Document:

Research Agreement

This Research  Agreement  ("Agreement")  effective as of May 8, 2000 ("Effective
Date")  made by and  between  MICROCIDE  PHARMACEUTICALS,  INC.,  a  corporation
organized and existing under the laws of  California,  and having its offices at
850  Maude  Avenue,   Mountain  View,  CA  94043,  U.S.A.  ("MPI")  and  Daiichi
Pharmaceutical Co., Ltd., a corporation organized and existing under the laws of
Japan, and having its offices at 16-13,  Kita-Kasai 1-Chome,  Edogawa-ku,  Tokyo
134-8630, Japan ("Daiichi")

WITNESSETH THAT:

         WHEREAS,  Daiichi  and MPI  jointly  carried  out  research  in finding
pharmaceutical  candidates  in the field of  bacterial  efflux  pump  inhibitors
("EPIs")  under JOINT  RESEARCH  AGREEMENT  dated on November 6, 1995,  which is
supplemented  by SUPPLEMENT TO THE JOINT RESEARCH  AGREEMENT  dated on March 25,
1998 and amended by AMENDMENT TO JOINT RESEARCH  AGREEMENT  dated on February 4,
2000 (collectively called "JRA"), until the end of March in 1999; and

         WHEREAS,   thereafter  Daiichi  and  MPI  respectively  are  conducting
Independent  Research and MPI Independent  Research (as respectively  defined in
the JRA) under JRA; and

         WHEREAS, Daiichi has looked for the contractor of research in the field
of EPIs to carry out some studies on behalf of Daiichi; and

         WHEREAS,  Daiichi  decided to consign those studies to MPI and proposed
MPI to carry out the studies regarding EPIs; and

         WHEREAS, MPI is willing to accept such proposal.

NOW THEREFORE,  in consideration of the promises and mutual covenants  contained
in this Agreement, the parties agree as follows:
<PAGE>

                       ARTICLE 1. GENERAL SCOPE OF STUDIES

     1.1 During one (1) year period  starting  from the  Effective  Date ("Study
Period"),  MPI shall perform following studies  ("Studies"),  in accordance with
the terms and  conditions set forth in this Agreement and the protocols in Annex
A attached hereto ("Protocols"):

1.   Medicinal  chemistry on [*].

2.   Characterization of synthesized compounds.

3.   Surveillance  and  profiling of  expression  of efflux pumps (Mex pumps) in
     clinical  isolates of  Pseudomonas  aeruginosa  from western  countries (at
     least U.S.A., Canada, and Europe).

4.   Investigation  of current trends and efficacy  (satisfaction by physicians)
     in the treatment for Pseudomonas infections in western countries.

The parties may engage in good faith  negotiation  to adjust the contents of the
Protocols from time to time.

     1.2  Daiichi  agrees  that MPI  carries  out the  Studies  in the Field (as
defined  in the JRA) under  this  Agreement  notwithstanding  the  provision  of
Section 10.7 (b) of JRA.  MPI  understands  that the Studies  carried out by MPI
under this Agreement are a part of the Independent Research of Daiichi.

                           ARTICLE 2. COST AND PAYMENT

     2.1 As consideration for carrying out the Studies, Daiichi shall pay to MPI
a total  amount of [*] US dollars  (US $[*]) in  accordance  with the  following
payment schedule.

     Within thirty (30) days after the Effective Date:
     [*] US dollars (US $[*])

     Within  thirty  (30) days  after  Daiichi's  receipt  of the  final  report
     pursuant to Section 3.1 below:
     [*] US  dollars (US $[*])

The above payment  includes all  applicable  indirect  costs due MPI. The actual
costs  incurred by MPI during the Study Period shall not exceed the research fee
above.  If the actual  costs  incurred by MPI for the  Studies  during the Study
Period are lower than the  research  fee above,  MPI shall  refund to Daiichi an
amount  equal to the  research  fee paid by Daiichi to MPI less the actual costs
incurred by MPI.  Payment would be within ninety (90) days  following the end of
the Study Period.

[*] Confidential Treatment Requested

<PAGE>

     2.2 All payments  from  Daiichi to MPI shall be made by bank wire  transfer
directed to:

                                       [*]

     2.3 MPI's chief  financial  officer (or  designee)  shall submit to Daiichi
financial reports of expenditures  incurred during the Study Period.  The report
shall be submitted, on quarterly basis, within thirty (30) days after the end of
each financial quarter.

     2.4 MPI shall keep accurate  records of MPI's actual costs incurred for the
Studies during the Study Period.  Such records shall be kept at MPI for at least
five (5) years  following  the end of the Study  Period.  Such  records  will be
available for inspection  during one (1) year after the end of the Study Period,
by an independent  auditor of Daiichi for the purpose of verifying the financial
reports  mentioned in paragraph 2.3 hereof.  Such inspection may be made no more
than  once a year at  reasonable  times  mutually  agreed  by MPI  and  Daiichi.
Daiichi's  independent  auditor  will be obliged  to  execute a  Confidentiality
Agreement prior to commencing any such inspection.  Inspections  conducted under
this paragraph shall be at the expense of Daiichi.

                     ARTICLE 3. RECORDKEEPING AND REPORTING

     3.1 MPI shall prepare and maintain complete and accurate records in writing
generated  from the  Studies.  MPI shall give  Daiichi a progress  report of the
Studies every one (1) week hereof,  and shall provide  Daiichi in writing with a
final report  including all the results  generated from the Studies  ("Results")
within thirty (30) days following the end of the Study Period.

     3.2 MPI shall  preserve the  originals of the raw data  resulting  from the
Studies  in MPI's  facilities  for  five  (5)  years  form  termination  of this
Agreement.

                             ARTICLE 4. INFORMATION

     4.1 Promptly after the execution of this Agreement,  Daiichi shall disclose
in  writing  information  possessed  by  Daiichi  and  which  Daiichi  considers
necessary for the Studies ("Information").

     4.3 MPI agrees that the  Information  shall be used only for the purpose of
carrying out the Studies hereunder,  and that the Informaiton shall be used only
within  MPI's  laboratories  and shall  not be made  available,  transferred  or
provided to any third party without Daiichi's prior written approval.

[*] Confidential Treatment Requested
<PAGE>

                              ARTICLE 5. DISCUSSION

     5.1 Daiichi and MPI shall, from time to time, discuss the matter concerning
the Studies and decide the plan of Studies.  The meeting between Daiichi and MPI
shall be held in August or September  in 2000,  and in February or March in 2001
to discuss the Results.

              ARTICLE 6. RESULTS AND NEW INVENTIONS AND DISCOVERIES

     6.1 Daiichi  shall solely own the Results and MPI shall not use,  have used
and  disclose  any  Results  for any  purpose  other  than  performance  of this
Agreement.

     6.2 MPI  shall  disclose  to  Daiichi  in  writing  any New  Inventions  or
Discoveries  promptly after the discovery of such New Inventions or Discoveries.
"New  Inventions or  Discoveries"  shall mean any patentable  Results  generated
hereunder.  Further in the event  sufficient  compound made by MPI remains after
Studies,  MPI shall provide Daiichi with such compound,  together with the final
report set forth in Section 3.1 hereof.

     6.3 Title to al New  Inventions  or  Discoveries  conceived  or  reduced to
practice in the course of performance of this Agreement shall be solely owned by
Daiichi.

                               ARTICLE 7. SECRECY

     7.1 MPI shall hold in confidence any information disclosed to it by Daiichi
or  generated  hereunder,  including,  but not limited to, the  Information  and
Results,  and shall not disclose said  information  to any third party except to
such of its employees and officers as have been made aware that said information
is  confidential  and are  bound to treat it as such and to whom  disclosure  is
necessary in order to carry out the Studies, except:

         (a) information and data which at the time of disclosure by Daiichi are
in the public domain;

         (b)  information  and data which after  disclosure by Daiichi enter the
public domain through no improper conduct of MPI;

         (c)  information  and data which prior to  disclosure  by Daiichi  were
already in the possession of MPI as evidenced by written records; or

         (d) information and data which  subsequent to disclosure  hereunder are
obtained  by MPI from third  parties  who are  lawfully  in  possession  of such
information  and data and who do not require MPI to refrain from disclosing such
information and data to others.

