Document:

EXHIBIT 4.3

        1996 SHORT TERM INCENTIVE COMPENSATION BONUS PROGRAM, AS AMENDED

                                       9
<PAGE>

              1996 SHORT TERM INCENTIVE COMPENSATION BONUS PROGRAM

      1. PURPOSES. The Purpose of this Incentive Compensation Bonus Program (the
"Program") is to provide an incentive from time to time to certain key employees
of Warrantech Corporation (the "Corporation") upon whom major responsibilities
for the successful operation, administration and management of the Corporation
rest and whose present and potential contributions are important to the
continued success of the Corporation and to enable the Corporation to attract
and retain in is employ highly qualified persons for the successful conduct of
its business. The Corporation has typically paid bonuses and commissions to
employees who have attained certain specified financial and sales goals. This
Program reflects the Corporation's decision to provide employees with the option
of accepting shares of the Corporation's Common Stock ("Common Stock") in lieu
of cash for such bonuses and commissions earned.

      2. ADMINISTRATION OF PROGRAM. This Program will be administered by the
compensation committee of the Board of Directors (the "Committee") of the
Corporation. The Committee is authorized to interpret the Plan and may from time
to time adopt such rules and regulations for carrying out the Program as it may
deem best. Decisions of the Committee shall be final, conclusive and binding
upon all parties, including the Corporation and the participants.

      3. PARTICIPANTS. Participants in the Program shall be limited to full time
employees of the Corporation and its subsidiaries.

      4. ELIGIBILITY FOR PARTICIPATION AND CALCULATION OF BONUS AMOUNT. Eligible
Employees from time to time shall be entitled to participate in the Program with
respect to a particular fiscal year of the Corporation based on the attainment
of certain specified operations and financial goals as established in such
fiscal year's budget.

                                       10
<PAGE>

      Each fiscal year's gross operating income and net sales revenue goals will
be communicated to Employee in writing at the beginning of each fiscal year.
Targets for operating income and net sales revenue will be established for each
fiscal year.

      Employee will receive a percentage of his/her base salary dependent on the
attainment of the fiscal year goals. If the Corporation achieves 100% of its
target goals, Employee will receive 100% of his/her targeted bonus. For every 1%
the Corporation exceeds its target goal, either in operating income or sales
revenue, Employee shall be entitled to an additional 1% of his/her targeted
bonus, over and above the 100% targeted bonus Employee received for meeting the
target goals.

      5. DISTRIBUTIONS. Distributions and calculations of the amount of awards
shall be made annually as soon as practicable following the end of the fiscal
year. In determining distributions under the Program, the Corporation shall rely
upon the Corporation's financial statements as prepared by the Corporation's
Independent Certified Public Accountants, which financial statements shall be
prepared in a manner consistent with generally accepted accounting principles.

      Management shall have the discretion to offer employees who are entitled
to cash bonuses described in this Program, as well as employees who are entitled
to receive compensation from the Corporation in the form of commissions, Common
Stock in lieu of cash. If management elects to offer Common Stock in lieu of
cash bonuses or commissions, employees may elect to receive distributions in
cash or in common stock. Management may value such Common Stock for distribution
purposes at a discount of up to 50% (to be determined at management's
discretion) from the fair market value thereof on the date of notification of
the Employee of the amount of his or her bonus or the date on which the
commissions were earned. "Fair market

                                       11
<PAGE>

value," for purposes of this Program, shall mean the closing price for the
Corporation's common stock as reported in the Wall Street Journal for such date
of notification. A maximum of 200,000 shares of Common Stock shall be available
for issuance in connection with the Program.

      6. AMENDMENT OF PROGRAM. The Board may amend this Program from time to
time as it deems desirable.

      7. TERMINATION OF THE PROGRAM. This Program shall terminate five (5) years
from the Effective Date as set forth below. The Board may, in its discretion,
terminate this Program at any time prior to such date.

      8. EFFECTIVE DATE. Upon adoption by the Board, this Program became
effective as of April 1, 1995 and distributions hereunder may be awarded at any
time on or after March 31, 1996, in accordance with the terms hereof.

