)
100 shares or such lesser number set forth in the applicable Award Agreement and
(ii) the maximum number of shares available for purchase under the Option at the
time of  exercise.  The Option  Price  shall be payable in a form  described  in
SECTION 10.

     7.7 RIGHT OF HOLDERS OF OPTIONS.

     Unless otherwise  stated in the applicable  Award Agreement,  an individual
holding or  exercising  an Option shall have none of the rights of a shareholder
(for  example,   the  right  to  cash  or  dividend  payments  or  distributions
attributable to the subject shares of Stock or to direct the voting of shares of
Stock)  until the shares of Stock  covered  thereby are fully paid and issued to
such individual.

     7.8 DELIVERY OF STOCK CERTIFICATES.

     Promptly  after the  exercise  of an Option by a Grantee and the payment in
full of the Option  Price,  such Grantee  shall be entitled to the issuance of a
stock  certificate or certificates  evidencing  such Grantee's  ownership of the
shares of Stock purchased upon such exercise of the Option.

8.   TRANSFERABILITY OF OPTIONS

     8.1 TRANSFERABILITY OF OPTIONS.

     Except as provided in SECTION 8.2,  during the lifetime of a Grantee,  only
the Grantee (or, in the event of legal incapacity or incompetency, the Grantee's
guardian or legal  representative) may exercise an Option. Except as provided in
SECTION 8.2, no Option shall be  assignable  or  transferable  by the Grantee to
whom it is granted, other than by will or the laws of descent and distribution.

     8.2 FAMILY TRANSFERS.

     If authorized in the applicable  Award  Agreement,  a Grantee may transfer,
not for value, all or part of an Option that is not an Incentive Stock Option to
any  Family  Member.  For the  purpose  of this  SECTION  8.2, a "not for value"
transfer  is a transfer  which is (i) a gift,  (ii) a transfer  under a domestic
relations  order in  settlement  of marital  property  rights;  or (iii)  unless
applicable law does not permit such transfers,  a transfer to an entity in which
more than fifty percent of the voting  interests are owned by Family Members (or
the Grantee) in exchange  for an interest

July 1, 2002
                                       10
<PAGE>

in that  entity.  Following a transfer  under this  SECTION 8.2, any such Option
shall continue to be subject to the same terms and conditions as were applicable
immediately  prior to  transfer,  and shares of Stock  acquired  pursuant to the
Option shall be subject to the same  restrictions on transfer of shares as would
have applied to the Grantee.  Subsequent  transfers of  transferred  Options are
prohibited  except to Family Members of the original  Grantee in accordance with
this SECTION 8.2 or by will or the laws of descent and distribution.  The events
of  termination  of Service  under an Option  shall  continue to be applied with
respect to the original Grantee, following which the Option shall be exercisable
by the  transferee  only to the  extent,  and for the periods  specified  in the
applicable Award  Agreement,  and the shares may be subject to repurchase by the
Company or its assignee.

9.   RESTRICTED STOCK

     9.1 GRANT OF RESTRICTED STOCK.

     The Board may from time to time grant  Restricted Stock to persons eligible
to  receive  Grants  under  SECTION  5  hereof,  subject  to such  restrictions,
conditions and other terms as the Board may determine.

     9.2 RESTRICTIONS.

     At the time a Grant of Restricted  Stock is made, the Board shall establish
a  restriction  period  applicable  to such  Restricted  Stock.  Each  Grant  of
Restricted  Stock may be subject to a different  restriction  period.  The Board
may, in its sole  discretion,  at the time a Grant of Restricted  Stock is made,
prescribe  conditions  that must be  satisfied  prior to the  expiration  of the
restriction  period,  including  the  satisfaction  of corporate  or  individual
performance objectives or continued Service, in order that all or any portion of
the Restricted  Stock shall vest.  Notwithstanding  the previous  sentence,  the
vesting  restrictions  applicable  to a Grant of  Restricted  Stock to a Service
Provider  who is not an officer,  director or  consultant  to the Company  shall
lapse no less rapidly than the rate of twenty percent (20%) per year for each of
the first five (5) years from the Grant Date, based on continued Service.

     The Board  also may,  in its sole  discretion,  shorten  or  terminate  the
restriction period or waive any of the conditions applicable to all or a portion
of the  Restricted  Stock.  The Restricted  Stock may not be sold,  transferred,
assigned,  pledged or otherwise encumbered or disposed of during the restriction
period or prior to the  satisfaction of any other  conditions  prescribed by the
Board with respect to such Restricted Stock.

     9.3 RESTRICTED STOCK CERTIFICATES.

     The Company  shall issue,  in the name of each  Grantee to whom  Restricted
Stock has been  granted,  stock  certificates  representing  the total number of
shares  of  Restricted  Stock  granted  to the  Grantee,  as soon as  reasonably
practicable  after the Grant Date.  The Board may provide in an Award  Agreement
that either (i) the  Secretary of the Company shall hold such  certificates  for
the Grantee's  benefit until such time as the  Restricted  Stock is forfeited to
the Company,  or the  restrictions  lapse,  or (ii) such  certificates  shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend  or  legends  that  complies  with  the  applicable  securities  laws and
regulations and makes  appropriate  reference to the restrictions  imposed under
the Plan and the Award Agreement.

     9.4 RIGHTS OF HOLDERS OF RESTRICTED STOCK.

     Unless  the Board  otherwise  provides  in an Award  Agreement,  holders of
Restricted  Stock  shall  have the  right to vote  such  Stock  and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock,  which may or may not be subject to the same  vesting  conditions  and
restrictions  applicable to such Restricted  Stock. All  distributions,  if any,
received by a Grantee with respect to Restricted  Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Grant.

July 1, 2002
                                       11
<PAGE>

     9.5 TERMINATION OF SERVICE.

     Unless  otherwise  provided by the Board in the applicable Award Agreement,
upon the  termination  of a Grantee's  Service with the Company or an Affiliate,
any shares of  Restricted  Stock held by such Grantee  that have not vested,  or
with  respect  to which all  applicable  restrictions  and  conditions  have not
lapsed,  shall  immediately be deemed  forfeited.  Upon forfeiture of Restricted
Stock,  the Grantee  shall have no further  rights  with  respect to such Grant,
including but not limited to any right to vote Restricted  Stock or any right to
receive dividends with respect to shares of Restricted Stock.

     9.6 PURCHASE AND DELIVERY OF STOCK.

     The Grantee  shall be required to purchase  the  Restricted  Stock from the
Company at a Purchase  Price equal to the greater of (i) the aggregate par value
of the shares of Stock represented by such Restricted Stock or (ii) the Purchase
Price,  if any,  specified in the Award  Agreement  relating to such  Restricted
Stock. The Purchase Price shall be payable in a form described in SECTION 10 or,
in the discretion of the Board, in consideration  for past Services  rendered to
the Company or an  Affiliate.  To the extent  required by  applicable  law,  the
Purchase Price of a share of Restricted  Stock shall be not less than 85 percent
of the Fair  Market  Value on the  Grant  Date of a share  of  Stock;  provided,
however,  that in the event that the Grantee is a Ten-Percent  Stockholder,  the
Purchase  Price shall be not less than 100  percent of the Fair Market  Value on
the Grant Date of a share of Stock.

     Upon the  expiration  or  termination  of the  restriction  period  and the
satisfaction of any other  conditions  prescribed by the Board,  having properly
paid the Purchase  Price,  the  restrictions  applicable to shares of Restricted
Stock shall lapse,  and, unless  otherwise  provided in the Award  Agreement,  a
stock  certificate  for  such  shares  shall  be  delivered,  free  of all  such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case
may be.

10.  FORM OF PAYMENT

     10.1 GENERAL RULE.

     Payment  of the  Option  Price for the  shares  purchased  pursuant  to the
exercise of an Option or the Purchase Price for  Restricted  Stock shall be made
in cash or in cash equivalents acceptable to the Company.

     10.2 SURRENDER OF STOCK.

     To the extent the Award Agreement so provides,  payment of the Option Price
for shares purchased pursuant to the exercise of an Option or the Purchase Price
for  Restricted  Stock  may be made all or in part  through  the  tender  to the
Company of shares of Stock,  which shares,  if acquired from the Company,  shall
have been held for at least six months at the time of tender and which  shall be
valued,  for  purposes of  determining  the extent to which the Option  Price or
Purchase Price has been paid thereby,  at their Fair Market Value on the date of
exercise.

     10.3 CASHLESS EXERCISE.

     With respect to an Option only (and not with respect to Restricted  Stock),
to the  extent  the Award  Agreement  so  provides  and the shares of Stock have
become  publicly  traded,  payment  of the  Option  Price for  shares  purchased
pursuant to the exercise of an Option may be made all or in part by delivery (on
a form  acceptable  to the  Board) of an  irrevocable  direction  to a  licensed
securities  broker  acceptable  to the  Company  to sell  shares of Stock and to
deliver  all or part of the sales  proceeds  to the  Company  in  payment of the
Option Price and any withholding taxes described in SECTION 11.

July 1, 2002
                                       12
<PAGE>

     10.4 PROMISSORY NOTE.

     To the extent the Award Agreement so provides,  payment of the Option Price
for shares purchased pursuant to the exercise of an Option or the Purchase Price
for Restricted Stock may be made all or in part with a full recourse  promissory
note executed by the Grantee.  The interest rate and other terms and  conditions
of such note shall be  determined  by the Board.  The Board may require that the
Grantee  pledge  the Stock  subject  to the Grant for the  purpose  of  securing
payment of the note.  In no event shall stock  certificate(s)  representing  the
Stock be released to the Grantee until such note is paid in full.

11.  WITHHOLDING TAXES

     The Company or any  Affiliate,  as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any Federal,  state,
or local taxes of any kind  required by law to be withheld  with  respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or upon
the issuance of any shares of Stock upon the exercise of an Option.  At the time
of such  vesting,  lapse,  or exercise,  the Grantee shall pay to the Company or
Affiliate,  as the case may be, any amount  that the  Company or  Affiliate  may
reasonably  determine to be necessary  to satisfy such  withholding  obligation.
Subject to the prior  approval  of the  Company or the  Affiliate,  which may be
withheld  by the  Company  or the  Affiliate,  as the case  may be,  in its sole
discretion,  the Grantee may elect to satisfy such  obligations,  in whole or in
part,  (i) by causing the Company or the  Affiliate to withhold  shares of Stock
otherwise  issuable to the Grantee or (ii) by  delivering  to the Company or the
Affiliate  shares of Stock already owned by the Grantee.  The shares of Stock so
delivered or withheld  shall have an  aggregate  Fair Market Value equal to such
withholding  obligations.  The Fair Market  Value of the shares of Stock used to
satisfy such  withholding  obligation  shall be determined by the Company or the
Affiliate  as of the  date  that  the  amount  of tax  to be  withheld  is to be
determined.  A Grantee who has made an election  pursuant to this SECTION 11 may
satisfy his or her withholding obligation only with shares of Stock that are not
subject to any repurchase,  forfeiture,  unfulfilled  vesting,  or other similar
requirements.