     7.2 The obligation in this Article 7 shall survive for a period of ten (10)
years after the termination of this Agreement.
<PAGE>

                                 ARTICLE 8. TERM

     8.1  This  Agreement  shall  become  effective  on the  Effective  Date and
continue in full force and effect until completion of last payment by Daiichi as
set forth in Section  2.1 hereof.  Further,  this  Agreement  may be extended by
mutual  written  consent of the  parties not less than thirty (30) days prior to
the termination for the agreed period of time.

                  ARTICLE 9. RIGHTS AND DUTIES UPON TERMINATION

     9.1   Termination  of  this  Agreement   shall  terminate  all  outstanding
obligation and liabilities, between the parties from this Agreement except those
described in Section 3.2, Article 6., Article 10. and Section 11.3. hereof.

     9.2 Upon the  termination  of this  Agreement,  MPI  shall  not use for any
reason  whatsoever  or transfer to any third party the Compound  provided to MPI
hereunder without Daiichi's prior written consent.  Daiichi may require that MPI
either destroy or return to Daiichi the unused Compound provided to MPI.

                           ARTICLE 10. INDEMNIFICATION

     10.1 MPI shall indemnify and hold harmless Daiichi, its employees, officers
and agents  from and  against  all loss or  expense  by reason of any  liability
imposed by law upon Daiichi relating to the handling of the Compound or carrying
out the Studies or any other work directly or indirectly relating to the Studies
by MPI;  provided  that such loss or expense is not due to negligence or willful
acts or omissions by Daiichi.

                            ARTICLE 11. MISCELLANEOUS

     11.1  Any   modification   and  addition  to  this   Agreement,   including
modifications  in the  Protocols,  shall be valid only if they are  confirmed in
writing by the duly authorized officers of both parties hereto.

     11.2  This  Agreement  constitutes  the full  and  complete  agreement  and
understanding between the parties hereto regarding the subject matter hereof and
shall supersede any and all prior written and oral agreements thereof.

     11.3 The  terms  and  conditions  of this  Agreement  shall  be  construed,
interpreted,  and enforced in accordance with the applicable  statutes,  without
regard  to choice  of law  rules,  of the  State of  California.  All  disputes,
controversies,  or differences that may arise between the parties hereto, out of
or in  relation  to or in  connection  with this  Agreement,  or for the  breach
thereof,  shall be settled by  arbitration.  If the  arbitration is initiated by
Daiichi, it shall be held in Los Angeles,  California USA in accordance with the
International Arbitration Rules of the American Arbitration Association.  If the
arbitration is initiated by MPI, it shall be held in Tokyo,  Japan in accordance
with the rules of Japan Commercial Arbitration  Association.  The award shall be
final and binding upon the parties hereto.
<PAGE>

     11.4 Any notice required or permitted under this Agreement shall be sent by
registered air mail, provided, however, that as for urgent matters facsimile may
be used,  in which case the issuing party shall confirm its notice by registered
air mail.  Said notice shall be sent to the  following  address of the receiving
party:

Daiichi Pharmaceutical Co., Ltd.            Microcide Pharmaceuticals, Inc.
New Product Research Laboratories I
16-13, Kita-Kasai 1-Chome                   850 Maude Ave. Mountain View,
Edogawa-ku, Tokyo 134-8630 Japan            California
Attention: Isao Hayakawa                    Attention: James E. Rurka
Director                                    President and CEO
Telephone No.: (3)-5696-8232                Telephone No.: (650)-428-3525
Facsimile No.: (3)-5696-8344                Facsimile No.: (650)-428-3545

IN WITNESS  WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorized officers upon the date first above written in duplicate
original, one (1) original to be retained by each party hereto.

DAIICHI PHARMACEUTICAL CO., LTD.            MICROCIDE PHARMACEUTICALS, INC.

By:  /S/  Kiyoshi Morita                    By:  /S/  James Rurka
     ----------------------                      ----------------------

Name:  Kiyoshi Morita                       Name:  James Rurka
       --------------------                        --------------------

Title:  President                           Title:  President and CEO
        -------------------                         -------------------

Date:  May 8, 2000                          Date:  April 20, 2000
       --------------------                        --------------------
<PAGE>

                                     ANNEX A

The main goal of this project is to obtain potent and diverse compounds that are
specific inhibitors [*]. Compounds  synthesized and Patents filed in the term of
this contractual study will belong to Daiichi.

                                      [*]

The areas in which research will be carried out are:

     1.   Medicinal chemistry on [*]

The target  compounds to be initially  synthesized will be determined by Daiichi
with additional, more detailed information about structure-activity-relationship
being assessed at Daiichi before the Studies.  Daiichi shall organize  chemistry
plans  for  compounds  which  will  be  synthesized  in the  Studies.  Compounds
synthesized at MPI will be sent to Daiichi after appropriate characterization at
MPI.

     2.   Characterization of synthesized compounds

Preliminary characterization will be performed on all compounds synthesized. The
method for characterization  should be determined by both parties prior to start
of the contractual study.  Compounds with sufficient  activity will be submitted
for pharmacological  studies (serum protein binding, pk and in vivo efficacy) as
jointly deemed appropriate.

     3.   Surveillance  and  profiling of expression of efflux pumps (Mex pumps)
          in clinical isolates of Pseudomonas  aeruginosa from western countries
          (at least USA, Canada, and Europe).

MPI will collect  appropriate numbers of clinical isolates of P. aeruginosa from
western  countries.  Those strains  should  consist of  quinolone-sensitive  and
-resistant  isolates,  and reflect the  distribution of isolates in the clinical
setting.  Characterization  of the  isolates  will be  performed at both MPI and
Daiichi. These studies are aimed at assessment for overall potential [*].

(MPI  will  perform  this item  within  the range of costs of less than US $[*].
However,  larger studies, if jointly deemed appropriate,  will have to be funded
separately by Daiichi.)

[*] Confidential Treatment Requested

<PAGE>

     4.   Investigation   of  current  trends  and  efficacy   (satisfaction  by
          physicians)  in the  treatment for  Pseudomonas  infections in western
          countries.

Approaches for this item could be sequential and initiated at appropriate  times
depending upon the success of the research.

          a.)  MPI  will  discuss  with  infectious   diseases  experts  on  its
               scientific  advisory  board the  current  state of therapy for P.
               aeruginosa and opportunities [*].

          b.)  MPI  scientists  will discuss these issues with a larger group of
               clinicians and pharmacy practitioners in telephone interviews and
               at meetings, and send a report to Daiichi.

          c.)  MPI  could  ask its  infectious  disease  consultant  to survey a
               number of colleagues and write a report.

          d.)  MPI could identify an existing marketing report that covers these
               issues and which could be purchased by Daiichi.

          e.)  MPI could commission a marketing  consultant to carry out a study
               and write a report.

MPI will  carry  out a) and b) under the terms of the  contract;  the  remaining
approaches  could be setup  and  monitored  by MPI but  would  require  separate
funding by Daiichi.

[*] Confidential Treatment RequestedExhibit 10.1.1

                             PACIFIC CAPITAL BANCORP

                   AMENDED AND RESTATED RESTRICTED STOCK PLAN

                          (Effective February 22, 2000)

         Pacific  Capital  Bancorp  hereby  amends and  restates  the  following
Restricted Stock Plan.

1.       PURPOSES OF THE PLAN

         The purposes of this Plan are to attract,  motivate and retain the best
available  officers and employees for the Company and its  Subsidiaries,  and to
provide them with additional incentive to promote the success of the business of
the Company and its Subsidiaries.

2.       DEFINITIONS

         As used herein, the following definitions shall apply:

         2.1 Administrator.  "Administrator" means the Board of Directors or any
of its Committees as shall be administering  the Plan in accordance with Section
10 of the Plan.