                                       12
<PAGE>

                                 AMENDMENT NO. 1
                                       TO
                             WARRANTECH CORPORATION
              1996 SHORT TERM INCENTIVE COMPENSATION BONUS PROGRAM

      The Warrantech Corporation 1996 Short Term Incentive Compensation Bonus
Program (the "Bonus Program") is hereby amended as follows:

      1. Section 7 of the Bonus Program is amended to read as follows:

          "7.  This Program shall terminate on March 31, 2005.
               The Board may, in its discretion, terminate this
               Program at any time prior to such date."

      2. Except as expressly amended, the provisions of the Bonus Program shall
remain in full force and effect.

      3. This Amendment shall be effective immediately upon approval by the
Company's Board of Directors.

                                      Adopted by the Board of Directors
                                      June 26, 2001

                                       13EXHIBIT 4.3

              1998 EMPLOYEE INCENTIVE STOCK OPTION PLAN, AS AMENDED

                                       1
<PAGE>

                               AMENDMENT NO. 1 TO
                             WARRANTECH CORPORATION
                                 1998 STOCK PLAN

      The Warrantech Corporation 1998 Stock Plan (the "1998 Plan") is hereby
amended as follows:

      1. Section 4(a) of the 1998 Plan is amended to read as follows:

      SECTION 4. Stock Rights

      (a) Number of Shares Subject to Rights. The stock subject to Stock Rights
shall be authorized but unissued shares of Common Stock of the Company, par
value $0.007 per share (the "Common Stock"), or shares of Common Stock
reacquired by the Company in any manner. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 1,641,987
shares. Such authorized share reserve is comprised of (i) the number of shares
which remained available for issuance, as of the Plan Effective Date, under the
Warrantech Corporation 1988 Employee Incentive Stock Option Plan (amended as of
July, 1996) (the "Predecessor Plan"), including the shares subject to the
outstanding options incorporated into the Plan and any other shares which would
have been available for future option grants under the Predecessor Plan, (ii) an
additional 600,000 shares which were included in the initial authorized share
reserve when the Plan was approved by the Company's Board of Directors on August
25, 1998, and (iii) an additional 600,000 shares which were included in the
authorized share reserve pursuant to the amendment of the Plan approved by the
Board of Directors on June 26, 2001, subject to stockholder approval. The
aggregate number of shares which may be issued pursuant to the Plan is subject
to adjustment as provided in paragraph 13. If any Stock Right granted under the
Plan shall expire or terminate for any reason without having been exercised in
full or shall cease for any reason to be exercisable in whole or in part, the
shares of Common Stock subject to such Stock Right shall again be available for
grants of Stock Rights under the Plan.

      2. Except as expressly amended, the provisions of the 1998 Plan shall
remain in full force and effect.

      3. This Amendment shall be effective immediately upon approval by the
Company's Board of Directors, subject to the approval of the stockholders of the
Company.

                                        Adopted by the Board of Directors
                                        June 26, 2001

                                        Approved by the Stockholders
                                        September 25, 2001

                                       2
<PAGE>

                     WARRANTECH CORPORATION 1998 STOCK PLAN

1. Purpose.

      The purpose of the Warrantech Corporation 1998 Stock Plan (the "Plan") is
to encourage key employees of Warrantech Corporation (the "Company") and of any
present or future parent or subsidiary of the Company (each a "Related
Corporation" and collectively, "Related Corporations") and other individuals who
render services to the Company or any Related Corporation, by providing
opportunities to participate in the ownership of the Company and its future
growth through (a) the grant of options which qualify as "incentive stock
options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code"); (b) the grant of options which do not qualify as ISOs
("Non-Qualified Options"); (c) awards of stock in the Company ("Awards"); and
(d) opportunities to make direct purchases of stock in the Company
("Purchases"). Both ISOs and Non-Qualified Options are referred to hereafter
individually as an "Option" and collectively as "Options." Options, Awards and
authorizations to make Purchases are referred to hereafter collectively as
"Stock Rights." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively, as those terms are
defined in Section 424 of the Code.