12.  RESTRICTIONS ON TRANSFER OF SHARES OF STOCK

     12.1 RIGHT OF FIRST REFUSAL.

     Subject to SECTION 12.4 below,  a Grantee (or such other  individual who is
entitled to exercise an Option or otherwise  acquire shares  pursuant to a Grant
under the terms of this Plan) shall not sell, pledge, assign, gift, transfer, or
otherwise  dispose of any shares of Stock  acquired  pursuant  to a Grant to any
person or entity  without first offering such shares to the Company for purchase
on the same terms and conditions as those offered the proposed  transferee.  The
Company may assign its right of first  refusal  under this SECTION 12.1 in whole
or in part,  to (1) any holder of stock or other  securities  of the  Company (a
"Stockholder"),  (2) any  Affiliate  or (3) any other  person or entity that the
Board determines has a sufficient  relationship with or interest in the Company.
The  Company  shall give  reasonable  written  notice to the Grantee of any such
assignment  of its rights.  The  restrictions  of this SECTION 12.1 apply to any
person to whom Stock that was originally  acquired  pursuant to a Grant is sold,
pledged,  assigned,  bequeathed,  gifted,  transferred or otherwise disposed of,
without  regard to the number of such  subsequent  transferees  or the manner in
which they acquire the Stock,  but the  restrictions of this SECTION 12.1 do not
apply to a transfer of Stock that occurs as a result of the death of the Grantee
or  of  any  subsequent  transferee  (but  shall  apply  to  the  executor,  the
administrator  or  personal  representative,   the  estate,  and  the  legatees,
beneficiaries and assigns thereof).

     12.2 REPURCHASE AND OTHER RIGHTS.

     Stock  issued  upon  exercise  of an  Option  or  pursuant  to the Grant of
Restricted  Stock may be subject to such right of repurchase  or other  transfer
restrictions  as the Board may determine,  consistent  with  applicable law. Any
such additional restriction shall be set forth in the Award Agreement.

July 1, 2002
                                       13
<PAGE>

     12.3 PAYMENTS FOR REPURCHASE

     Upon the Grantee's termination of Service, payment shall be made in cash or
by cancellation  of  indebtedness  within the ninety (90) days after the date of
termination  of  Service  or ninety  (90) days  after  the date of  exercise  or
purchase,  as the case may be, for the repurchase of shares of Stock acquired by
the Grantee pursuant to the exercise of an Option or under a Grant of Restricted
Stock.

     12.4 PUBLICLY TRADED STOCK.

     If the  Stock is  listed  on an  established  national  or  regional  stock
exchange or is admitted to  quotation on The Nasdaq Stock  Market,  Inc.,  or is
publicly  traded in an established  securities  market,  the foregoing  transfer
restrictions of SECTIONS 12.1 and 12.2 shall terminate as of the first date that
the Stock is so listed, quoted or publicly traded.

     12.5 LEGEND.

     In order to enforce  the  restrictions  imposed  upon shares of Stock under
this Plan or as provided in an Award Agreement,  the Board may cause a legend or
legends to be placed on any certificate  representing  shares issued pursuant to
this Plan that complies with the applicable  securities laws and regulations and
makes appropriate reference to the restrictions imposed under it.

13.  PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other agreement,
contract,  or  understanding  heretofore or hereafter  entered into by a Grantee
with  the  Company  or  any  Affiliate,   except  an  agreement,   contract,  or
understanding  hereafter  entered  into  that  expressly  modifies  or  excludes
application of this paragraph (an "Other  Agreement"),  and  notwithstanding any
formal  or  informal  plan or  other  arrangement  for the  direct  or  indirect
provision  of  compensation  to the  Grantee  (including  groups or  classes  of
participants or beneficiaries of which the Grantee is a member),  whether or not
such compensation is deferred,  is in cash, or is in the form of a benefit to or
for the Grantee (a  "Benefit  Arrangement"),  if the Grantee is a  "disqualified
individual,"  as  defined  in  Section  280G(c)  of the  Code,  any  Options  or
Restricted  Stock held by that  Grantee  and any right to receive any payment or
other benefit under this Plan shall not become  exercisable or vested (i) to the
extent that such right to exercise,  vesting,  payment, or benefit,  taking into
account all other rights, payments, or benefits to or for the Grantee under this
Plan,  all Other  Agreements,  and all  Benefit  Arrangements,  would  cause any
payment or benefit to the Grantee  under this Plan to be considered a "parachute
payment" within the meaning of Section  280G(b)(2) of the Code as then in effect
(a  "Parachute  Payment")  and (ii) if, as a result  of  receiving  a  Parachute
Payment,  the  aggregate  after-tax  amounts  received by the  Grantee  from the
Company  under this Plan,  all Other  Agreements,  and all Benefit  Arrangements
would be less than the  maximum  after-tax  amount that could be received by the
Grantee without causing any such payment or benefit to be considered a Parachute
Payment.  In the event that the receipt of any such right to exercise,  vesting,
payment,  or benefit  under this Plan,  in  conjunction  with all other  rights,
payments,  or benefits to or for the Grantee  under any Other  Agreement  or any
Benefit  Arrangement would cause the Grantee to be considered to have received a
Parachute  Payment under this Plan that would have the effect of decreasing  the
after-tax  amount  received  by the Grantee as  described  in clause (ii) of the
preceding sentence, then the Grantee shall have the right, in the Grantee's sole
discretion,  to designate those rights,  payments,  or benefits under this Plan,
any Other  Agreements,  and any Benefit  Arrangements  that should be reduced or
eliminated  so as to avoid  having the payment or benefit to the  Grantee  under
this Plan be deemed to be a Parachute Payment.

July 1, 2002
                                       14
<PAGE>

14.  REQUIREMENTS OF LAW

     14.1 GENERAL.

     The  Company  shall not be  required  to sell or issue any  shares of Stock
under  any Grant if the sale or  issuance  of such  shares  would  constitute  a
violation by the Grantee, any other individual exercising a right emanating from
such Grant,  or the Company of any  provision  of any law or  regulation  of any
governmental  authority,  including  without  limitation  any  federal  or state
securities laws or regulations.  If at any time the Company shall determine,  in
its discretion,  that the listing,  registration or  qualification of any shares
subject  to a Grant  upon any  securities  exchange  or under  any  governmental
regulatory  body is necessary or desirable as a condition  of, or in  connection
with,  the issuance or purchase of shares  hereunder,  no shares of Stock may be
issued or sold to the  Grantee  or any  other  individual  exercising  an Option
pursuant to such Grant unless such listing, registration, qualification, consent
or approval  shall have been  effected or obtained  free of any  conditions  not
acceptable to the Company,  and any delay caused  thereby shall in no way affect
the date of  termination  of the Grant.  Specifically,  in  connection  with the
Securities  Act, upon the exercise of any right emanating from such Grant or the
delivery of any shares of  Restricted  Stock,  unless a  registration  statement
under  the  Securities  Act is in effect  with  respect  to the  shares of Stock
covered by such Grant,  the Company  shall not be required to sell or issue such
shares  unless  the  Board has  received  evidence  satisfactory  to it that the
Grantee or any other  individual  exercising  an Option may acquire  such shares
pursuant  to an  exemption  from  registration  under the  Securities  Act.  Any
determination  in this  connection  by the Board  shall be final,  binding,  and
conclusive. The Company may, but shall in no event be obligated to, register any
securities  covered hereby pursuant to the Securities Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of an
Option or the  issuance  of shares of Stock  pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly  imposes the requirement that an Option shall not be exercisable until
the shares of Stock  covered by such  Option are  registered  or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction  apply) shall be deemed  conditioned upon the effectiveness
of such registration or the availability of such an exemption.

     14.2 RULE 16b-3.

     During any time when the Company has a class of equity security  registered
under  Section 12 of the  Exchange  Act,  it is the intent of the  Company  that
Grants pursuant to the Plan and the exercise of Options  granted  hereunder will
qualify for the exemption  provided by Rule 16b-3 under the Exchange Act. To the
extent  that any  provision  of the Plan or action by the Board  does not comply
with the  requirements  of Rule  16b-3,  it shall be deemed  inoperative  to the
extent  permitted by law and deemed advisable by the Board, and shall not affect
the  validity of the Plan.  In the event that Rule 16b-3 is revised or replaced,
the  Board may  exercise  its  discretion  to  modify  this Plan in any  respect
necessary to satisfy the  requirements  of, or to take advantage of any features
of, the revised exemption or its replacement.

     14.3 FINANCIAL REPORTS.

     To the extent required by applicable law, not less often than annually, the
Company  shall furnish to Grantees  summary  financial  information  including a
balance  sheet  regarding  the  Company's  financial  condition  and  results of
operations,  unless such  Grantees have duties with the Company that assure them
access to equivalent information. Such financial statements need not be audited.

15.  EFFECT OF CHANGES IN CAPITALIZATION

     15.1 CHANGES IN STOCK.

     The number of shares for which Grants of Options and  Restricted  Stock may
be made under the Plan shall be  proportionately  increased or decreased for any
increase  or  decrease  in the  number  of  shares  of Stock on  account

July 1, 2002
                                       15
<PAGE>

of  any   recapitalization,   reclassification,   stock  split,  reverse  split,
combination of shares,  exchange of shares, stock dividend or other distribution
payable in capital  stock,  or for any other increase or decrease in such shares
effected  without receipt of  consideration  by the Company  occurring after the
Effective Date (any such event hereafter referred to as a "CORPORATE EVENT"). In
addition,  subject to the  exception  set forth in the last  sentence of SECTION
15.4,  the  number  of  shares  for  which  Grants  are  outstanding   shall  be
proportionately  increased  or  decreased  for any  increase  or decrease in the
number of shares of Stock on account of any Corporate Event. Any such adjustment
in outstanding  Options shall not change the aggregate Option Price payable with
respect  to shares  that are  subject  to the  unexercised  portion of an Option
outstanding  but shall include a corresponding  proportionate  adjustment in the
Option Price per share.  The  conversion  of any  convertible  securities of the
Company shall not be treated as an increase in shares  effected  without receipt
of consideration. In the event of any distribution to the Company's stockholders
of securities of any other entity or other assets (other than dividends  payable
in cash or  stock  of the  Company)  without  receipt  of  consideration  by the
Company,  the Company  may, in such  manner as the  Company  deems  appropriate,
adjust (i) the number and kind of shares  subject to  outstanding  Awards and/or
(ii) the exercise price of outstanding Options to reflect such distribution.

     15.2  REORGANIZATION  IN WHICH THE COMPANY IS THE  SURVIVING  ENTITY AND IN
           WHICH NO CHANGE OF CONTROL OCCURS.