         2.2 Applicable Laws. "Applicable Laws" means the federal and state laws
relating to the administration of stock option plans.

         2.3 Award.  "Award"  means any Option or  Restricted  Stock  granted or
issued under this Plan.

         2.4 Award  Agreement.  "Award  Agreement" means any Option Agreement or
Restricted Stock Agreement, as appropriate, relating to any Award.

         2.5 "Board of Directors" means the Board of Directors of the Company.

         2.6 "Change of Control" means the occurrence of either of the following
events:

                  2.6.1 An acquisition (other than directly from the Company) of
any  voting  securities  of the  Company by any person (as that term is used for
purposes of Section  13(d) or Section  14(d) of the Exchange  Act),  immediately
after which such  person has  beneficial  ownership  (within the meaning of Rule
13d-3 promulgated  under the Exchange Act) of thirty-five  percent (35%) or more
of  the  combined  voting  power  of  the  Company's  then  outstanding   voting
securities;

                           A.  provided  that a Change of  Control  shall not be
         deemed to have  occurred  if the person  acquiring  the  securities  is
         either (a) an employee benefit plan (or a trust forming a part thereof)
         maintained by the Company or any of its Subsidiaries or (b) the Company
         or any of its Subsidiaries; and

                                        1

<PAGE>

                           B.  provided  further that a Change of Control  shall
         not be  deemed  to have  occurred  if any other  person  acquires  such
         securities  in  connection  with  any  merger,  consolidation  or other
         reorganization of the Company in a transaction after which:

                                    (i)  the   stockholders   of  the   Company,
                  immediately   before  such   transaction,   own   directly  or
                  indirectly   immediately   after  such  transaction  at  least
                  fifty-one  percent  (51%)  of  the  voting  securities  of the
                  corporation  resulting  from  such  merger,  consolidation  or
                  reorganization (the "Surviving  Corporation") in substantially
                  the  same   proportion  as  their   ownership  of  the  voting
                  securities of the Company immediately before such transaction;
                  or

                                    (ii)  the  individuals  who  were  Incumbent
                  Directors  at the  time  of  the  Company's  execution  of the
                  agreement providing for such transaction constitute at least a
                  majority of the members of the board of directors of Surviving
                  Corporation;   provided  that,  if  the  Company  is  not  the
                  Surviving Corporation or is the Surviving Corporation but is a
                  subsidiary of another  corporation,  the  individuals who were
                  Incumbent  Directors at the time of the Company's execution of
                  the  agreement  providing for such  transaction  constitute at
                  least a majority of the members of the board of  directors  of
                  the ultimate parent corporation of the Surviving  Corporation;
                  or

                                    (iii) no person [other than (a) the Company,
                  (b) any Subsidiary of the Company, or (c) any employee benefit
                  plan (or any trust forming a part  thereof)  maintained by the
                  Company,  the Surviving  Corporation  or any Subsidiary of the
                  Company],  has  beneficial  ownership of  thirty-five  percent
                  (35%) or more of the combined  voting  power of the  Surviving
                  Corporation's voting securities outstanding  immediately after
                  such transaction; or

                  2.6.2 A cumulative  change in the  composition of the Board of
Directors  occurring during any two-year period, as a result of which fewer than
a majority of the Directors are Incumbent Directors; provided that no individual
shall be considered  to be an Incumbent  Director if such  individual  initially
assumed  office as a result of either an actual or threatened  election  contest
(as described in Rule 14a-11  promulgated  under the Exchange Act) (an "Election
Contest") or other actual or threatened  solicitation  of proxies or consents by
or on behalf of a person other than the Board of Directors (a "Proxy  Contest"),
including  by reason of any  agreement  intended to avoid or settle any Election
Contest or Proxy Contest.

                  2.6.3 Notwithstanding the foregoing, a Change of Control shall
not be deemed to occur solely because any person acquires  beneficial  ownership
of more than the permitted  percentage of the then outstanding voting securities
of the  Company  as a result  of the  acquisition  of voting  securities  by the
Company which,  by reducing the number of voting  securities  then  outstanding,
increases the proportional  number of voting  securities  beneficially  owned by
such  person;  provided  that,  if a Change of Control  would occur (but for the
operation of this sentence) as a result of the acquisition of voting  securities
by the Company,  and, after such acquisition by the Company, such person becomes
the beneficial  owner of any additional  voting  securities  which increases the
percentage of the then outstanding voting securities  beneficially owned by such
person, then a Change of Control shall occur.

                  2.6.4  Notwithstanding  anything  in this  Plan  or any  Stock
Option  Agreement  or  Restricted  Stock  Agreement  to the  contrary,  (a)  the
occurrence of a merger,  consolidation  or  reorganization  that is described in
Section 11.2 of this Plan shall not be considered  the occurrence of a Change of
Control for any purposes under this Plan or any Stock Option  Agreement or Stock
Restricted Stock Agreement and (b) if a merger, consolidation, reorganization or
other  transaction  might be deemed to be  described  in both this  Section  and
Section 11.2 of this Plan, such merger,  consolidation,  reorganization or other
transaction shall be deemed to be described in only Section 11.2 of this Plan.

                                        2

<PAGE>

         2.7 "Code" means the Internal Revenue Code of 1986, as amended.

         2.8 "Commission" means the Securities and Exchange Commission.

         2.9 "Committee"  means the  Committee of  the Board of  Directors  that
shall administer the Plan.

        2.10 "Common Stock" means the Common Stock of the Company.

        2.11 "Company" means Pacific Capital Bancorp, a California corporation.

        2.12 "Donative  Transfer"  means any  transfer  of an  Option or Reload
Option  made for  donative  purposes  or without the payment or receipt by or on
behalf  of the  Optionee  of any  cash,  property  or other  consideration.  For
purposes of this Section 2.12,  neither an Optionee's  receipt of or eligibility
for a deduction,  credit or similar allowance for federal or state income tax or
estate tax purposes nor the  transferee's  use for family or support purposes of
any proceeds  realized  from the sale of any shares of Common Stock  acquired on
exercise of an Option shall be deemed to be the receipt of consideration.

        2.13 "Effective  Date" means  February 22, 2000,  the date on which the
amendment and restatement of this Plan was approved by the Board of Directors.

        2.14 "Exchange  Act" means  the  Securities  Exchange  Act of 1934,  as
amended.

        2.15 "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows.

                  2.15.1 If the Common Stock is listed on an  established  stock
exchange or a national market system,  including  without  limitation the Nasdaq
National  Market  of  the  National  Association  of  Securities  Dealers,  Inc.
Automated  Quotation  ("NASDAQ")  System,  the Fair  Market  Value of a share of
Common  Stock  shall be the  closing  sales price for such stock (or the closing
bid, if no sales were  reported)  as quoted on such  system or exchange  (or the
exchange  with the greatest  volume of trading in the Common  Stock) on the last
market trading day prior to the date of determination.

                  2.15.2 If the Common Stock is quoted on the NASDAQ System (but
not  on  the  Nasdaq  National  Market  thereof)  or is  regularly  quoted  by a
recognized  securities  dealer but  selling  prices are not  reported,  the Fair
Market  Value of a share of Common  Stock shall be the mean between the high bid
and low asked prices for the Common  Stock on the last market  trading day prior
to the date of determination.

        2.16 Incentive Stock  Option.  "Incentive  Stock Option" means an option
which conforms to the applicable provisions of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.

        2.17  "Incumbent  Directors"  means  Directors of the Company who either
(a) are Directors of the Company as of the  Effective  Date, or (b) are elected,
or nominated for election,  to the Board of Directors by the affirmative vote of
at least a majority of the  Incumbent  Directors at the time of such election or
nomination;  provided  that, for purposes of clause (b) of this Section 2.17, an
individual whose election or nomination is effected in connection with an actual
or  threatened  Election  Contest or Proxy  Contest  relating to the election of
Directors of the Company shall not be considered an Incumbent Director.

                                        3

<PAGE>

         2.18 "Non-Employee  Director" shall be defined as it is defined in Rule
16b-3.