2. Administration of the Plan.

      (a) Board or Committee Administration. The Plan shall be administered by a
committee (the "Committee") of the Board of Directors of the Company (the
"Board"). The Committee, to the extent required by applicable regulations under
Section 162(m) of the Code, shall be comprised of two or more outside directors
(as defined in applicable regulations thereunder) who, to the extent required by
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or
any successor provision ("Rule 16b-3"), shall be disinterested administrators
within the meaning of Rule 16b-3. All references in this Plan to the Committee
shall mean the Board if no Committee has been appointed. Subject to ratification
of the grant or authorization of each Stock Right by the Board (if so required
by applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to: (i) determine to whom (from among the class of
employees eligible under paragraph 3 to receive ISOs) ISOs shall be granted, and
to whom (from among the class of individuals and entities eligible under
paragraph 3 to receive Non-Qualified Options and Awards and to make Purchases)
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted; (ii) determine the time or times at which Options or Awards shall be
granted or Purchases made; (iii) determine the purchase price of shares subject
to each Option or Purchase, which prices shall not be less than the Minimum
Price specified in paragraph 6; (iv) determine whether each Option granted shall
be an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the
time or times when each Option shall become exercisable and the duration of the
exercise period; (vi) extend the period during which outstanding Options may be
exercised; (vii) determine whether restrictions are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such restrictions, if
any, and (viii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary, under Section 422 of
the Code and the regulations

                                       3
<PAGE>

promulgated thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem advisable.

      (b) Committee Actions. The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may determine. A
majority of the Committee shall constitute a quorum and acts of a majority of
the members of the Committee at a meeting at which a quorum is present, or acts
reduced to or approved in writing by all the members of the Committee (if
consistent with applicable state law), shall be the valid acts of the Committee.
From time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.

      (c) Grant of Stock Rights to Board Members. Subject to the provisions of
paragraph 3 below, if applicable, Stock Rights may be granted to members of the
Board. All grants of Stock Rights to members of the Board shall in all other
respects be made in accordance with the provisions of this Plan applicable to
other eligible persons. Consistent with the provisions of paragraph 3 below,
members of the Board who either (i) are eligible to receive grants of Stock
Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on
any matters affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan, except that no such member shall act upon the
granting to himself or herself of Stock Rights, but any such member may be
counted in determining the existence of a quorum at any meeting of the Board
during which action is taken with respect to the granting to such member of
Stock Rights.

      (d) Exculpation. No member of the Board or the Committee shall be
personally liable for any action taken or any failure to take any action in
connection with the Plan or the granting of Stock Rights under the Plan,
provided that this subparagraph 2(d) shall not apply to (i) any breach of such
member's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law, (iii) acts or omissions that would result in liability under
Section 174 of the General Corporation Law of the State of Delaware, as amended,
and (iv) any transaction from which the member derived an improper personal
benefit.

      (e) Indemnification. Service on the Committee shall constitute service as
a member of the Board. Each member of the Committee shall be entitled without
further act on his or her part to indemnity from the Company to the fullest
extent provided by applicable law and the Company's Certificate of Incorporation
and/or By-laws in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Stock Rights thereunder in which he or she may be involved by reason of his or
her being or having been a member of the Committee, whether or not he or she
continues to be a member of the Committee at the time of the action, suit or
proceeding.

                                       4
<PAGE>

3. Eligible Employees and Others.

      ISOs may be granted only to employees of the Company or any Related
Corporation. Non-Qualified Options, Awards and authorizations to make Purchases
may be granted to any employee, officer or director (whether or not also an
employee) or consultant of the Company or any Related Corporation. The Committee
may take into consideration a recipient's individual circumstances in
determining whether to grant a Stock Right. The granting of any Stock Right to
any individual or entity shall neither entitle that individual or entity to, nor
disqualify such individual or entity from, participation in any other grant of
Stock Rights.