     Subject to the exception set forth in the last sentence of SECTION 15.4, if
the Company  shall be the surviving  entity in any  reorganization,  merger,  or
consolidation  of the Company  with one or more other  entities  and in which no
Change of Control occurs,  any Grant theretofore made pursuant to the Plan shall
pertain to and apply  solely to the common stock shares to which a holder of the
number  of  shares of Stock  subject  to such  Grant  would  have been  entitled
immediately following such reorganization,  merger, or consolidation, and in the
case of Options,  with a  corresponding  proportionate  adjustment of the Option
Price per share so that the aggregate  Option Price thereafter shall be the same
as the  aggregate  Option  Price of the shares  remaining  subject to the Option
immediately prior to such reorganization,  merger, or consolidation.  Subject to
any contrary  language in an Award  Agreement  evidencing a Grant of  Restricted
Stock, any restrictions  applicable to such Restricted Stock shall apply as well
to  any  replacement  shares  received  by  the  Grantee  as  a  result  of  the
reorganization, merger or consolidation.

     15.3  REORGANIZATION,  SALE OF ASSETS  OR SALE OF STOCK  WHICH  INVOLVES  A
           CHANGE OF CONTROL.

     Subject to the  exceptions  set forth in the last  sentence of this SECTION
15.3 and the last sentence of Section 15.4,  (i) upon the occurrence of a Change
of Control,  all outstanding  shares of Restricted Stock shall be deemed to have
vested,  and, with the exception of such restrictions  imposed under SECTION 12,
all  restrictions  and conditions  applicable to such shares of Restricted Stock
shall be deemed to have  lapsed,  immediately  prior to the  occurrence  of such
Change of Control,  and (ii) either of the following two actions shall be taken:
(A) fifteen days prior to the scheduled consummation of a Change of Control, all
Options  outstanding  hereunder shall become  immediately  exercisable and shall
remain  exercisable for a period of fifteen days, or (B) the Board may elect, in
its sole  discretion,  to cancel any outstanding  Grants and pay or deliver,  or
cause to be paid or  delivered,  to the  holder  thereof  an  amount  in cash or
securities  having a value (as determined by the Board acting in good faith), in
the case of Restricted Stock, equal to the formula or fixed price per share paid
to holders of shares of Stock and, in the case of Options,  equal to the product
of the number of shares of Stock  subject to the Option  (the  "OPTION  SHARES")
multiplied  by the  amount,  if any, by which (I) the formula or fixed price per
share paid to holders of shares of Stock  pursuant to such  transaction  exceeds
(II) the Option  Price  applicable  to such Option  Shares.  With respect to the
Company's  establishment  of an exercise  window,  (i) any exercise of an Option
during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only  immediately  before the  consummation  of the
event,  and (ii) upon  consummation  of any Change of Control the Plan,  and all
outstanding  but  unexercised  Options  shall  terminate.  The Board  shall send
written  notice  of an event  that  will  result  in such a  termination  to all
individuals  who hold Options not later than the time at which the Company gives
notice  thereof to its  shareholders.  This  SECTION 15.3 shall not apply to any
Change of Control to the extent that  provision is made in writing in connection
with such Change of Control for the  assumption or  continuation  of the Options
and Restricted  Stock  theretofore  granted,  or for the  substitution  for such
Options and  Restricted  Stock for new common stock options and new common stock
restricted  stock  relating to the stock of a successor  entity,  or a parent or
subsidiary  thereof,  with  appropriate  adjustments  as to the number of shares
(disregarding any consideration  that is not common

July 1, 2002
                                       16
<PAGE>

stock) and option  prices,  in which event the Plan and  Options and  Restricted
Stock  theretofore  granted shall  continue in the manner and under the terms so
provided.

     15.4 ADJUSTMENTS.

     Adjustments  under  SECTION 15 related to shares of Stock or  securities of
the Company  shall be made by the Board,  whose  determination  in that  respect
shall be final, binding and conclusive. No fractional shares or other securities
shall be issued  pursuant to any such  adjustment,  and any fractions  resulting
from any such adjustment  shall be eliminated in each case by rounding  downward
to the nearest whole share. The Board may provide in the Award Agreements at the
time of Grant,  or any time  thereafter  with the  consent of the  Grantee,  for
different provisions to apply to a Grant in place of those described in SECTIONS
15.1, 15.2 and 15.3.

     15.5 NO LIMITATIONS ON COMPANY.

     The making of Grants  pursuant to the Plan shall not affect or limit in any
way the right or power of the  Company to make  adjustments,  reclassifications,
reorganizations,  or changes of its capital or business  structure  or to merge,
consolidate,  dissolve, or liquidate,  or to sell or transfer all or any part of
its business or assets.

16.  DURATION AND AMENDMENTS

     16.1 TERM OF THE PLAN.

     The  Effective  Date of this Plan is the date of its adoption by the Board,
subject to the approval of the Plan by the Company's stockholders.  In the event
that the  stockholders  fail to approve the Plan within twelve (12) months after
its adoption by the Board,  any Grants  already made shall be null and void, and
no  additional  Grants shall be made after such date.  The Plan shall  terminate
automatically  ten  (10)  years  after  its  adoption  by the  Board  and may be
terminated on any earlier date as next provided.

     16.2 AMENDMENT AND TERMINATION OF THE PLAN.

     The  Board  may,  at any time and from  time to time,  amend,  suspend,  or
terminate  the Plan as to any shares of Stock as to which  Grants  have not been
made.  An amendment to the Plan shall be contingent on approval of the Company's
stockholders  only to the extent  required by  applicable  law,  regulations  or
rules.  No Grants shall be made after the termination of the Plan. No amendment,
suspension,  or  termination  of the Plan  shall,  without  the  consent  of the
Grantee,  alter or impair  rights  or  obligations  under any Grant  theretofore
awarded under the Plan.

17.  GENERAL PROVISIONS

     17.1 DISCLAIMER OF RIGHTS

     No  provision  in the  Plan or in any  Grant or  Award  Agreement  shall be
construed  to confer  upon any  individual  the right to remain in the employ or
service of the Company or any  Affiliate,  or to  interfere  in any way with any
contractual  or other right or  authority  of the Company  either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any  employment or other  relationship  between any individual and the
Company or any  Affiliate.  The  obligation  of the Company to pay any  benefits
pursuant to this Plan shall be  interpreted  as a contractual  obligation to pay
only those  amounts  described  herein,  in the manner and under the  conditions
prescribed  herein.  The Plan  shall in no way be  interpreted  to  require  the
Company to transfer any amounts to a third party  trustee or otherwise  hold any
amounts in trust or escrow for payment to any  participant or beneficiary  under
the terms of the Plan.

July 1, 2002
                                       17
<PAGE>

     17.2 NONEXCLUSIVITY OF THE PLAN

     Neither  the  adoption  of the Plan nor the  submission  of the Plan to the
shareholders  of the Company for  approval  shall be  construed  as creating any
limitations  upon the  right and  authority  of the  Board to adopt  such  other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or  specifically  to a particular
individual or particular  individuals) as the Board in its discretion determines
desirable,   including,  without  limitation,  the  granting  of  stock  options
otherwise than under the Plan.

     17.3 CAPTIONS

     The  use of  captions  in  this  Plan  or any  Award  Agreement  is for the
convenience  of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.

     17.4 OTHER AWARD AGREEMENT PROVISIONS

     Each  Grant  awarded  under  the Plan may  contain  such  other  terms  and
conditions not inconsistent  with the Plan as may be determined by the Board, in
its sole discretion.

     17.5 NUMBER AND GENDER

     With respect to words used in this Plan,  the singular  form shall  include
the plural form, the masculine gender shall include the feminine  gender,  etc.,
as the context requires.

     17.6 SEVERABILITY

     If any provision of the Plan or any Award  Agreement shall be determined to
be  illegal  or  unenforceable  by any  court  of law in any  jurisdiction,  the
remaining  provisions  hereof and thereof shall be severable and  enforceable in
accordance with their terms, and all provisions shall remain  enforceable in any
other jurisdiction.

     17.7 POOLING

     In the event any provision of the Plan or an Award  Agreement would prevent
the use of pooling of interests accounting in a corporate  transaction involving
the Company or its Affiliates and such transaction is contingent upon pooling of
interests accounting,  then that provision shall be deemed amended or revoked to
the extent  required  to preserve  such  pooling of  interests.  The Company may
require in an Award Agreement that a Grantee who receives a Grant under the Plan
shall,  upon  advice  from  the  Company,  take  (or  refrain  from  taking,  as
appropriate)  all actions  necessary  or  desirable  to ensure  that  pooling of
interests accounting is available.

     17.8 GOVERNING LAW

     The validity and  construction of this Plan and the instruments  evidencing
the  Grants  awarded  hereunder  shall be  governed  by the laws of the State of
Delaware  other than any conflicts or choice of law rule or principle that might
otherwise refer  construction or interpretation of this Plan and the instruments
evidencing the Grants  awarded  hereunder to the  substantive  laws of any other
jurisdiction.

July 1, 2002
                                       18
<PAGE>

18.  EXECUTION

     To record  adoption of the Plan by the Board as of December 28,  2001,  and
approval of the Plan by the stockholders on July 1, 2002, the Company has caused
its authorized officer to execute the Plan.

                               CDEX, INC.

                                    By:
                                        ----------------------------------------
                                    Name:    Malcolm H. Philips
                                    Title:   President, CEO and Chairman

July 1, 2002

                                       19Exhibit 4.3

                                                                 CDEX INC.

                                              THE TECHNOLOGY DEVELOPMENT COMPANY

                             CDEX INC.

                             2003 STOCK OPTION PLAN

--------------------------------------------------------------------------------
                                        1
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                             Page
<S>    <C>                                                                                    <C>
1.     PURPOSE.................................................................................4
2.     DEFINITIONS.............................................................................4
3.     ADMINISTRATION OF THE PLAN..............................................................6
       3.1       Board.........................................................................6
       3.2       Committee.....................................................................6
       3.3       Grants........................................................................7
       3.4       DEFERRAL Arrangement..........................................................8
       3.5       NO Liability..................................................................8
4.     STOCK SUBJECT TO THE PLAN...............................................................8
5.     GRANT ELIGIBILITY.......................................................................8
       5.1       EMPLOYEES AND OTHER SERVICE Providers.........................................8
       5.2       SUCCESSIVE Grants.............................................................8
       5.3       LIMITATIONS ON INCENTIVE STOCK Options........................................8
6.     AWARD AGREEMENT.........................................................................9
7.     TERMS AND CONDITIONS OF options.........................................................9
       7.1       OPTION Price..................................................................9
       7.2       Vesting.......................................................................9
       7.3       Term..........................................................................9
       7.4       EXERCISE OF OPTIONS ON TERMINATION OF Service.................................9
       7.5       LIMITATIONS ON EXERCISE OF Option.............................................10
       7.6       EXERCISE Procedure............................................................10
       7.7       RIGHT OF HOLDERS OF Options...................................................10
       7.8       DELIVERY OF STOCK Certificates................................................10
8.     TRANSFERABILITY OF OPTIONs..............................................................10
       8.1       TRANSFERABILITY OF Options....................................................10
       8.2       FAMILY Transfers..............................................................10
9.     RESTRICTED STOCK........................................................................11
       9.1       GRANT OF RESTRICTED Stock.....................................................11
       9.2       Restrictions..................................................................11
       9.3       RESTRICTED STOCK Certificates.................................................11
       9.4       RIGHTS OF HOLDERS OF RESTRICTED Stock.........................................11
       9.5       TERMINATION OF Service........................................................12
       9.6       PURCHASE AND DELIVERY OF Stock................................................12
10.    FORM OF PAYMENT.........................................................................12
       10.1      GENERAL Rule..................................................................12
       10.2      SURRENDER OF Stock............................................................12
       10.3      CASHLESS Exercise.............................................................12
       10.4      PROMISSORY Note...............................................................13
11.    WITHHOLDING TAXES.......................................................................13
12.    RESTRICTIONS ON TRANSFER OF SHARES OF STOCK.............................................13
       12.1      RIGHT OF FIRST Refusal........................................................13
       12.2      REPURCHASE AND OTHER Rights...................................................13
       12.3      PAYMENTS FOR Repurchase.......................................................14
       12.4      PUBLICLY TRADED Stock.........................................................14
</TABLE>