         2.19 Nonqualified  Stock Option.  "Nonqualified  Stock Option" means an
Option  which  is  not   designated   as  an  Incentive   Stock  Option  by  the
Administrator.

         2.20  "Option"  means a stock option  granted  pursuant to the Plan and
shall  include  Reload  Options.   All  Options   granted   hereunder  shall  be
"nonstatutory  stock  options"  and each such  Option  shall be  evidenced  by a
written Stock Option Agreement.

         2.21 "Optioned Stock" means the Common Stock subject to an Option.

         2.22  "Optionee"  means  an  employee  of  the  Company  or  any of its
Subsidiaries who receives an Option.

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

         2.24  Participant  "Participant"  means  any  Optionee  and  Restricted
Stockholder who has received an Award under this Plan.

         2.25 "Plan" means this  Restricted  Stock  Option Plan,  as amended and
restated.

         2.26 Restricted  Stock.  "Restricted  Stock" means Common Stock awarded
under this Plan.

         2.27 Restricted Stockholder. "Restricted Stockholder" means an Employee
granted an award of Restricted Stock under this Plan.

         2.28 Restricted Stock Agreement.  "Restricted  Stock Agreement" means a
written agreement between the Company and the Restricted  Stockholder evidencing
the terms and restrictions  applying to the award of the Restricted  Stock. Each
Restricted  Stock  Agreement is subject to the terms and conditions of the Plan.
The terms and  provisions of each  Restricted  Stock  Agreement  need not be the
same.

         2.29 "Rule 16b-3" means Rule 16b-3  promulgated  under the Exchange Act
or any successor to Rule 16b-3 in effect at the time in question.

         2.30 "Section 16(b)" means Section 16(b) of the Exchange Act.

         2.31 "Stock Option  Agreement"  means a written  agreement  between the
Company and an Optionee  evidencing  the terms and  conditions  of an individual
Option grant.  Each Option  Agreement is subject to the terms and  conditions of
the Plan.  The terms and  provisions  of each Option  Agreement  need not be the
same.

                                        4

<PAGE>

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

3.       RESERVE OF SHARES

         3.1 Reserve.  Subject to the  provisions  of Section  3.2,  below,  the
maximum  aggregate  number of shares of Common Stock  reserved for issuance upon
the exercise of Options and other Awards granted under the Plan is Three Million
Three Hundred Thousand  (3,300,000)  shares of authorized but unissued shares of
Common  Stock of the  Company.  No more than the total  number of shares held in
this  Reserve  shall be  issued  under  the Plan  pursuant  to the  exercise  of
Incentive Options and Non-Qualified Options in the aggregate.

         3.2 Adjustments In Reserve.  If the outstanding  shares of Common Stock
are  increased or  decreased,  or are changed into or exchanged  for a different
number or kind of shares or other  securities,  as a result of the occurrence of
an event  described in Section  11.1 or Section  11.2,  below,  then and in such
event, appropriate adjustments shall be made in the number and/or kind of shares
or other securities for which Options may thereafter be granted under this Plan.
In the event that any outstanding Option under the Plan expires or is terminated
without exercise, or with only partial exercise,  prior to the end of the period
during which Options may be granted under the Plan, the shares  allocable to the
unexercised  portion of any such  Option may be added back into the  Reserve and
may again be subject to Option under the Plan.

4.       ELIGIBILITY

         Full-time   salaried   employees   of  the   Company  and  any  of  its
Subsidiaries,  who shall, in the judgment of the Administrator,  be qualified by
position, training, or ability to contribute substantially to the success of the
Company and its  Subsidiaries,  shall be eligible to participate in the Plan and
to receive Awards under the Plan.  The number of shares  allocable to any person
by means of an Award under this Plan is to be  reasonable,  as determined by the
Administrator,  in  relation  to the  purposes  of the  Plan and the  needs  and
capabilities of the Company. No Award may be granted to any employee owning more
than ten  percent  (10%) of the  voting  power  of all  classes  of stock of the
Company or any of its Subsidiaries.

5.       TYPE OF AWARDS

        5.1      Grant of Options.

                  5.1.1  Effective Date of Option Grant.  The grant of an Option
pursuant to this Plan shall be deemed to have occurred on the latest of: (a) the
date the Board of Directors or the Committee  announces the grant of the Option;
or (b) such later date  designated by the Board of Directors or the Committee or
set forth in the Stock Option Agreement.

                  5.1.2 Determination of Grants.

                           A. The  Administrator  may from time to time,  in its
         absolute discretion:

                                    (i)  Determine   which   Employees  are  key
                  Employees and select the key Employees  (including  Employees,
                  who have  previously  received  Options or other  Awards under
                  this Plan) to be granted Options;

                                        5

<PAGE>

                                    (ii)  Determine  the  number of shares to be
                  subject to Options granted to any Employee;

                                    (iii) Determine  whether such Options are to
                  be Incentive Options or Nonqualified Stock Options; and

                                    (iv)   Determine   the   other   terms   and
                  conditions of such Options consistent with this Plan.

                           B. Upon the selection of an Employee to be granted an
         Option,  the Administrator  shall instruct the Secretary of the Company
         to issue the Option and may impose such  conditions on the grant of the
         Option as the Administrator deems appropriate.

                           C. An Incentive  Option  granted  under this Plan may
         not be modified by the  Administrator  to  disqualify  such Option from
         treatment as an "incentive  stock option" under Section 422 of the Code
         without the consent of the Optionee.

                  5.1.3 Other Awards.  Options may be granted  either alone,  in
addition to, or in tandem with other Awards  granted  under the Plan and/or cash
awards made outside of the Plan.

                  5.1.4 Stock Option  Agreements.  Each Option granted hereunder
shall be evidenced by a written Stock Option Agreement.

        5.2      Award of Restricted Stock.

                  5.2.1 Effective Date of Award.  The award of Restricted  Stock
pursuant to this Plan shall be deemed to have occurred on the latest of: (a) the
date  the  Board  of  Directors  or the  Committee  announces  the  award of the
Restricted Stock; or (b) such later date designated by the Board of Directors or
the Committee or set forth in the Restricted Stock Agreement.

                  5.2.2 Determination of Awards.

                           A. The  Administrator  may from time to time,  in its
         absolute discretion:

                                    (i)  Determine   which   Employees  are  key
                  Employees  and select the key Employees  (including  Employees
                  who have previously  received other Awards under this Plan) to
                  be awarded Restricted Stock;

                                    (ii) Determine the purchase  price,  if any,
                  payable for the Restricted Stock;

                                    (iii)  Determine  the period,  if any,  over
                  which the Restricted  Stockholder's interest in the Restricted
                  Stock  shall  vest;  provided  that such  period  shall not be
                  longer than five (5) years and at least twenty  percent  (20%)
                  of the interest shall vest on each  anniversary of the date of
                  issuance of the Restricted  Stock;  provided  further that the
                  Administrator  may provide in any Restricted  Stock  Agreement
                  that  the  Restricted  Stock  shall  be  fully  vested  on the
                  occurrence of a Change in Control; and

                                        6

<PAGE>

                                    (iv)   Determine   the   other   terms   and
                  conditions, consistent with this Plan, applicable to the award
                  of the Restricted Stock.

                           B. The  Administrator  shall  establish  the purchase
         price,  if any, and the form of payment of the  purchase  price for the
         Restricted  Stock;  provided that such purchase  price shall be no less
         than par value.

                           C. Upon the  selection  of an  Employee to be awarded
         Restricted Stock, the Administrator shall instruct the Secretary of the
         Company to issue such  Restricted  Stock and may impose such conditions
         on the issuance of such Restricted Stock as it deems appropriate.

                           D.  Restricted  Stock may be issued either alone,  in
         addition  to, or in tandem  with other  Awards  granted  under the Plan
         and/or cash awards made outside of the Plan.

                  5.2.3  Other  Awards.  Restricted  Stock may be issued  either
alone,  in addition  to, or in tandem with other Awards  granted  under the Plan
and/or cash awards made outside of the Plan.