4. Stock Rights.

      (a) Number of Shares Subject to Rights. The stock subject to Stock Rights
shall be authorized but unissued shares of Common Stock of the Company, par
value $0.007 per share (the "Common Stock"), or shares of Common Stock
reacquired by the Company in any manner. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall initially not exceed
1,041,987 shares. Such authorized share reserve is comprised of (i) the number
of shares which remained available for issuance, as of the Plan Effective Date,
under the Warrantech Corporation 1988 Employee Incentive Stock Option Plan
(amended as of July, 1996) (the "Predecessor Plan"), including the shares
subject to the outstanding options incorporated into the Plan and any other
shares which would have been available for future option grants under the
Predecessor Plan, plus (ii) an additional 600,000 shares, subject to stockholder
approval. The aggregate number of shares which may be issued pursuant to the
Plan is subject to adjustment as provided in paragraph 13. If any Stock Right
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part, the shares of Common Stock subject to such Stock Right shall again
be available for grants of Stock Rights under the Plan.

      (b) Nature of Awards. In addition to ISOs and Non-Qualified Options, the
Committee may grant or award the following Stock Rights. Participants may be
granted the right to purchase Common Stock, subject to such restrictions as may
be specified by the Committee ("Restricted Shares"). Such restrictions may
include, but are not limited to, the requirement of continued employment with
the Company or a Related Corporation and achievement of performance objectives.
The Committee shall determine the purchase price of the Restricted Shares, the
nature of the restrictions and the performance objectives, all of which shall be
set forth in the agreement relating to each right awarded to purchase Restricted
Shares. The performance objectives shall consist of (A) one or more in business
criteria, and (B) a target level or levels of performance with respect to such
criteria. The performance objectives shall be objective and shall otherwise meet
the requirements of Section 162(m)(4)(C) of the Code. In addition to the
foregoing, awards of Common Stock may be made to participants as bonuses or as
additional compensation, as may be determined by the Committee.

      5. Granting of Stock Rights. S tock Rights may be granted under the Plan
at any time on or after August 25, 1998 and prior to August 24, 2008. The date
of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided,

                                       5
<PAGE>

however, that such date shall not be prior to the date on which the Committee
acts to approve the grant. Options granted under the Plan are intended to
qualify as performance based compensation to the extent required under proposed
Treasury Regulation Section 1.162-27.

6. Minimum Option Price; ISO Limitations.

      (a) Price for Non-Qualified Options, Awards and Purchases. The exercise
price per share specified in the agreement relating to each Non-Qualified Option
granted, and the purchase price per share of stock granted in any Award or
authorized as a Purchase, under the Plan shall in no event be less than the
minimum legal consideration required therefor under the laws of any jurisdiction
in which the Company or its successors in interest may be organized.
Non-Qualified Options granted under the Plan, with an exercise price less than
the fair market value per share of Common Stock on the date of grant, are
intended to qualify as performance-based compensation under Section 1652(m) of
the Code and any applicable regulations thereunder. Any such Non-Qualified
Options granted under the Plan shall be exercisable only upon the attainment of
a pre-established, objective performance goal established by the Committee.

      (b) Price for ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee owning stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
For purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply.

      (c) $100,000 Annual Limitation on ISO Vesting. Each eligible employee may
be granted Options treated as ISOs only to the extent that, in the aggregate
under this Plan and all incentive stock option plans of the company and any
related Corporation, ISOs do not become exercisable for the first time by such
employee during any calendar year with respect to stock having a fair market
value (determined at the time the ISOs were granted) in excess of $100,000. The
Company intends to designate any Options granted in excess of such limitation as
Non-Qualified Options.

      (d) Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the date of grant or, if the prices or
quotes discussed in this sentence are unavailable for such date, the last
business day for which such prices or quotes are available prior to the date of
grant and shall mean (i) the average (on that date) of the high and low prices
of the Common Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on a national
securities exchange. If the Common Stock is not publicly traded at the time an
Option is granted under the

                                       6
<PAGE>

Plan, "fair market value" shall mean the fair value of the Common Stock as
determined by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm's length.