July 1, 2003
                                       2
<PAGE>

<TABLE>
<S>    <C>                                                                                    <C>
       12.5      Legend........................................................................14
13.    PARACHUTE LIMITATIONS...................................................................14
14.    REQUIREMENTS OF LAW.....................................................................15
       14.1      General.......................................................................15
       14.2      RULE 16b-3....................................................................15
       14.3      FINANCIAL Reports.............................................................15
15.    EFFECT OF CHANGES IN CAPITALIZATION.....................................................15
       15.1      CHANGES IN Stock..............................................................15
       15.2      REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY AND
                 IN WHICH NO CHANGE OF CONTROL OCCURS..........................................16
       15.3      REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES
                 A CHANGE OF Control...........................................................16
       15.4      Adjustments...................................................................17
       15.5      NO LIMITATIONS ON Company.....................................................17
16.    DURATION AND amendments.................................................................17
       16.1      TERM OF THE Plan..............................................................17
       16.2      AMENDMENT AND TERMINATION OF THE Plan.........................................17
17.    GENERAL provisions......................................................................17
       17.1      DISCLAIMER OF Rights..........................................................17
       17.2      NONEXCLUSIVITY OF THE Plan....................................................18
       17.3      Captions......................................................................18
       17.4      OTHER AWARD AGREEMENT Provisions..............................................18
       17.5      NUMBER AND Gender.............................................................18
       17.6      Severability..................................................................18
       17.7      Pooling.......................................................................18
       17.8      GOVERNING Law.................................................................18
18.    EXECUTION...............................................................................19
</TABLE>

July 1, 2003
                                       3
<PAGE>

                                   CDEX, INC.
                            2003 STOCK INCENTIVE PLAN

     CDEX, Inc., a Nevada  corporation  (the  "COMPANY"),  sets forth herein the
terms of its 2003 Stock Incentive Plan (the "Plan") as follows:

1.   PURPOSE

     The Plan is intended  to enhance  the  Company's  and its  Affiliates'  (as
defined  herein)  ability  to  attract  and retain  highly  qualified  officers,
directors,  key  employees,  and other  persons,  and to motivate such officers,
directors,  key  employees,  and  other  persons  to serve the  Company  and its
Affiliates  and to expend  maximum  effort to improve the  business  results and
earnings of the Company, by providing to such officers, directors, key employees
and other  persons an  opportunity  to acquire or increase a direct  proprietary
interest in the operations  and future success of the Company.  To this end, the
Plan provides for the grant of stock options and restricted  stock in accordance
with the terms hereof.  Stock options granted under the Plan may be nonqualified
stock options or incentive stock options, as provided herein.

2.   DEFINITIONS

     For  purposes of  interpreting  the Plan and related  documents  (including
Award Agreements), the following definitions shall apply:

     2.1 "AFFILIATE"  means,  with respect to the Company,  any company or other
trade or business that  controls,  is  controlled by or is under common  control
with the  Company  within  the  meaning  of Rule 405 of  Regulation  C under the
Securities Act, including, without limitation, any Subsidiary.

     2.2 "AWARD  AGREEMENT" means the stock option  agreement,  restricted stock
agreement  or other  written  agreement  between the Company and a Grantee  that
evidences and sets out the terms and conditions of a Grant.

     2.3  "BENEFIT  ARRANGEMENT"  shall have the meaning set forth in SECTION 13
hereof.

     2.4 "BOARD" means the Board of Directors of the Company.

     2.5 "CAUSE" means, as determined by the Board and unless otherwise provided
in an applicable  employment  agreement  with the Company or an  Affiliate,  (i)
gross  negligence or willful  misconduct in connection  with the  performance of
duties;  (ii)  conviction  of a  criminal  offense  (other  than  minor  traffic
offenses); or (iii) material breach of any term of any employment, consulting or
other  services,  confidentiality,   intellectual  property  or  non-competition
agreements,  if  any,  between  the  Service  Provider  and  the  Company  or an
Affiliate.

     2.6 "CHANGE OF CONTROL"  means (i) the  dissolution  or  liquidation of the
Company or a merger, consolidation, or reorganization of the Company with one or
more other  entities in which the Company is not the  surviving  entity,  (ii) a
sale of  substantially  all of the assets of the  Company  to another  person or
entity,  or (iii) any  transaction  (including  without  limitation  a merger or
reorganization  in which the Company is the  surviving  entity) which results in
any person or entity  (other than  persons who are  shareholders  or  Affiliates
immediately  prior to the  transaction)  owning  [50%]  or more of the  combined
voting power of all classes of stock of the Company.

     2.7 "CODE" means the Internal  Revenue Code of 1986, as now in effect or as
hereafter amended.

     2.8  "COMMITTEE"  means a committee of, and designated from time to time by
resolution  of the Board,  which  shall  consist  of one or more  members of the
Board.

     2.9 "COMPANY" means CDEX, Inc.

July 1, 2003
                                       4
<PAGE>

     2.10  "DISABILITY"  means the  Grantee  is unable  to  perform  each of the
essential   duties  of  such  Grantee's   position  by  reason  of  a  medically
determinable  physical or mental  impairment  which is potentially  permanent in
character or which can be expected to last for a  continuous  period of not less
than 12  months;  PROVIDED,  HOWEVER,  that,  with  respect  to rules  regarding
expiration of an Incentive Stock Option  following  termination of the Grantee's
Service,  Disability  shall  mean  the  Grantee  is  unable  to  engage  in  any
substantial gainful activity by reason of a medically  determinable  physical or
mental  impairment  which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.

     2.11  "EFFECTIVE  DATE"  means  December  28,  2001,  the  date the Plan is
approved by the Board.

     2.12 "EXCHANGE  ACT" means the  Securities  Exchange Act of 1934, as now in
effect or as hereafter amended.

     2.13 "FAIR MARKET VALUE" means the value of a share of Stock, determined as
follows: if on the Grant Date or other determination date the Stock is listed on
an established national or regional stock exchange,  is admitted to quotation on
The  Nasdaq  Stock  Market,  Inc.,  or is  publicly  traded  on  an  established
securities  market,  the Fair  Market  Value  of a share  of Stock  shall be the
closing  price of the Stock on such exchange or in such market (if there is more
than one such  exchange  or market the Board  shall  determine  the  appropriate
exchange  or market) on the Grant Date or such other  determination  date (or if
there is no such reported closing price, the Fair Market Value shall be the mean
between the highest bid and lowest asked prices or between the high and low sale
prices on such trading day) or, if no sale of Stock is reported for such trading
day, on the next  preceding day on which any sale shall have been  reported.  If
the Stock is not listed on such an exchange,  quoted on such system or traded on
such a market,  Fair Market Value shall be the value of the Stock as  determined
by the Board in good faith.

     2.14 "FAMILY MEMBER" means a person who is a spouse,  former spouse, child,
stepchild,   grandchild,   parent,  stepparent,   grandparent,   niece,  nephew,
mother-in-law,  father-in-law,  son-in-law,  daughter-in-law,  brother,  sister,
brother-in-law,  or  sister-in-law,  including  adoptive  relationships,  of the
Grantee,  any person  sharing the  Grantee's  household  (other than a tenant or
employee),  a trust in which any one or more these  persons have more than fifty
percent of the  beneficial  interest,  a foundation  in which any one or more of
these persons (or the Grantee)  control the management of assets,  and any other
entity in which one or more these  persons (or the  Grantee) own more than fifty
percent of the voting interests;  provided, however, that to the extent required
by applicable  law, the term Family Member shall be limited to a person who is a
spouse,  former  spouse,  child,  stepchild,   grandchild,  parent,  stepparent,
grandparent, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother,
sister, brother-in-law,  or sister-in-law,  including adoptive relationships, of
the Grantee or a trust or  foundation  for the  exclusive  benefit of any one or
more of these persons.

     2.15  "GRANT"  means an award of an Option or  Restricted  Stock  under the
Plan.

     2.16 "GRANT DATE" means, as determined by the Board, the latest to occur of
(i) the date as of which the Board approves a Grant,  (ii) the date on which the
recipient of a Grant first  becomes  eligible to receive a Grant under SECTION 5
hereof, or (iii) such other date as may be specified by the Board.

     2.17 "GRANTEE" means a person who receives or holds an Option or Restricted
Stock under the Plan.

     2.18 "INCENTIVE  STOCK OPTION" means an "incentive stock option" within the
meaning  of  Section  422 of the Code,  or the  corresponding  provision  of any
subsequently enacted tax statute, as amended from time to time.

     2.19  "NONQUALIFIED  STOCK  OPTION"  means  a stock  option  that is not an
Incentive Stock Option.

     2.20  "OPTION"  means an option  to  purchase  one or more  shares of Stock
pursuant to the Plan.

     2.21  "OPTION  PRICE"  means the  purchase  price  for each  share of Stock
subject to an Option.

     2.22  "OTHER  AGREEMENT"  shall  have the  meaning  set forth in SECTION 13
hereof.

July 1, 2003
                                       5
<PAGE>

     2.23 "PLAN" means this CDEX, Inc. 2003 Stock Incentive Plan.

     2.24  "PURCHASE  PRICE"  means the  purchase  price for each share of Stock
pursuant to a Grant of Restricted Stock.

     2.25  "REPORTING  PERSON"  means a person who is required  to file  reports
under Section 16(a) of the Exchange Act.

     2.26  "RESTRICTED  STOCK"  means  shares  of  Stock,  awarded  to a Grantee
pursuant to SECTION 9 hereof,  that are subject to restrictions and to a risk of
forfeiture.

     2.27 "SECURITIES ACT" means the Securities Act of 1933, as now in effect or
as hereafter amended.

     2.28  "SERVICE"  means service as an employee,  officer,  director or other
Service Provider of the Company or an Affiliate.  Unless otherwise stated in the
applicable Award  Agreement,  a Grantee's change in position or duties shall not
result in interrupted or terminated  Service,  so long as such Grantee continues
to be an employee, officer, director or other Service Provider of the Company or
an  Affiliate.  Subject to the  preceding  sentence,  whether a  termination  of
Service  shall have occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final, binding and conclusive.

     2.29  "SERVICE  PROVIDER"  means an  employee,  officer or  director of the
Company or an Affiliate, or a consultant or adviser currently providing services
to the Company or an Affiliate.