                  5.2.4  Restricted Stock  Agreements.  Each award of Restricted
Stock shall be evidenced by a written Restricted Stock Agreement.

         5.3 Other Stock Awards.  The  Administrator  may designate  whether any
grant of Restricted Stock is intended to be "performance-based  compensation" as
that term is used in Section 162(m) of the Code. Any awards of Restricted  Stock
designated  as  intended  to  be   "performance-based   compensation"  shall  be
conditioned on the achievement of one or more performance  measures  established
by  the   Administrator.   For  awards  of  Restricted   Stock  intended  to  be
"performance-based  compensation,"  the  grant of the  Restricted  Stock and the
establishment  of the  performance  measures  shall be made  during  the  period
required  under Section  162(m) of the Code.  Any award of  Restricted  Stock as
performance-based  compensation shall be evidenced by a written Restricted Stock
Agreement.

6.       TERMS OF OPTIONS.

         6.1 Option Exercise Price.

                  6.1.1  Establishment  of  Option  Price.  The  price per share
required to be paid upon exercise of any Option  granted  hereunder,  whether an
Incentive  Option or a  Non-Qualified  Option,  shall be 100% of the fair market
value per share,  as determined by the Board of Directors or the  Committee,  of
the Common Stock at the time of the grant of the Option.

                  6.1.2  Payment  of Option  Price.  The Option  price  shall be
payable either (a) in cash in immediately  available funds, or (b) with stock of
the Company,  valued at its then Fair Market Value. In the event that the Option
price is paid,  whether  in whole or in part,  through  the  tender of shares of
Common  Stock  already  owned by the  Option  holder,  then the  Option  must be
exercised  for a minimum of at least 100 shares,  or the total  number of shares
subject to the outstanding Option being exercised, if less than 100 shares.

                  6.1.3 Exchange of Options.  Notwithstanding the foregoing,  in
the event  that any  Option is  granted  under  this  Plan in  exchange  for the
surrender by the grantee of another  Option for the Common  Stock,  the Board of
Directors or the Committee, in its discretion,  may establish the exercise price
under the new  Option  at the same  price as  provided  in the  Option  which is
surrendered,  but only to the extent of the number of shares then subject to the
Option which is surrendered.

                                        7

<PAGE>

         6.2 Option Period. The term of any Incentive Option granted pursuant to
this Plan shall not exceed five (5) years. The term of any Non-Qualified  Option
shall not exceed ten (10) years.

         6.3 Limitation on Incentive  Stock  Options.  The aggregate Fair Market
Value,  as determined by the Board of Directors or the Committee,  of the shares
of Common  Stock with respect to which an Incentive  Option  granted  under this
Plan is exercisable  for the first time by an Optionee  during any calendar year
shall not  exceed  the  difference  between  (a) One  Hundred  Thousand  Dollars
($100,000) and (b) the sum of the Fair Market Value,  as determined by the Board
of Directors or the  Committee,  as of the time the Incentive  Options,  if any,
were granted,  of the shares of Common Stock  covered by all  Incentive  Options
which were granted to the Optionee under this Plan and all other incentive stock
option plans of the Company and which are  exercisable for the first time by the
Optionee during such calendar year. If an Incentive  Option is granted  pursuant
to which the  aggregate  fair market  value of shares  with  respect to which it
first becomes exercisable in any calendar year exceeds such $100,000 limitation,
the portion of such Option which is in excess of the $100,000  limitation  shall
be treated as a Non-qualified  Option pursuant to Section 422(d)(1) of the Code.
This Section 6.3 is intended to comply with the provisions of Section 422 of the
Code and  shall be  interpreted  so as to  comply  with the  provisions  of such
Section of the Code.  Nothing in this Section 6.3 shall  obligate the Company to
grant Options or any  additional  Options to any employee under this Plan or any
other stock  option plan here or  hereafter  adopted by the Company by reason of
the treatment of any Options as Non-Qualified Options under this Section 6.3.

6.4      Exercise; Vesting.

         6.4.1 Vesting Schedule.  Options granted hereunder  (whether  Incentive
Options  or  Non-Qualified   Options)  shall  become  exercisable   ("vest")  in
accordance with such schedule as the Board of Directors or the Committee, in the
exercise of its discretion,  may deem appropriate in any particular case. To the
extent not so provided by the Board of Directors or the Committee, Options shall
vest as follows:  The aggregate  number of shares covered by the Option shall be
divided by the number of years included in the Option term (each such year being
hereinafter  called an "Option  Year").  The Optionee  shall become  entitled to
purchase  the  number of shares of Common  Stock  resulting  from the  foregoing
division  as  follows:   (i)  the  first  installment  of  shares  shall  become
exercisable  six (6) months after the date of the grant of the Option;  and (ii)
an  additional  installment  shall become  exercisable  on the first day of each
Option Year that begins thereafter. Notwithstanding anything in the Plans to the
contrary,  (a) Options granted under this Plan shall vest and become exercisable
over a period no longer  than five (5) years and at a rate not less than  twenty
percent  (20%) per year,  and (b) no Option  granted  under  this Plan  shall be
exercisable  for at least six (6) months  following the date of the grant of the
Option, except in case of death or disability

         6.4.2  Acceleration  on Change of  Control.  Upon the  occurrence  of a
Change of Control,  all unexercised Options then outstanding shall be and become
immediately  exercisable  effective  as the  effective  date of such  Change  of
Control.  If any Options or portion thereof  originally  designated as Incentive
Options  would cease to qualify as incentive  stock  options under the Code as a
result  of the  exercise  of such  Options  in  accordance  with  the  preceding
sentence,  then such Incentive  Options or portion thereof shall be redesignated
as  Non-qualified  Options.  The  Company  shall use its  reasonable  efforts to
promptly  notify  each  Optionee  upon the  occurrence  of a Change of  Control;
provided  that  neither the Company nor any member of the Board of  Directors or
the Committee  shall have any liability to any Optionee  solely by reason of any
delay or failure to give notice of the occurrence of a Change of Control.

                                        8

<PAGE>

         6.5 Expiration of Options.

                  6.5.1 Termination Events. Notwithstanding any other provisions
of this  Plan or the  terms  of any  Stock  Option  Agreement,  Options  granted
pursuant to this Plan shall expire upon the  occurrence  of any of the following
events.

                           A.  Termination  of  Employment.   The  Option  shall
         terminate   immediately   upon  the   termination   of  the  Optionee's
         employment,  other than as a result of the Optionee's retirement, death
         or disability,  provided that the Optionee may, within thirty (30) days
         after the date of the termination (but in no event beyond the period of
         time for which the  Optionee  is  granted),  exercise  the Option as to
         those shares with respect to which the Option was vested as of the date
         of termination of employment.

                           B. Retirement. The Option shall terminate immediately
         upon  retirement  of the  Optionee  in  accordance  with the  Company's
         retirement  policy,  provided  that the  Optionee  may within three (3)
         months after the date of retirement  (but in no event beyond the period
         of time for which the  Option is  granted)  exercise  the  Option as to
         those shares with respect to which the Option was vested as of the date
         on which the Optionee retired.

                           C. Death or  Disability.  The Option shall  terminate
         immediately  upon the death or permanent  disability (as defined in the
         Company's  Incentive and  Investment  Profit Sharing Plan and Trust) of
         the  Optionee  while  in  the  employ  of  the  Company  or  any of its
         Subsidiaries; provided that the Optionee may, within twelve (12) months
         of the date of his/her death or disability  (but in no event beyond the
         period of time for which the Option is granted)  exercise the Option as
         to those  shares with  respect to which the Option was vested as of the
         date of the  Optionee's  death or  permanent  disability.  During  such
         twelve-month   period   the   Optionee   (or   his  or   her   personal
         representative)  or the persons to whom the Optionee's rights under the
         Option shall have passed by will or by the  applicable  laws of descent
         and  distribution  shall have the right to  exercise  the Option to the
         extent that any  vesting  installments,  if any,  had accrued as of the
         date of Optionee's death or disability.