7. Option Duration.

      Subject to earlier termination as provided in paragraphs 9 and 10 or in
the agreement relating to such Option, each Option shall expire on the date
specified by the Committee, but not more than (i) ten years from the date of
grant in the case of Options generally, and (ii) five years from the date of
grant in the case of ISOs granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, as determined under paragraph
6(b). Subject to earlier termination as provided in paragraphs 9 and 10, the
term of each ISO shall be the term set forth in the original instrument granting
such ISO.

8. Exercise of Option and Transfer of Shares Upon Exercise.

      Subject to the provisions of paragraphs 9 through 12, each Option granted
under the Plan shall be exercisable as follows:

      (a) Vesting. The Option shall either be fully exercisable on the date of
grant or shall become exercisable thereafter in such installments as the
Committee may specify.

      (b) Full Vesting of Installments. Once an installment becomes exercisable,
it shall remain exercisable until expiration or termination of the Option,
unless otherwise specified by the Committee.

      (c) Partial Exercise. Each Option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable.

      (d) Acceleration of Vesting. The Committee shall have the right to
accelerate the date that any installment of any Option becomes exercisable;
provided that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option granted
to any employee as an ISO if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(c).

      (e) Transfer of Shares Upon Exercise of the Non-Qualified Options. In the
event that the shares received upon the exercise of the Non-Qualified Options
are registered under the Securities Act of 1933, as amended, the Optionee may
not sell more than 50% of such shares within the first year following such
exercise, and shall be permitted to sell all of such shares thereafter. The
certificate(s) issued reflecting any such shares shall bear a legend
substantially as follows: "No more than 50% of the shares represented by this
certificate may be sold within one year following the date of original issue
thereof. All of such shares may be sold thereafter."

                                       7
<PAGE>

9. Termination of Employment.

      Unless otherwise specified in the agreements relating to such ISOs, if an
ISO optionee ceases to be employed by the Company and all Related Corporations
other than by reason of death or disability or as otherwise specified in
paragraph 10, no further installments of his or her ISOs shall become
exercisable, and his or her ISOs shall terminate on the earlier of (a) ninety
(90) days after the date of termination of his or her employment, or (b) their
specified expiration dates. For purposes of this paragraph 9, employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Committee shall not be considered an interruption of employment under this
paragraph 9, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not be
affected by a change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any Related Corporation. Nothing in the Plan shall be deemed to give any
grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.

10. Death; Disability; Voluntary Termination; Breach.

      (a) Death. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his or her death, any ISO owned by such
optionee may be exercised, to the extent otherwise exercisable on the date of
death, by the estate, personal representative or beneficiary who has acquired
the ISO by will or by the laws of descent and distribution, until the earlier of
(i) the specified expiration date of the ISO or (ii) one (1) year from the date
of the optionee's death.

      (b) Disability. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her disability, such optionee
shall have the right to exercise any ISO held by him or her on the date of
termination of employment, for the number of shares for which he or she could
have exercised it on that date, until the earlier of (i) the specified
expiration date of the ISO or (ii) one (1) year from the date of the termination
of the optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in Section
22(e)(3) of the Code or any successor statute.

      (c) Voluntary Termination; Breach. If an ISO optionee voluntarily leaves
the employ of the Company and all Related Corporations or ceases to be employed
by the Company and all Related Corporations, then, in either such event, in
addition to immediate termination of the Option, the ISO optionee shall
automatically forfeit all shares for which the Company has not yet delivered
share certificates upon refund by the Company of the exercise price of such
Option. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share

                                       8
<PAGE>

certificates pending the resolution of any inquiry that could lead to a finding
resulting in a forfeiture.

11. Assignability.

      No Stock Right shall be assignable or transferable by the grantee except
by will, by the laws of descent and distribution or, in the case of
Non-Qualified Options only, pursuant to a valid domestic relations order. Except
as set forth in the previous sentence, during the lifetime of a grantee each
Stock Right shall be exercisable only by such grantee.