     2.30 "STOCK"  means the common  stock,  $0.001 par value per share,  of the
Company.

     2.31 "SUBSIDIARY" means any "subsidiary  corporation" of the Company within
the meaning of Section 424(f) of the Code.

     2.32 "TEN-PERCENT  STOCKHOLDER"  means an individual who owns more than ten
percent (10%) of the total  combined  voting power of all classes of outstanding
stock of the  Company,  its parent or any of its  Subsidiaries.  In  determining
stock  ownership,  the attribution  rules of Section 424(d) of the Code shall be
applied.

3.   ADMINISTRATION OF THE PLAN

     3.1 BOARD.

     The  Board  shall  have  such  powers  and   authorities   related  to  the
administration  of the Plan as are consistent with the Company's  certificate of
incorporation  and by-laws and  applicable  law. The Board shall have full power
and  authority  to take all actions and to make all  determinations  required or
provided for under the Plan,  any Grant or any Award  Agreement,  and shall have
full power and  authority to take all such other actions and make all such other
determinations  not  inconsistent  with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate  to the  administration
of  the  Plan,  any  Grant  or  any  Award  Agreement.   All  such  actions  and
determinations  shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous  consent of the Board executed in
writing in  accordance  with the  Company's  certificate  of  incorporation  and
by-laws and applicable law. The  interpretation and construction by the Board of
any  provision  of the Plan,  any Grant or any Award  Agreement  shall be final,
binding and conclusive.  To the extent  permitted by law, the Board may delegate
its authority under the Plan to a member of the Board or an executive officer of
the Company who is a member of the Board.

     3.2 COMMITTEE.

     The Board from time to time may  delegate  to one or more  Committees  such
powers and authorities  related to the  administration and implementation of the
Plan, as set forth in SECTION 3.1 above and in other applicable

July 1, 2003
                                       6
<PAGE>

provisions,  as the Board shall  determine,  consistent  with the certificate of
incorporation  and by-laws of the Company and applicable  law. In the event that
the Plan, any Grant or any Award Agreement  entered into hereunder  provides for
any action to be taken by or determination to be made by the Board,  such action
may be taken by or such determination may be made by the applicable Committee if
the power and  authority  to do so has been  delegated  to the  Committee by the
Board as provided for in SECTION 3.1. Unless otherwise  expressly  determined by
the Board,  any such action or  determination  by the Committee  shall be final,
binding and  conclusive.  To the extent  permitted  by law,  the  Committee  may
delegate its  authority  under the Plan to a member of the Board or an executive
officer of the Company who is a member of the Board.

     3.3 GRANTS.

     Subject to the other terms and conditions of the Plan, the Board shall have
full and final authority to:

     (i)  designate Grantees,

     (ii) determine the type or types of Grants to be made to a Grantee,

     (iii) determine the number of shares of Stock to be subject to a Grant,

     (iv) establish the terms and conditions of each Grant  (including,  but not
          limited to, the Option Price of any Option, the nature and duration of
          any restriction or condition (or provision for lapse thereof) relating
          to the vesting,  exercise,  transfer,  or forfeiture of a Grant or the
          shares of Stock subject thereto,  and any terms or conditions that may
          be necessary to qualify Options as Incentive Stock Options),

     (v)  prescribe the form of each Award Agreement evidencing a Grant, and

     (vi) amend, modify, or supplement the terms of any outstanding Grant.

     Such authority specifically includes the authority,  in order to effectuate
the  purposes of the Plan but without  amending  the Plan,  to modify  Grants to
eligible  individuals  who are  foreign  nationals  or are  individuals  who are
employed  outside the United States to recognize  differences  in local law, tax
policy,  or custom. As a condition to any Grant, the Board shall have the right,
at  its  discretion,  to  require  Grantees  to  return  to the  Company  Grants
previously  awarded under the Plan.  Subject to the terms and  conditions of the
Plan, any such  subsequent  Grant shall be upon such terms and conditions as are
specified  by the Board at the time the new Grant is made.  The Board shall have
the right, in its discretion, to make Grants in substitution or exchange for any
other grant under another plan of the Company,  any  Affiliate,  or any business
entity to be acquired by the Company or an Affiliate. The Company may retain the
right in an Award  Agreement  to cause a  forfeiture  of the gain  realized by a
Grantee on account of actions  taken by the Grantee in violation or breach of or
in  conflict  with any  non-competition  agreement,  any  agreement  prohibiting
solicitation of employees or clients of the Company or any Affiliate  thereof or
any  confidentiality  obligation  with  respect to the Company or any  Affiliate
thereof or otherwise in competition  with the Company or any Affiliate  thereof,
to the extent  specified  in such Award  Agreement  applicable  to the  Grantee.
Furthermore,  the Company may annul a Grant if the Grantee is an employee of the
Company or an Affiliate  thereof and is  terminated  for Cause as defined in the
applicable Award Agreement or the Plan, as applicable.

July 1, 2003
                                       7
<PAGE>

     3.4 DEFERRAL ARRANGEMENT.

     The Board may permit or require the  deferral of any award  payment  into a
deferred  compensation  arrangement,  subject to such rules and procedures as it
may  establish,  which may include  provisions  for the payment or  crediting of
interest  or  dividend  equivalents,  including  converting  such  credits  into
deferred Stock  equivalents  and  restricting  deferrals to comply with hardship
distribution rules affecting 401(k) plans.

     3.5 NO LIABILITY.

     No member of the Board or of the  Committee  shall be liable for any action
or  determination  made in good faith  with  respect to the Plan or any Grant or
Award Agreement.

4.   STOCK SUBJECT TO THE PLAN

     Subject to adjustment  as provided in SECTION 15 hereof and the  limitation
of the next  paragraph  relating to  Restricted  Stock,  the number of shares of
Stock  available for issuance under the Plan shall be a total of 5,000,000 (Five
Million).  Stock issued or to be issued under the Plan shall be  authorized  but
unissued  shares or, to the extent  permitted by applicable  law,  issued shares
that have been  reacquired by the Company.  If any shares covered by a Grant are
not  purchased or are  forfeited,  or if a Grant  otherwise  terminates  without
delivery  of any  Stock  subject  thereto,  then the  number  of shares of Stock
counted  against the aggregate  number of shares  available  under the Plan with
respect  to  such  Grant  shall,  to  the  extent  of  any  such  forfeiture  or
termination,  again be  available  for  making  Grants  under the  Plan.  If the
exercise  price of any Option  granted  under the Plan is satisfied by tendering
shares of Stock to the Company (by either  actual  delivery or by  attestation),
only the number of shares of Stock  issued  net of the shares of Stock  tendered
shall be deemed  delivered  for purposes of  determining  the maximum  number of
shares of Stock available for delivery under the Plan.

5.   GRANT ELIGIBILITY

     5.1 EMPLOYEES AND OTHER SERVICE PROVIDERS.

     Grants  (including  Grants of Incentive  Stock Options,  subject to SECTION
5.3) may be made  under the Plan to any  employee,  officer or  director  of, or
other Service Provider  providing  services to the Company or any Affiliate.  To
the extent required by applicable state law, Grants within certain states may be
limited to employees and officers or employees, officers and directors.

     5.2 SUCCESSIVE GRANTS.

     An  eligible  person  may  receive  more than one  Grant,  subject  to such
restrictions as are provided herein.

     5.3 LIMITATIONS ON INCENTIVE STOCK OPTIONS.

     An Option  shall  constitute  an  Incentive  Stock  Option  only (i) if the
Grantee of such Option is an employee  of the Company or any  Subsidiary  of the
Company;  (ii)  to  the  extent  specifically  provided  in  the  related  Award
Agreement;  and  (iii)  to the  extent  that the  aggregate  Fair  Market  Value
(determined  at the time the  Option is  granted)  of the  shares of Stock  with
respect  to which  all  Incentive  Stock  Options  held by such  Grantee  become
exercisable  for the first time during any calendar year (under the Plan and all
other  plans of the  Grantee's  employer  and its  affiliates)  does not  exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

July 1, 2003
                                       8
<PAGE>

6.   AWARD AGREEMENT

     Each Grant  pursuant to the Plan shall be evidenced by an Award  Agreement,
in such form or forms as the Board  shall  from  time to time  determine,  which
specifies the number of shares  subject to the Grant and provides for adjustment
in accordance with SECTION 15. Award Agreements  granted from time to time or at
the same time need not contain  similar  provisions but shall be consistent with
the terms of the Plan. Each Award Agreement  evidencing a Grant of Options shall
specify  whether such Options are intended to be  Nonqualified  Stock Options or
Incentive Stock Options,  and in the absence of such  specification such options
shall be deemed Nonqualified Stock Options.

7.   TERMS AND CONDITIONS OF OPTIONS

     7.1 OPTION PRICE.

     The Option  Price of each Option  shall be fixed by the Board and stated in
the Award Agreement  evidencing  such Option.  In the case of an Incentive Stock
Option  the Option  Price  shall not be less than the Fair  Market  Value on the
Grant  Date of a share of Stock;  provided,  however,  that in the event  that a
Grantee is a  Ten-Percent  Stockholder,  the Option Price of an Incentive  Stock
Option  granted to such  Grantee  shall be not less than 110 percent of the Fair
Market  Value  of a  share  of  Stock  on  the  Grant  Date.  In the  case  of a
Nonqualified Stock Option, the Option Price shall be not less than 85 percent of
the Fair Market Value on the Grant Date of a share of Stock; PROVIDED,  HOWEVER,
that in the event that a Grantee is a Ten-Percent Stockholder,  the Option Price
shall be not less than 110 percent of the Fair Market  Value of a share of Stock
on the Grant Date.  In no case shall the Option Price of any Option be less than
the par value of a share of Stock.

     7.2 VESTING.

     Subject to SECTIONS 7.3 and 15.3 hereof, each Option granted under the Plan
shall become  exercisable  at such times and under such  conditions  as shall be
determined by the Board and stated in the Award Agreement.  For purposes of this
SECTION 7.2, fractional numbers of shares of Stock subject to an Option shall be
rounded  down to the next  nearest  whole  number.  To the  extent  required  by
applicable  law, each Option shall become  exercisable  no less rapidly than the
rate of twenty  percent (20%) per year for each of the first five (5) years from
the Grant Date based on continued  Service.  Subject to the preceding  sentence,
the Board may provide,  for example,  in the Award Agreement for (i) accelerated
exercisability  of the Option in the event the Grantee's  Service  terminates on
account of death,  Disability or another  event,  (ii)  expiration of the Option
prior to its term in the  event of the  termination  of the  Grantee's  Service,
(iii) immediate  forfeiture of the Option in the event the Grantee's  Service is
terminated  for Cause or (iv)  unvested  Options to be exercised  subject to the
Company's right of repurchase with respect to unvested shares of Stock.