                  6.5.2  Transfer to and from  Subsidiaries.  The transfer of an
Optionee's  employment  from the  Company  to any  Subsidiary  or  Parent of the
Company,  from a Subsidiary or Parent of the Company to the Company or among any
of the Company Subsidiaries or any of its Parents or shall not be considered the
termination of the Optionee's employment for purposes of Section 6.5.1, above.

         6.6 Method of Exercise.  Options granted pursuant to this Plan shall be
exercised by delivery to the  Administrator  of a written notice  specifying (a)
the number of shares which an Optionee  (or his or her personal  representative)
then desires to purchase, (b) the name or names in which Optionee (or his or her
personal  representative) desires to have the shares issued, and (c) whether the
Options being exercised are Incentive  Options or  Non-Qualified  Options.  Said
notice shall be accompanied  by full payment of the aggregate  purchase price of
such  Options in  immediately  available  funds (or stock of the  Company).  The
Company or its designated agent shall, as soon as practicable thereafter,  issue
and deliver to the Optionee and/or any other persons designated in the notice of
exercise,  the necessary  certificate or  certificates  evidencing the number of
shares purchased  (excluding any fractional shares), in the name of the Optionee
and/or in the name of the other  persons  designated  in the notice of exercise.
The  Optionee may  designate  in the notice of exercise  that some or all of the
shares to be issued upon such exercise shall be issued in the name of Optionee's
spouse, the trustee of a revocable trust in which Optionee and his or her spouse

                                        9

<PAGE>

are the sole primary beneficiaries,  Optionee's prior spouse, or any combination
of the foregoing.  Notwithstanding anything herein to the contrary, Optionee may
not  designate in the notice of exercise  that any of the shares of Common Stock
or other  securities  shall be issued to  Optionee's  prior  spouse  unless such
issuance is to be made pursuant to a domestic  relations order as defined in the
Code or Title I of the Employee  Income  Retirement  Security  Act, or the rules
thereunder. The Board of Directors or the Committee may rely on a representation
of the person  exercising  the  Option,  or such other  evidence as the Board of
Directors or the Committee  deems  appropriate,  for purposes of determining the
propriety of the exercise of any Option and the compliance of such exercise with
the terms of this Plan and any applicable Stock Option  Agreement.  The Board of
Directors or the Committee shall have no obligation to independently investigate
the  propriety of the exercise of any Option or the  compliance of such exercise
with the terms of this Plan or any applicable Stock Option Agreement.

         6.7 Reload Features.

                  6.7.1  Grant of Reload  Options.  Whenever  the  holder of any
Option (the "Original Option") outstanding under this Plan (whether an Incentive
Option or a Non-Qualified Option, and including any Reload Options granted under
the  provisions  of this Section 6.7)  exercises  the Original  Option and makes
payment  of the option  price by  tendering  shares of the  Common  Stock of the
Company  previously  held by him or her, then the holder of that Option shall be
entitled  to receive  and the  Company  shall  grant a new Option  (the  "Reload
Option") for that number of additional shares of the Common Stock of the Company
which is equal to the number of shares  tendered  by the  Optionee in payment of
the option  price for the  Original  Option  being  exercised.  All such  Reload
Options granted hereunder shall be on the following terms and conditions.

                           A. Option Price.  The option price per share shall be
         an amount  equal to the then current Fair Market Value per share of the
         Common  Stock,  as of the date of exercise of the Original  Option,  as
         determined by the Board of Directors or the Committee.

                           B. Expiration  Date. The option exercise period shall
         expire,  and the Reload Option shall no longer be  exercisable,  on the
         expiration  of the  option  period of the  Original  Option or five (5)
         years from the date of the grant of the  Reload  Option,  whichever  is
         later.

                           C. Vesting  Period.  Any Reload Option  granted under
         this Section 6.7 shall "vest" and first become exercisable one (1) year
         following the date of exercise of the Original Option.

                           D. Other  Terms.  All other  terms of Reload  Options
         granted hereunder shall be identical to the terms and conditions of the
         Original  Option,  the exercise of which gives rise to the grant of the
         Reload Option. Further, the character of the Reload Option shall be the
         same as the  character of the Original  Option,  namely if the Original
         Option is an Incentive Option,  the Reload Option shall be an Incentive
         Option;  and if the  Original  Option is a  Non-Qualified  Option,  the
         Reload Option shall also be a Non-Qualified Option.

                                       10

<PAGE>

                  6.7.2  Restrictions  on  Reload  Options.  Any and all  Reload
Options  granted  pursuant to this  Section  6.7 (or Section 8, below)  shall be
subject to the following conditions and restrictions:

                           A.  No  Reload   on   Existing   Incentive   Options.
         Notwithstanding Section 6.7.1, above, no Reload Option shall be granted
         pursuant to Section  6.7.3,  below,  upon the exercise of any Incentive
         Option  which is  outstanding  as of the date as of which this Plan was
         originally adopted by the Board of Directors.

                           B.  Holding  Period  of  Shares  Tendered.  No Reload
         Option shall be granted  pursuant to Section 6.7.1,  above,  unless the
         shares  tendered  upon  exercise  of the  Original  Option  in  payment
         therefore  have been held by the Optionee for a period of more than six
         (6) months prior to the exercise of the Original Option.

                           C. Holding Period of Original  Option Shares.  If the
         shares of Common Stock of the Company which are issued upon exercise of
         the Original Option are sold within one (1) year following the exercise
         of the  Original  Option,  then the  Reload  Option  shall  immediately
         terminate.

                           D.  Exception.  The holding period  restrictions  set
         forth in  Sections  6.7.2.B  and  6.7.2.C  above  shall not apply to an
         Optionee's  (a)  transfer  of shares of Common  Stock to the Company in
         payment of all or any portion of the purchase price upon exercise of an
         Option,  whether  an  Original  Option  or  a  Reload  Option,  or  (b)
         satisfaction of his withholding obligation, if any, pursuant to Section
         8 below by the  withholding of shares that would otherwise be issued as
         a result of the exercise of an Option.

                  6.7.3 "Grandfather" Provisions.  The Company acknowledges that
there are  outstanding  options  granted to employees  under the Company's prior
employee  Stock Option Plan,  which plan expired in calendar year 1993, and that
said plan contained  "reload" features similar to those contained herein. To the
extent  that any such  outstanding  options  under  said Stock  Option  Plan are
exercised  after the  expiration  of that plan,  the Board of  Directors  or the
Committee  shall have the power,  in its sole  discretion,  to grant to any such
option holders a Reload Option under and containing the terms  specified in this
Plan.

         6.8      Transferability of Options.

                  6.8.1  Restriction  on Transfer.  Except as  specifically  set
forth in Section 6.8.2 hereof, no Option or Reload Option may be sold,  pledged,
assigned,  hypothecated,  transferred,  or otherwise  disposed of in any manner,
other than by will or the laws of descent and distribution.

                  6.8.2 Limited  Transferability.  A Stock Option  Agreement may
provide  that an Optionee  may  transfer  all or a portion of any  Non-Qualified
Option or  Non-Qualified  Reload  Option in accordance  with  provisions of this
Section  6.8.2.  If a  Stock  Option  Agreement  permits  the  transfer  of  any
Non-Qualified  Option or Non-Qualified Reload Option, any transfer that does not
comply with all of the  provisions  of this  Section  6.8.2 and the Stock Option
Agreement  shall be null and void ab initio.  The provisions of the Stock Option
Agreements dealing with the transferability of the Options need not be identical
for all Options and the provision for transferability with respect to one Option
shall not require the  provision for  transferability  with respect to any other
Option.  (For  purposes  of  this  Section  6.8.2,   Non-Qualified  Options  and
Non-Qualified  Reload  Options  which  may be  transferred  are  referred  to as
"Transferable Option".)