12. Terms and Conditions of Options.

      Options shall be evidenced by instruments (which need not be identical) in
such forms as the Committee may from time to time approve. Such instruments
shall conform to the terms and conditions set forth in paragraphs 6 through 11
hereof and may contain such other provisions as the Committee deems advisable
which are not inconsistent with the Plan, including restrictions applicable to
shares of Common Stock issuable upon exercise of Options. The Committee may
specify that any Non-Qualified Option shall be subject to the restrictions set
forth herein with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may determine. The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one
or more officers of the Company to execute and deliver such instruments. The
proper officers of the Company are authorized and directed to take any and all
action necessary or advisable from time to time to carry out the terms of such
instruments.

13. Adjustments.

      Upon the occurrence of any of the following events, an optionee's rights
with respect to Options granted to such optionee hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the written
agreement between the optionee and the Company related to such Option:

      (a) Stock Dividends and Stock Splits. If the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

      (b) Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Committee or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on a
equitable basis for the shares then subject to such Options either (A) the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (B)

                                       9
<PAGE>

shares of stock of the surviving corporation or (C) such other securities as the
Successor Board deems appropriate, the fair market value of which shall
approximate the fair market value of the shares of Common Stock subject to such
Options immediately preceding the Acquisition; or (ii) upon written notice to
the optionees, provide that all Options must be exercised, to the extent then
exercisable, within a specified number of days of the date of such notice, at
the end of which period the Options shall terminate; or (iii) terminate all
Options in exchange for a cash payment equal to the excess of the fair market
value of the shares subject to such Options (to the extent then exercisable)
over the exercise price thereof.

      (c) Recapitalization or Reorganization. In the event of a recapitalization
or reorganization of the Company (other than a transaction described in
subparagraph (b) above) pursuant to which securities of the Company or of
another corporation are issued with respect to the outstanding shares of Common
Stock, an optionee upon exercising an Option shall be entitled to receive for
the purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such recapitalization
or reorganization.

      (d) Modification of ISO's. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs (a), (b) or (c) with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs or would cause adverse tax consequences to the
holders, it may refrain from making such adjustments.

      (e) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, each Option will terminate immediately prior to
the consummation of such proposed action or at such other time and subject to
such other conditions as shall be determined by the Committee.

      (f) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.

      (g) Fractional Shares. No fractional shares shall be issued under the Plan
and the optionee shall receive from the Company cash in lieu of such fractional
shares.

      (h) Adjustments. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) above, the class and aggregate number of shares
set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific

                                       10
<PAGE>

adjustments to be made under this paragraph 13 and, subject to paragraph 2, its
determination shall be conclusive.

14. Means of Exercising Options.

      An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address, or to such
transfer agent as the Company shall designate. Such notice shall identify the
Option being exercised and specify the number of shares as to which such Option
is being exercised, accompanied by full payment of the purchase price thereof
either (a) in United States dollars in cash or by check, (b) at the discretion
of the Committee, through delivery of shares of Common Stock having a fair
market value equal as of the date of the exercise to the cash exercise price of
the Option, (c) at the discretion of the Committee, by delivery of the grantee's
personal recourse note bearing interest payable not less than annually at no
less than 100% of the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, (d) at the discretion of the Committee and consistent with
applicable law, through the delivery of an assignment to the Company of a
sufficient amount of the proceeds from the sale of the Common Stock acquired
upon exercise of the Option and an authorization to the broker or selling agent
to pay that amount to the Company, which sale shall be at the participant's
direction at the time of exercise, or (e) at the discretion of the Committee, by
any combination of (a), (b), (c) and (d) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (b), (c), (d) or (e) of the preceding sentence,
such discretion shall be exercised in writing at the time of the grant of the
ISO in question. The holder of an Option shall not have the rights of a
shareholder with respect to the shares covered by such Option until the date of
issuance of a stock certificate to such holder for such shares. Except as
expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued. In the absence of an effective registration statement
covering the shares issuable upon exercise of any Stock Rights, such notice may,
at the option of the Committee, also include a statement that the person
exercising the Stock Rights is purchasing the Common Stock as an investment and
not with a view to the sale or distribution of any of such Common Stock, and the
holder's agreement not to sell any Common Stock received upon the exercise of
the Stock Rights except either (i) in compliance with the Securities Act of
1933, as amended (provided that the Company shall be under no obligation to
register either the Plan, or any securities obtained by the Optionee pursuant
thereto, with the Securities and Exchange Commission), or (ii) with the prior
written approval of the Company.