     7.3 TERM.

     Each  Option  granted  under the Plan  shall  terminate,  and all rights to
purchase  shares of Stock  thereunder  shall cease,  upon the  expiration of ten
years from the Grant Date,  or under such  circumstances  and on such date prior
thereto  as is set forth in the Plan or as may be fixed by the Board and  stated
in the Award Agreement relating to such Option;  provided,  however, that in the
event that the Grantee is a Ten-Percent  Stockholder,  an Option granted to such
Grantee  that  is  intended  to  be an  Incentive  Stock  Option  shall  not  be
exercisable after the expiration of five years from its Grant Date.

     7.4 EXERCISE OF OPTIONS ON TERMINATION OF SERVICE.

     Each Award  Agreement shall set forth the extent to which the Grantee shall
have the right to exercise the Option  following  termination  of the  Grantee's
Service.  Such  provisions  shall be  determined  in the sole  discretion of the
Board,  need not be uniform among all Options  issued  pursuant to the Plan, and
may  reflect  distinctions  based on the  reasons  for  termination  of Service.
Notwithstanding  the foregoing  each Option shall provide that the Grantee

July 1, 2003
                                       9
<PAGE>

shall  have the right to  exercise  the vested  portion  of any  Option  held at
termination  for at least sixty (60) days following  termination of Service with
the Company for any reason  (other than for Cause),  and that the Grantee  shall
have the right to  exercise  the Option for at least  twelve  (12) months if the
Grantee's Service terminates due to death or Disability.

     7.5 LIMITATIONS ON EXERCISE OF OPTION.

     Notwithstanding any other provision of the Plan, in no event may any Option
be exercised, in whole or in part, prior to the date the Plan is approved by the
shareholders  of the Company,  or after ten years  following  the Grant Date, or
after the  occurrence of an event referred to in SECTION 15 hereof which results
in termination of the Option.

     7.6 EXERCISE PROCEDURE.

     An Option that is exercisable may be exercised by the Grantee's delivery to
the Company of written  notice of exercise on any business day, at the Company's
principal  office.  Such notice shall specify the number of shares of Stock with
respect  to which the  Option is being  exercised  and shall be  accompanied  by
payment in full of the Option  Price of the shares for which the Option is being
exercised. The minimum number of shares of Stock with respect to which an Option
may be  exercised,  in whole or in part,  at any time shall be the lesser of (i)
100 shares or such lesser number set forth in the applicable Award Agreement and
(ii) the maximum number of shares available for purchase under the Option at the
time of  exercise.  The Option  Price  shall be payable in a form  described  in
SECTION 10.

     7.7 RIGHT OF HOLDERS OF OPTIONS.

     Unless otherwise  stated in the applicable  Award Agreement,  an individual
holding or  exercising  an Option shall have none of the rights of a shareholder
(for  example,   the  right  to  cash  or  dividend  payments  or  distributions
attributable to the subject shares of Stock or to direct the voting of shares of
Stock)  until the shares of Stock  covered  thereby are fully paid and issued to
such individual.

     7.8 DELIVERY OF STOCK CERTIFICATES.

     Promptly  after the  exercise  of an Option by a Grantee and the payment in
full of the Option  Price,  such Grantee  shall be entitled to the issuance of a
stock  certificate or certificates  evidencing  such Grantee's  ownership of the
shares of Stock purchased upon such exercise of the Option.

8.   TRANSFERABILITY OF OPTIONS

     8.1 TRANSFERABILITY OF OPTIONS.

     Except as provided in SECTION 8.2,  during the lifetime of a Grantee,  only
the Grantee (or, in the event of legal incapacity or incompetency, the Grantee's
guardian or legal  representative) may exercise an Option. Except as provided in
SECTION 8.2, no Option shall be  assignable  or  transferable  by the Grantee to
whom it is granted, other than by will or the laws of descent and distribution.

     8.2 FAMILY TRANSFERS.

     If authorized in the applicable  Award  Agreement,  a Grantee may transfer,
not for value, all or part of an Option that is not an Incentive Stock Option to
any  Family  Member.  For the  purpose  of this  SECTION  8.2, a "not for value"
transfer  is a transfer  which is (i) a gift,  (ii) a transfer  under a domestic
relations  order in  settlement  of marital  property  rights;  or (iii)  unless
applicable law does not permit such transfers,  a transfer to an entity in which
more than fifty percent of the voting  interests are owned by Family Members (or
the Grantee) in exchange  for an interest

July 1, 2003
                                       10
<PAGE>

in that  entity.  Following a transfer  under this  SECTION 8.2, any such Option
shall continue to be subject to the same terms and conditions as were applicable
immediately  prior to  transfer,  and shares of Stock  acquired  pursuant to the
Option shall be subject to the same  restrictions on transfer of shares as would
have applied to the Grantee.  Subsequent  transfers of  transferred  Options are
prohibited  except to Family Members of the original  Grantee in accordance with
this SECTION 8.2 or by will or the laws of descent and distribution.  The events
of  termination  of Service  under an Option  shall  continue to be applied with
respect to the original Grantee, following which the Option shall be exercisable
by the  transferee  only to the  extent,  and for the periods  specified  in the
applicable Award  Agreement,  and the shares may be subject to repurchase by the
Company or its assignee.

9.   RESTRICTED STOCK

     9.1 GRANT OF RESTRICTED STOCK.

     The Board may from time to time grant  Restricted Stock to persons eligible
to  receive  Grants  under  SECTION  5  hereof,  subject  to such  restrictions,
conditions and other terms as the Board may determine.

     9.2 RESTRICTIONS.

     At the time a Grant of Restricted  Stock is made, the Board shall establish
a  restriction  period  applicable  to such  Restricted  Stock.  Each  Grant  of
Restricted  Stock may be subject to a different  restriction  period.  The Board
may, in its sole  discretion,  at the time a Grant of Restricted  Stock is made,
prescribe  conditions  that must be  satisfied  prior to the  expiration  of the
restriction  period,  including  the  satisfaction  of corporate  or  individual
performance objectives or continued Service, in order that all or any portion of
the Restricted  Stock shall vest.  Notwithstanding  the previous  sentence,  the
vesting  restrictions  applicable  to a Grant of  Restricted  Stock to a Service
Provider  who is not an officer,  director or  consultant  to the Company  shall
lapse no less rapidly than the rate of twenty percent (20%) per year for each of
the first five (5) years from the Grant Date, based on continued Service.

     The Board  also may,  in its sole  discretion,  shorten  or  terminate  the
restriction period or waive any of the conditions applicable to all or a portion
of the  Restricted  Stock.  The Restricted  Stock may not be sold,  transferred,
assigned,  pledged or otherwise encumbered or disposed of during the restriction
period or prior to the  satisfaction of any other  conditions  prescribed by the
Board with respect to such Restricted Stock.

     9.3 RESTRICTED STOCK CERTIFICATES.

     The Company  shall issue,  in the name of each  Grantee to whom  Restricted
Stock has been  granted,  stock  certificates  representing  the total number of
shares  of  Restricted  Stock  granted  to the  Grantee,  as soon as  reasonably
practicable  after the Grant Date.  The Board may provide in an Award  Agreement
that either (i) the  Secretary of the Company shall hold such  certificates  for
the Grantee's  benefit until such time as the  Restricted  Stock is forfeited to
the Company,  or the  restrictions  lapse,  or (ii) such  certificates  shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend  or  legends  that  complies  with  the  applicable  securities  laws and
regulations and makes  appropriate  reference to the restrictions  imposed under
the Plan and the Award Agreement.

     9.4 RIGHTS OF HOLDERS OF RESTRICTED STOCK.

     Unless  the Board  otherwise  provides  in an Award  Agreement,  holders of
Restricted  Stock  shall  have the  right to vote  such  Stock  and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock,  which may or may not be subject to the same  vesting  conditions  and
restrictions  applicable to such Restricted  Stock. All  distributions,  if any,
received by a Grantee with respect to Restricted  Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Grant.

July 1, 2003
                                       11
<PAGE>

     9.5 TERMINATION OF SERVICE.

     Unless  otherwise  provided by the Board in the applicable Award Agreement,
upon the  termination  of a Grantee's  Service with the Company or an Affiliate,
any shares of  Restricted  Stock held by such Grantee  that have not vested,  or
with  respect  to which all  applicable  restrictions  and  conditions  have not
lapsed,  shall  immediately be deemed  forfeited.  Upon forfeiture of Restricted
Stock,  the Grantee  shall have no further  rights  with  respect to such Grant,
including but not limited to any right to vote Restricted  Stock or any right to
receive dividends with respect to shares of Restricted Stock.

     9.6 PURCHASE AND DELIVERY OF STOCK.

     The Grantee  shall be required to purchase  the  Restricted  Stock from the
Company at a Purchase  Price equal to the greater of (i) the aggregate par value
of the shares of Stock represented by such Restricted Stock or (ii) the Purchase
Price,  if any,  specified in the Award  Agreement  relating to such  Restricted
Stock. The Purchase Price shall be payable in a form described in SECTION 10 or,
in the discretion of the Board, in consideration  for past Services  rendered to
the Company or an  Affiliate.  To the extent  required by  applicable  law,  the
Purchase Price of a share of Restricted  Stock shall be not less than 85 percent
of the Fair  Market  Value on the  Grant  Date of a share  of  Stock;  provided,
however,  that in the event that the Grantee is a Ten-Percent  Stockholder,  the
Purchase  Price shall be not less than 100  percent of the Fair Market  Value on
the Grant Date of a share of Stock.

     Upon the  expiration  or  termination  of the  restriction  period  and the
satisfaction of any other  conditions  prescribed by the Board,  having properly
paid the Purchase  Price,  the  restrictions  applicable to shares of Restricted
Stock shall lapse,  and, unless  otherwise  provided in the Award  Agreement,  a
stock  certificate  for  such  shares  shall  be  delivered,  free  of all  such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case
may be.

10.  FORM OF PAYMENT

     10.1 GENERAL RULE.

     Payment  of the  Option  Price for the  shares  purchased  pursuant  to the
exercise of an Option or the Purchase Price for  Restricted  Stock shall be made
in cash or in cash equivalents acceptable to the Company.

     10.2 SURRENDER OF STOCK.

     To the extent the Award Agreement so provides,  payment of the Option Price
for shares purchased pursuant to the exercise of an Option or the Purchase Price
for  Restricted  Stock  may be made all or in part  through  the  tender  to the
Company of shares of Stock,  which shares,  if acquired from the Company,  shall
have been held for at least six months at the time of tender and which  shall be
valued,  for  purposes of  determining  the extent to which the Option  Price or
Purchase Price has been paid thereby,  at their Fair Market Value on the date of
exercise.

     10.3 CASHLESS EXERCISE.

     With respect to an Option only (and not with respect to Restricted  Stock),
to the  extent  the Award  Agreement  so  provides  and the shares of Stock have
become  publicly  traded,  payment  of the  Option  Price for  shares  purchased
pursuant to the exercise of an Option may be made all or in part by delivery (on
a form  acceptable  to the  Board) of an  irrevocable  direction  to a  licensed
securities  broker  acceptable  to the  Company  to sell  shares of Stock and to
deliver  all or part of the sales  proceeds  to the  Company  in  payment of the
Option Price and any withholding taxes described in SECTION 11.