                           A. Permitted  Transferees.  A Transferable Option may
         be  transferred  by the Optionee only to one or more of the  following:
         (a) the Optionee's spouse,  parents and lineal  descendants,  including
         adopted  children  (the  "Immediate  Family  Members");   (b)  a  trust
         established  by the Optionee  and with respect to which all  beneficial
         interests are held by one or more of the Optionee, the Immediate Family
         Members,  and a  tax-exempt  charitable  organization  which has only a
         contingent residual interest in the trust; (c) a partnership or limited

                                       11

<PAGE>

         liability  company  established  by  the  Optionee  and  in  which  all
         beneficial  interests  are held by one or more of the  Optionee and the
         Immediate Family Members;  (d) a tax-exempt  educational,  religious or
         charitable  organization,   as  those  terms  are  defined  in  Section
         501(c)(3) of the Code;  and (e) such other  persons and entities as the
         Company may  specifically  approve in writing after written notice from
         the Optionee. The Company may require as a condition to the transfer of
         any  Transferable  Option under this Section 6.8.2 that the  transferee
         provide to the Company reasonable evidence that the proposed transferee
         is described in one of the foregoing clauses.

                           B.   Permitted   Transfers.   Any   transfer   of   a
         Transferable  Option under this Section 6.8.2 must be either a Donative
         Transfer,  a transfer to a  partnership  or limited  liability  company
         described in clause (c) of Section 6.8.2.A above, pursuant to which the
         Optionee  receives  only  his or her  interest  in the  partnership  or
         limited  liability  company,  or a transfer  specifically  approved  in
         writing by the Company after written notice from the Optionee.

                           C. Minimum  Transfer.  Any transfer of a Transferable
         Option or a Reload  Option  must be with  respect  to not less than one
         hundred  (100)  shares of Optioned  Stock and may be made only in whole
         number multiples of one hundred (100) shares of Optioned Stock.

                           D. Notice to the Company. The Optionee shall give the
         Company at least ten (10) days  prior  written  notice of any  proposed
         transfer of a  Transferable  Option  pursuant to this Section 6.8.2 and
         shall include with such notice:

                                    (i) The name  and  address  of the  proposed
                  transferee  and a statement of the basis on which the proposed
                  transferee is a permitted  transferee  under  Section  6.8.2.A
                  hereof; and

                                    (ii)  The  proposed   transferee's   written
                  agreement to accept the Transferable  Option and any shares of
                  Common Stock acquired on exercise of the  Transferable  Option
                  subject  to all of the terms and  conditions  of this Plan and
                  the   applicable   Stock  Option   Agreement,   including  the
                  provisions  dealing with the  termination of the  Transferable
                  Option  on the  death or  disability  of the  Optionee  or the
                  termination of the Optionee's  employment  with the Company or
                  any of its Subsidiaries.

                           E. No Further Transfer.  Notwithstanding  anything in
         this Plan or any Stock Option  Agreement to the contrary,  a transferee
         of any Transferable Option shall not have the right to further transfer
         all or any portion of the Transferable  Option,  other than (a) by will
         or the laws of descent and distribution, or (b), if the transferee is a
         trust,  pursuant to the terms of the trust  agreement  by reason of the
         death of any settlor.

                           F. No Transfer of Incentive Options.  Notwithstanding
         anything in this Plan or any Stock Option Agreement to the contrary, an
         Optionee may not transfer any Incentive Option or Reload Option granted
         with respect to an  Incentive  Option other than by will or the laws of
         descent and distribution.

                           G.  Further  Acts.  The  Company  may  require  as  a
         condition to the transfer of any  Transferable  Option such  additional
         information   and  agreements   from  the  Optionee  and  the  proposed
         transferee as the Company may deem necessary or beneficial for purposes
         of complying with this Section or any applicable  federal or state law,
         rule or regulation.

                                       12

<PAGE>

                           H.  Disclaimer.   The  Company's  acceptance  of  any
         transfer of a Transferable  Option shall not be considered legal or tax
         advice  to  the  Optionee  or  the  proposed  transferee  as  to  their
         compliance  with any applicable law, rule or regulation or the legal or
         tax  consequences  of such transfer or the  subsequent  exercise of the
         Transferable  Option or the sale or  exchange  of any of the  shares of
         Common Stock acquired on exercise of the Transferable Option.

         6.9 No Stockholder Rights. An Option holder shall not be deemed to be a
stockholder  of the Company with respect to Options  unless and until the shares
of Common  Stock  covered by the Option  shall have been  issued  upon  exercise
thereof and are paid for in full.

         6.10  Substitution of Options.  The Board of Directors or the Committee
may grant to an Option holder,  if he or she is otherwise  eligible,  additional
Options  under this Plan or,  with the consent of the Option  holder,  grant new
Options  under  this  Plan in lieu of any  outstanding  Options  for a number of
shares,  at a purchase  price and for a term which in any  respect is greater or
lesser  than that of the  earlier  Option,  subject to those  limitations  as to
Options otherwise set forth herein.

         6.11 Stock Option Agreements.  The Stock Option Agreements entered into
hereunder shall contain such other provisions,  including,  without  limitation,
restrictions  upon the  exercise of an Option,  as the Board of Directors or the
Committee shall deem advisable.  Incentive Stock Option Agreements shall contain
such limitations and restrictions  upon the exercise of the Incentive Options as
shall be  necessary in order that such  Incentive  Options  will  constitute  an
"incentive  stock option" as defined in Section 422 of the Code or to conform to
any change in the law. The terms and  provisions of the Stock Option  Agreements
need not be identical for all Options granted under the Plan.

7.       TERMS OF RESTRICTED STOCK AWARDS.

         7.1 Restricted Stock  Agreement.  Restricted Stock shall be issued only
pursuant  to a  Restricted  Stock  Agreement,  which  shall be  executed  by the
selected  Employee  and which shall  contain  such terms and  conditions  as the
Administrator shall determine consistent with this Plan.

         7.2  Continued  Services.  As  consideration  for the  issuance  of the
Restricted  Stock, in addition to payment of any purchase price,  the Restricted
Stockholder  shall  agree to remain in the employ of the Company for a period of
at  least  one  (1)  year  (or  such  shorter  period  as  may be  fixed  by the
Administrator) after the Restricted Stock is issued.  Nothing in this Plan or in
any Restricted  Stock Agreement  shall confer on any Restricted  Stockholder any
right to continue in the employ of the Company for any period or any  particular
period or shall  interfere with or restrict in any way the rights of the Company
to discharge any Restricted  Stockholder at any time for any reason  whatsoever,
with or without cause.

         7.3 Rights as  Stockholders.  Upon delivery of the shares of Restricted
Stock to the  Restricted  Stockholder,  the Restricted  Stockholder  shall have,
unless otherwise provided by the Administrator,  all the rights of a stockholder
with respect to said shares, subject to the restrictions in the Restricted Stock
Agreement,  including the right to receive all dividends and other distributions
paid or made with respect to the Restricted Stock.

                                       13

<PAGE>

         7.4 Restriction on Transfer.  Notwithstanding  anything in this Plan or
any Restricted  Stock Agreement to the contrary,  no Restricted  Stockholder may
sell or  otherwise  transfer,  whether or not for value,  any of the  Restricted
Stock  prior to six (6)  months  after the date of the  award of the  Restricted
Stock.

         7.5 Restriction.  All shares of Restricted Stock issued under this Plan
(including any shares of Common Stock and other  securities  issued with respect
to the shares of Restricted Stock as a result of stock  dividends,  stock splits
or similar changes in the capital  structure of the Company) shall be subject to
such restrictions as the  Administrator  shall provide,  which  restrictions may
include,   without   limitation,    restrictions   concerning   voting   rights,
transferability  of the Restricted Stock and  restrictions  based on duration of
employment with the Company,  Company  performance  and individual  performance;
provided  that the  Administrator  may, on such terms and  conditions  as it may
determine to be appropriate,  remove any or all of such restrictions at any time
and from time to time. The  restrictions,  if any, imposed by the  Administrator
under  this  Section  need not be  identical  for all  Restricted  Stock and the
imposition of any  restrictions  with respect to any Restricted  Stock shall not
require the imposition of the same or any other restrictions with respect to any
other Restricted Stock.