15. Term and Amendment of Plan.

      This Plan was adopted by the Board on August 25, 1998, subject, with
respect to the validation of ISOs granted under the Plan, to approval of the
Plan by the stockholders of the Company at the next Meeting of Stockholders, or
in lieu thereof, by written consent. If the approval of stockholders is not
obtained on or prior to August 24, 1999, any grants of ISOs under the Plan made
prior to that date will be rescinded. The Plan shall expire at the end of the
day on August 24, 2008, (except as to Options outstanding on that date). Subject
to the provisions of

                                       11
<PAGE>

paragraph 5 above, Options may be granted under the Plan prior to the date of
stockholder approval of the Plan. The Board may terminate or amend the Plan in
any respect at any time, except that, without the approval of the stockholders
obtained within 12 months before or after the Board adopts a resolution
authorizing any of the following actions: (a) the total number of shares that
may be issued under the Plan may not be increased (except as provided in
paragraph 4(a) or by adjustment pursuant to paragraph 13); (b) the benefits
accruing to participants under the Plan may not be materially increased; (c) the
requirements as to eligibility for participation in the Plan may not be
materially modified; (d) the provisions of paragraph 3 regarding eligibility for
grants of ISOs may not be modified; (e) the provisions of paragraph 6(b)
regarding the exercise price at which shares may be offered pursuant to ISOs may
not be modified (except by adjustment pursuant to paragraph 13); (f) the
expiration date of the Plan may not be extended; and (g) the Board may not take
any action which would cause the Plan to fail to comply with Rule 16b-3. Except
as otherwise provided in this paragraph 15, in no event may action of the Board
or stockholders alter or impair the rights of a grantee, without such grantee's
consent, under any Option previously granted to such grantee.

16. Application of Funds.

      The proceeds received by the Company from the sale of shares pursuant to
Options granted and Purchases authorized under the Plan shall be used for
general corporate purposes.

17. Notice to Company of Disqualifying Disposition.

      By accepting an ISO granted under the Plan, each optionee agrees to notify
the Company in writing immediately after such optionee makes a Disqualifying
Disposition (as described in Sections 421, 422 and 424 of the Code and
regulations thereunder) of any stock acquired pursuant to the exercise of ISOs
granted under the Plan. Disqualifying Disposition is generally any disposition
occurring on or before the later of (a) the date two years following the date
the ISO was granted or (b) the date one year following the date the ISO was
exercised.

18. Withholding of Additional Income Taxes.

      Upon the exercise of a Non-Qualified Option, the grant of an Award, the
making of a Purchase of Common Stock for less than its fair market value, the
making of a Disqualifying Disposition (as defined in paragraph 17), the vesting
or transfer of restricted stock or securities acquired on the exercise of an
Option hereunder, or the making of a distribution or other payment with respect
to such stock or securities, the Company may withhold taxes in respect of
amounts that constitute compensation includable in gross income. The Committee
in its discretion may condition (i) the exercise of an Option, (ii) the grant of
an Award, (iii) the making of a Purchase of Common Stock for less than its fair
market value, or (iv) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the grantee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the grantee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the grantee's delivery of
previously held shares of Common Stock or the

                                       12
<PAGE>

withholding from the shares of Common Stock otherwise deliverable upon exercise
of a Option shares having an aggregate fair market value equal to the amount of
such withholding taxes.

19. Governmental Regulation.

      The Company's obligation to sell and deliver shares of the Common Stock
under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares.
Government regulations may impose reporting or other obligations on the Company
with respect to the Plan. For example, the Company may be required to send tax
information statements to employees and former employees that exercise ISOs
under the Plan, and the Company may be required to file tax information returns
reporting the income received by grantees of Options in connection with the
Plan.

20. Governing Law. The validity and construction of the Plan and the instruments
evidencing Stock Rights shall be governed by the laws of Delaware.

                                       13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]