July 1, 2003
                                       12
<PAGE>

     10.4 PROMISSORY NOTE.

     To the extent the Award Agreement so provides,  payment of the Option Price
for shares purchased pursuant to the exercise of an Option or the Purchase Price
for Restricted Stock may be made all or in part with a full recourse  promissory
note executed by the Grantee.  The interest rate and other terms and  conditions
of such note shall be  determined  by the Board.  The Board may require that the
Grantee  pledge  the Stock  subject  to the Grant for the  purpose  of  securing
payment of the note.  In no event shall stock  certificate(s)  representing  the
Stock be released to the Grantee until such note is paid in full.

11.  WITHHOLDING TAXES

     The Company or any  Affiliate,  as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any Federal,  state,
or local taxes of any kind  required by law to be withheld  with  respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or upon
the issuance of any shares of Stock upon the exercise of an Option.  At the time
of such  vesting,  lapse,  or exercise,  the Grantee shall pay to the Company or
Affiliate,  as the case may be, any amount  that the  Company or  Affiliate  may
reasonably  determine to be necessary  to satisfy such  withholding  obligation.
Subject to the prior  approval  of the  Company or the  Affiliate,  which may be
withheld  by the  Company  or the  Affiliate,  as the case  may be,  in its sole
discretion,  the Grantee may elect to satisfy such  obligations,  in whole or in
part,  (i) by causing the Company or the  Affiliate to withhold  shares of Stock
otherwise  issuable to the Grantee or (ii) by  delivering  to the Company or the
Affiliate  shares of Stock already owned by the Grantee.  The shares of Stock so
delivered or withheld  shall have an  aggregate  Fair Market Value equal to such
withholding  obligations.  The Fair Market  Value of the shares of Stock used to
satisfy such  withholding  obligation  shall be determined by the Company or the
Affiliate  as of the  date  that  the  amount  of tax  to be  withheld  is to be
determined.  A Grantee who has made an election  pursuant to this SECTION 11 may
satisfy his or her withholding obligation only with shares of Stock that are not
subject to any repurchase,  forfeiture,  unfulfilled  vesting,  or other similar
requirements.

12.  RESTRICTIONS ON TRANSFER OF SHARES OF STOCK

     12.1 RIGHT OF FIRST REFUSAL.

     Subject to SECTION 12.4 below,  a Grantee (or such other  individual who is
entitled to exercise an Option or otherwise  acquire shares  pursuant to a Grant
under the terms of this Plan) shall not sell, pledge, assign, gift, transfer, or
otherwise  dispose of any shares of Stock  acquired  pursuant  to a Grant to any
person or entity  without first offering such shares to the Company for purchase
on the same terms and conditions as those offered the proposed  transferee.  The
Company may assign its right of first  refusal  under this SECTION 12.1 in whole
or in part,  to (1) any holder of stock or other  securities  of the  Company (a
"Stockholder"),  (2) any  Affiliate  or (3) any other  person or entity that the
Board determines has a sufficient  relationship with or interest in the Company.
The  Company  shall give  reasonable  written  notice to the Grantee of any such
assignment  of its rights.  The  restrictions  of this SECTION 12.1 apply to any
person to whom Stock that was originally  acquired  pursuant to a Grant is sold,
pledged,  assigned,  bequeathed,  gifted,  transferred or otherwise disposed of,
without  regard to the number of such  subsequent  transferees  or the manner in
which they acquire the Stock,  but the  restrictions of this SECTION 12.1 do not
apply to a transfer of Stock that occurs as a result of the death of the Grantee
or  of  any  subsequent  transferee  (but  shall  apply  to  the  executor,  the
administrator  or  personal  representative,   the  estate,  and  the  legatees,
beneficiaries and assigns thereof).

     12.2 REPURCHASE AND OTHER RIGHTS.

     Stock  issued  upon  exercise  of an  Option  or  pursuant  to the Grant of
Restricted  Stock may be subject to such right of repurchase  or other  transfer
restrictions  as the Board may determine,  consistent  with  applicable law. Any
such additional restriction shall be set forth in the Award Agreement.

July 1, 2003
                                       13
<PAGE>

     12.3 PAYMENTS FOR REPURCHASE

     Upon the Grantee's termination of Service, payment shall be made in cash or
by cancellation  of  indebtedness  within the ninety (90) days after the date of
termination  of  Service  or ninety  (90) days  after  the date of  exercise  or
purchase,  as the case may be, for the repurchase of shares of Stock acquired by
the Grantee pursuant to the exercise of an Option or under a Grant of Restricted
Stock.

     12.4 PUBLICLY TRADED STOCK.

     If the  Stock is  listed  on an  established  national  or  regional  stock
exchange or is admitted to  quotation on The Nasdaq Stock  Market,  Inc.,  or is
publicly  traded in an established  securities  market,  the foregoing  transfer
restrictions of SECTIONS 12.1 and 12.2 shall terminate as of the first date that
the Stock is so listed, quoted or publicly traded.

     12.5 LEGEND.

     In order to enforce  the  restrictions  imposed  upon shares of Stock under
this Plan or as provided in an Award Agreement,  the Board may cause a legend or
legends to be placed on any certificate  representing  shares issued pursuant to
this Plan that complies with the applicable  securities laws and regulations and
makes appropriate reference to the restrictions imposed under it.

13.  PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other agreement,
contract,  or  understanding  heretofore or hereafter  entered into by a Grantee
with  the  Company  or  any  Affiliate,   except  an  agreement,   contract,  or
understanding  hereafter  entered  into  that  expressly  modifies  or  excludes
application of this paragraph (an "Other  Agreement"),  and  notwithstanding any
formal  or  informal  plan or  other  arrangement  for the  direct  or  indirect
provision  of  compensation  to the  Grantee  (including  groups or  classes  of
participants or beneficiaries of which the Grantee is a member),  whether or not
such compensation is deferred,  is in cash, or is in the form of a benefit to or
for the Grantee (a  "Benefit  Arrangement"),  if the Grantee is a  "disqualified
individual,"  as  defined  in  Section  280G(c)  of the  Code,  any  Options  or
Restricted  Stock held by that  Grantee  and any right to receive any payment or
other benefit under this Plan shall not become  exercisable or vested (i) to the
extent that such right to exercise,  vesting,  payment, or benefit,  taking into
account all other rights, payments, or benefits to or for the Grantee under this
Plan,  all Other  Agreements,  and all  Benefit  Arrangements,  would  cause any
payment or benefit to the Grantee  under this Plan to be considered a "parachute
payment" within the meaning of Section  280G(b)(2) of the Code as then in effect
(a  "Parachute  Payment")  and (ii) if, as a result  of  receiving  a  Parachute
Payment,  the  aggregate  after-tax  amounts  received by the  Grantee  from the
Company  under this Plan,  all Other  Agreements,  and all Benefit  Arrangements
would be less than the  maximum  after-tax  amount that could be received by the
Grantee without causing any such payment or benefit to be considered a Parachute
Payment.  In the event that the receipt of any such right to exercise,  vesting,
payment,  or benefit  under this Plan,  in  conjunction  with all other  rights,
payments,  or benefits to or for the Grantee  under any Other  Agreement  or any
Benefit  Arrangement would cause the Grantee to be considered to have received a
Parachute  Payment under this Plan that would have the effect of decreasing  the
after-tax  amount  received  by the Grantee as  described  in clause (ii) of the
preceding sentence, then the Grantee shall have the right, in the Grantee's sole
discretion,  to designate those rights,  payments,  or benefits under this Plan,
any Other  Agreements,  and any Benefit  Arrangements  that should be reduced or
eliminated  so as to avoid  having the payment or benefit to the  Grantee  under
this Plan be deemed to be a Parachute Payment.

July 1, 2003
                                       14
<PAGE>

14.  REQUIREMENTS OF LAW

     14.1 GENERAL.

     The  Company  shall not be  required  to sell or issue any  shares of Stock
under  any Grant if the sale or  issuance  of such  shares  would  constitute  a
violation by the Grantee, any other individual exercising a right emanating from
such Grant,  or the Company of any  provision  of any law or  regulation  of any
governmental  authority,  including  without  limitation  any  federal  or state
securities laws or regulations.  If at any time the Company shall determine,  in
its discretion,  that the listing,  registration or  qualification of any shares
subject  to a Grant  upon any  securities  exchange  or under  any  governmental
regulatory  body is necessary or desirable as a condition  of, or in  connection
with,  the issuance or purchase of shares  hereunder,  no shares of Stock may be
issued or sold to the  Grantee  or any  other  individual  exercising  an Option
pursuant to such Grant unless such listing, registration, qualification, consent
or approval  shall have been  effected or obtained  free of any  conditions  not
acceptable to the Company,  and any delay caused  thereby shall in no way affect
the date of  termination  of the Grant.  Specifically,  in  connection  with the
Securities  Act, upon the exercise of any right emanating from such Grant or the
delivery of any shares of  Restricted  Stock,  unless a  registration  statement
under  the  Securities  Act is in effect  with  respect  to the  shares of Stock
covered by such Grant,  the Company  shall not be required to sell or issue such
shares  unless  the  Board has  received  evidence  satisfactory  to it that the
Grantee or any other  individual  exercising  an Option may acquire  such shares
pursuant  to an  exemption  from  registration  under the  Securities  Act.  Any
determination  in this  connection  by the Board  shall be final,  binding,  and
conclusive. The Company may, but shall in no event be obligated to, register any
securities  covered hereby pursuant to the Securities Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of an
Option or the  issuance  of shares of Stock  pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly  imposes the requirement that an Option shall not be exercisable until
the shares of Stock  covered by such  Option are  registered  or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction  apply) shall be deemed  conditioned upon the effectiveness
of such registration or the availability of such an exemption.

     14.2 RULE 16b-3.

     During any time when the Company has a class of equity security  registered
under  Section 12 of the  Exchange  Act,  it is the intent of the  Company  that
Grants pursuant to the Plan and the exercise of Options  granted  hereunder will
qualify for the exemption  provided by Rule 16b-3 under the Exchange Act. To the
extent  that any  provision  of the Plan or action by the Board  does not comply
with the  requirements  of Rule  16b-3,  it shall be deemed  inoperative  to the
extent  permitted by law and deemed advisable by the Board, and shall not affect
the  validity of the Plan.  In the event that Rule 16b-3 is revised or replaced,
the  Board may  exercise  its  discretion  to  modify  this Plan in any  respect
necessary to satisfy the  requirements  of, or to take advantage of any features
of, the revised exemption or its replacement.

     14.3 FINANCIAL REPORTS.

     To the extent required by applicable law, not less often than annually, the
Company  shall furnish to Grantees  summary  financial  information  including a
balance  sheet  regarding  the  Company's  financial  condition  and  results of
operations,  unless such  Grantees have duties with the Company that assure them
access to equivalent information. Such financial statements need not be audited.

15.  EFFECT OF CHANGES IN CAPITALIZATION

     15.1 CHANGES IN STOCK.

     The number of shares for which Grants of Options and  Restricted  Stock may
be made under the Plan shall be  proportionately  increased or decreased for any
increase  or  decrease  in the  number  of  shares  of Stock on  account

July 1, 2003
                                       15
<PAGE>

of  any   recapitalization,   reclassification,   stock  split,  reverse  split,
combination of shares,  exchange of shares, stock dividend or other distribution
payable in capital  stock,  or for any other increase or decrease in such shares
effected  without receipt of  consideration  by the Company  occurring after the
Effective Date (any such event hereafter referred to as a "CORPORATE EVENT"). In
addition,  subject to the  exception  set forth in the last  sentence of SECTION
15.4,  the  number  of  shares  for  which  Grants  are  outstanding   shall  be
proportionately  increased  or  decreased  for any  increase  or decrease in the
number of shares of Stock on account of any Corporate Event. Any such adjustment
in outstanding  Options shall not change the aggregate Option Price payable with
respect  to shares  that are  subject  to the  unexercised  portion of an Option
outstanding  but shall include a corresponding  proportionate  adjustment in the
Option Price per share.  The  conversion  of any  convertible  securities of the
Company shall not be treated as an increase in shares  effected  without receipt
of consideration. In the event of any distribution to the Company's stockholders
of securities of any other entity or other assets (other than dividends  payable
in cash or  stock  of the  Company)  without  receipt  of  consideration  by the
Company,  the Company  may, in such  manner as the  Company  deems  appropriate,
adjust (i) the number and kind of shares  subject to  outstanding  Awards and/or
(ii) the exercise price of outstanding Options to reflect such distribution.

     15.2 REORGANIZATION  IN WHICH THE  COMPANY IS THE  SURVIVING  ENTITY AND IN
          WHICH NO CHANGE OF CONTROL OCCURS.

     Subject to the exception set forth in the last sentence of SECTION 15.4, if
the Company  shall be the surviving  entity in any  reorganization,  merger,  or
consolidation  of the Company  with one or more other  entities  and in which no
Change of Control occurs,  any Grant theretofore made pursuant to the Plan shall
pertain to and apply  solely to the common stock shares to which a holder of the
number  of  shares of Stock  subject  to such  Grant  would  have been  entitled
immediately following such reorganization,  merger, or consolidation, and in the
case of Options,  with a  corresponding  proportionate  adjustment of the Option
Price per share so that the aggregate  Option Price thereafter shall be the same
as the  aggregate  Option  Price of the shares  remaining  subject to the Option
immediately prior to such reorganization,  merger, or consolidation.  Subject to
any contrary  language in an Award  Agreement  evidencing a Grant of  Restricted
Stock, any restrictions  applicable to such Restricted Stock shall apply as well
to  any  replacement  shares  received  by  the  Grantee  as  a  result  of  the
reorganization, merger or consolidation.

     15.3 REORGANIZATION,  SALE OF  ASSETS  OR SALE OF STOCK  WHICH  INVOLVES  A
          CHANGE OF CONTROL.

     Subject to the  exceptions  set forth in the last  sentence of this SECTION
15.3 and the last sentence of Section 15.4,  (i) upon the occurrence of a Change
of Control,  all outstanding  shares of Restricted Stock shall be deemed to have
vested,  and, with the exception of such restrictions  imposed under SECTION 12,
all  restrictions  and conditions  applicable to such shares of Restricted Stock
shall be deemed to have  lapsed,  immediately  prior to the  occurrence  of such
Change of Control,  and (ii) either of the following two actions shall be taken:
(A) fifteen days prior to the scheduled consummation of a Change of Control, all
Options  outstanding  hereunder shall become  immediately  exercisable and shall
remain  exercisable for a period of fifteen days, or (B) the Board may elect, in
its sole  discretion,  to cancel any outstanding  Grants and pay or deliver,  or
cause to be paid or  delivered,  to the  holder  thereof  an  amount  in cash or
securities  having a value (as determined by the Board acting in good faith), in
the case of Restricted Stock, equal to the formula or fixed price per share paid
to holders of shares of Stock and, in the case of Options,  equal to the product
of the number of shares of Stock  subject to the Option  (the  "OPTION  SHARES")
multiplied  by the  amount,  if any, by which (I) the formula or fixed price per
share paid to holders of shares of Stock  pursuant to such  transaction  exceeds
(II) the Option  Price  applicable  to such Option  Shares.  With respect to the
Company's  establishment  of an exercise  window,  (i) any exercise of an Option
during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only  immediately  before the  consummation  of the
event,  and (ii) upon  consummation  of any Change of Control the Plan,  and all
outstanding  but  unexercised  Options  shall  terminate.  The Board  shall send
written  notice  of an event  that  will  result  in such a  termination  to all
individuals  who hold Options not later than the time at which the Company gives
notice  thereof to its  shareholders.  This  SECTION 15.3 shall not apply to any
Change of Control to the extent that  provision is made in writing in connection
with such Change of Control for the  assumption or  continuation  of the Options
and Restricted  Stock  theretofore  granted,  or for the  substitution  for such
Options and  Restricted  Stock for new common stock options and new common stock
restricted  stock  relating to the stock of a successor  entity,  or a parent or
subsidiary  thereof,  with  appropriate  adjustments  as to the number of shares
(disregarding any consideration  that is not common

July 1, 2003
                                       16
<PAGE>

stock) and option  prices,  in which event the Plan and  Options and  Restricted
Stock  theretofore  granted shall  continue in the manner and under the terms so
provided.

     15.4 ADJUSTMENTS.

     Adjustments  under  SECTION 15 related to shares of Stock or  securities of
the Company  shall be made by the Board,  whose  determination  in that  respect
shall be final, binding and conclusive. No fractional shares or other securities
shall be issued  pursuant to any such  adjustment,  and any fractions  resulting
from any such adjustment  shall be eliminated in each case by rounding  downward
to the nearest whole share. The Board may provide in the Award Agreements at the
time of Grant,  or any time  thereafter  with the  consent of the  Grantee,  for
different provisions to apply to a Grant in place of those described in SECTIONS
15.1, 15.2 and 15.3.

     15.5 NO LIMITATIONS ON COMPANY.

     The making of Grants  pursuant to the Plan shall not affect or limit in any
way the right or power of the  Company to make  adjustments,  reclassifications,
reorganizations,  or changes of its capital or business  structure  or to merge,
consolidate,  dissolve, or liquidate,  or to sell or transfer all or any part of
its business or assets.

16.  DURATION AND AMENDMENTS

     16.1 TERM OF THE PLAN.

     The  Effective  Date of this Plan is the date of its adoption by the Board,
subject to the approval of the Plan by the Company's stockholders.  In the event
that the  stockholders  fail to approve the Plan within twelve (12) months after
its adoption by the Board,  any Grants  already made shall be null and void, and
no  additional  Grants shall be made after such date.  The Plan shall  terminate
automatically  ten  (10)  years  after  its  adoption  by the  Board  and may be
terminated on any earlier date as next provided.

     16.2 AMENDMENT AND TERMINATION OF THE PLAN.

     The  Board  may,  at any time and from  time to time,  amend,  suspend,  or
terminate  the Plan as to any shares of Stock as to which  Grants  have not been
made.  An amendment to the Plan shall be contingent on approval of the Company's
stockholders  only to the extent  required by  applicable  law,  regulations  or
rules.  No Grants shall be made after the termination of the Plan. No amendment,
suspension,  or  termination  of the Plan  shall,  without  the  consent  of the
Grantee,  alter or impair  rights  or  obligations  under any Grant  theretofore
awarded under the Plan.

17.  GENERAL PROVISIONS

     17.1 DISCLAIMER OF RIGHTS

     No  provision  in the  Plan or in any  Grant or  Award  Agreement  shall be
construed  to confer  upon any  individual  the right to remain in the employ or
service of the Company or any  Affiliate,  or to  interfere  in any way with any
contractual  or other right or  authority  of the Company  either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any  employment or other  relationship  between any individual and the
Company or any  Affiliate.  The  obligation  of the Company to pay any  benefits
pursuant to this Plan shall be  interpreted  as a contractual  obligation to pay
only those  amounts  described  herein,  in the manner and under the  conditions
prescribed  herein.  The Plan  shall in no way be  interpreted  to  require  the
Company to transfer any amounts to a third party  trustee or otherwise  hold any
amounts in trust or escrow for payment to any  participant or beneficiary  under
the terms of the Plan.

July 1, 2003
                                       17
<PAGE>

     17.2 NONEXCLUSIVITY OF THE PLAN

     Neither  the  adoption  of the Plan nor the  submission  of the Plan to the
shareholders  of the Company for  approval  shall be  construed  as creating any
limitations  upon the  right and  authority  of the  Board to adopt  such  other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or  specifically  to a particular
individual or particular  individuals) as the Board in its discretion determines
desirable,   including,  without  limitation,  the  granting  of  stock  options
otherwise than under the Plan.

     17.3 CAPTIONS

     The  use of  captions  in  this  Plan  or any  Award  Agreement  is for the
convenience  of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.

     17.4 OTHER AWARD AGREEMENT PROVISIONS

     Each  Grant  awarded  under  the Plan may  contain  such  other  terms  and
conditions not inconsistent  with the Plan as may be determined by the Board, in
its sole discretion.

     17.5 NUMBER AND GENDER

     With respect to words used in this Plan,  the singular  form shall  include
the plural form, the masculine gender shall include the feminine  gender,  etc.,
as the context requires.

     17.6 SEVERABILITY

     If any provision of the Plan or any Award  Agreement shall be determined to
be  illegal  or  unenforceable  by any  court  of law in any  jurisdiction,  the
remaining  provisions  hereof and thereof shall be severable and  enforceable in
accordance with their terms, and all provisions shall remain  enforceable in any
other jurisdiction.

     17.7 POOLING

     In the event any provision of the Plan or an Award  Agreement would prevent
the use of pooling of interests accounting in a corporate  transaction involving
the Company or its Affiliates and such transaction is contingent upon pooling of
interests accounting,  then that provision shall be deemed amended or revoked to
the extent  required  to preserve  such  pooling of  interests.  The Company may
require in an Award Agreement that a Grantee who receives a Grant under the Plan
shall,  upon  advice  from  the  Company,  take  (or  refrain  from  taking,  as
appropriate)  all actions  necessary  or  desirable  to ensure  that  pooling of
interests accounting is available.

     17.8 GOVERNING LAW

     The validity and  construction of this Plan and the instruments  evidencing
the  Grants  awarded  hereunder  shall be  governed  by the laws of the State of
Delaware  other than any conflicts or choice of law rule or principle that might
otherwise refer  construction or interpretation of this Plan and the instruments
evidencing the Grants  awarded  hereunder to the  substantive  laws of any other
jurisdiction.

July 1, 2003
                                       18
<PAGE>

18.  EXECUTION

     To record  adoption of the Plan by the Board as of December 28,  2001,  and
approval of the Plan by the stockholders on July 1, 2003, the Company has caused
its authorized officer to execute the Plan.

                               CDEX, INC.

                                    By:
                                       -----------------------------------------
                                    Name:     Malcolm H. Philips
                                    Title:    President, CEO and Chairman

July 1, 2003
                                       19

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