         7.6 Repurchase of Unvested  Restricted  Stock.  Each  Restricted  Stock
Agreement shall provide that the Company shall have the right to repurchase from
the Restricted  Stockholder the unvested  Restricted Stock upon a Termination of
Employment  at a cash price per share  equal to the  purchase  price paid by the
Restricted Stockholder for such Restricted Stock; provided that provision may be
made that no such right of repurchase  shall exist in the event of a Termination
of Employment without cause or following a Change In Control.

         7.7  Repurchase of Vested  Restricted  Stock.  In the discretion of the
Administrator, the Restricted Stock Agreement may provide that the Company shall
have the right to repurchase the vested  Restricted  Stock upon a Termination of
Employment  at a cash price per share equal to the then Fair Market Value of the
Common  Stock;  provided  that  provision  may be made  that no  such  right  of
repurchase shall exist in the event of a Termination of Employment without cause
or following a Change In Control.

         7.8  Legend.  The  Administrator  shall cause a legend or legends to be
placed on certificates  representing shares of Restricted Stock that are subject
to restrictions under Restricted Stock Agreements, which legend or legends shall
make appropriate  reference to the applicable  restrictions.  In lieu of issuing
shares of Restricted Stock which are unvested,  the  Administrator  may elect to
issue such shares of Restricted  Stock through  journal entry and to deliver the
stock  certificates  for  such  shares  only  at  such  time  as the  Restricted
Stockholder's interest in such shares of Restricted Stock has become vested.

8.       TAX WITHHOLDING

         To the extent that the exercise of any Option granted  hereunder  gives
rise to an obligation on the part of the Company or any of its  Subsidiaries  to
withhold  from  Optionee's  wages,  the Company shall do so on such terms and in
accordance with such procedures as may be required under  applicable law. At the
election of the  Optionee,  withholding  may be made  through the  surrender  of
shares of the Common Stock or through the  withholding of shares of Common Stock
which would  otherwise be issued as a result of the exercise.  If withholding is
made through the surrender or  withholding  of shares of the Common  Stock,  the
Board of Directors or the Committee,  in its sole  discretion,  may grant Reload
Option(s),  on the terms  specified  in Section  6.7,  above,  for the number of
shares so surrendered or withheld.

                                       14

<PAGE>

9.       SECURITIES COMPLIANCE

         Options  granted  pursuant  to  this  Plan  shall  be  subject  to  the
requirement  that if at any time the Board of Directors or the  Committee  shall
determine, in its discretion, that the listing,  registration,  or qualification
of the shares covered thereby is required upon any securities  exchange or under
any state or  federal  law,  or the  consent  or  approval  of any  governmental
regulatory authority is necessary or desirable as a condition of the exercise of
such Option,  the Option may not be exercised,  in whole or in part,  unless and
until such listing, registration,  qualification, consent or approval shall have
been effected or obtained free of any  conditions not acceptable to the Board of
Directors or the Committee.

10.      ADMINISTRATION

         10.1  Procedure.  The Plan  shall be  administered  by the Board or the
Committee. The Committee shall consist of not less than two (2) Directors all of
whom shall be  Non-Employee  Directors of the Company within the meaning of Rule
16b-3. Once appointed, the Committee shall continue to administer the Plan until
otherwise  directed  by the  Board.  The  Board  may  increase  the  size of the
Committee and may appoint  additional  members,  remove members (with or without
cause) and substitute new members,  fill vacancies (however caused),  and remove
all members of the Committee and thereafter directly administer the Plan, all to
the extent  permitted by Applicable  Law. No member of the Board of Directors or
the Committee shall be liable for any action or determination undertaken or made
in good faith with respect to the Plan or any agreement executed pursuant to the
Plan.

         10.2  Powers of the  Administrator.  Subject to the  provisions  of the
Plan, the Administrator shall have the authority, in its discretion, to:

                  10.2.1 Select the Employees, Consultants and Directors to whom
Options and Restricted Stock may be granted or awarded hereunder;

                  10.2.2  Determine  whether  and to  what  extent  Options  and
Restricted Stock are granted or awarded hereunder;

                  10.2.3  Determine  the number of shares of Common  Stock to be
covered by Options and Restricted Stock granted or awarded hereunder;

                  10.2.4  Determine the Fair Market Value of the Common Stock in
accordance with Section 2.15 hereof;

                  10.2.5  Approve  forms  of  the  Option   Agreements  and  the
Restricted Stock Agreements, which Agreements need not be identical;

                  10.2.6  Determine the terms and conditions,  not  inconsistent
with the terms of this Plan, of any award granted hereunder,  including, but not
limited to, the exercise  price,  the time or times when  Options or  Restricted
Stock may be  exercised  or become  vested  (which  may be based on  performance
criteria),  any vesting acceleration or waiver of forfeiture  restrictions,  and
any  restriction or limitation  regarding any Option or Restricted  Stock or the
shares of Common Stock relating  thereto,  based in each case on such factors as
the Administrator, in its sole discretion, shall determine;

                  10.2.7 Construe and interpret the terms of the Plan and awards
granted under the Plan;

                                       15

<PAGE>

                  10.2.8  Prescribe,  amend and  rescind  rules and  regulations
relating to the Plan;

                  10.2.9 Modify or amend each Option or Restricted Stock;

                  10.2.10  Authorize  any  person  to  execute  on behalf of the
Company any instrument required to effect the grant of an Option or the award of
Restricted Stock previously authorized by the Administrator;

                  10.2.11  Determine  the terms and  restrictions  applicable to
Options and any Restricted Stock; and

                  10.2.12  Make all other  determinations  deemed  necessary  or
advisable for administering the Plan.

         10.3 Committee  Procedure.  If the Committee acts as the Administrator,
the  Administrator  shall  act  pursuant  to the vote or  written  consent  of a
majority of its  members,  and minutes  shall be kept of all of its meetings and
copies  thereof  shall be  provided  to the Board of  Directors.  Subject to the
provisions  of the Plan  and the  directions  of the  Board  of  Directors,  the
Committee  may  establish  and follow such other rules and  regulations  for the
conduct of its business as it may deem advisable.

         10.4  Professional  Assistance;  Good Faith Actions.  The Administrator
may, with the approval of the Board of Directors,  employ and rely on the advice
of attorneys, consultants,  accountants,  appraisers, brokers, or other persons.
All  actions  taken  and  all  interpretations  and  determinations  made by the
Administrator  in good  faith  shall be final and  binding  upon all  Optionees,
Restricted Stockholders, the Company and all other interested persons. No member
of the Administrator or the Board of Directors or any officer, employee or agent
of the  Company  shall be  personally  liable for any action,  determination  or
interpretation  made by the  Administrator  in good faith  with  respect to this
Plan, any Options or Restricted Stock granted or awarded under this Plan, or any
Option Agreement or Restricted Stock Agreement.

         10.5   Indemnification.   In   addition   to  any   other   rights   of
indemnification  they  may  have,  the  Administrator  and  the  members  of the
Administrator  shall be indemnified by the Company against reasonable  expenses,
including attorneys' fees and costs,  incurred in connection with the defense of
any  claim,  action,  suit,  or  proceeding,  or in  connection  with any appeal
thereof,  to which  they or any of them may be a party by reason  of any  action
taken or  failure  to act under or in  connection  with the Plan,  any Option or
Restricted  Stock  granted or awarded  thereunder,  or any Option  Agreement  or
Restricted Stock  Agreement,  and against all amounts paid by them in settlement
thereof  (provided  such  settlement  is approved by  independent  legal counsel
selected by the  Company) or paid by them in  satisfaction  of a judgment in any
action, suit, or proceeding;  provided that the foregoing  indemnification shall
not apply to matters as to which it shall be adjudged in such action,  suit,  or
proceeding that the  Administrator or such member is liable for gross negligence
or  willful   misconduct  in  the   performance  of  his  or  her  duties.   The
indemnification  provided in this  Section  shall be available  only if,  within
sixty  (60)  days  after  institution  of  any  such  claim,  action,  suit,  or
proceeding,  the  Administrator  or the member thereof  seeking  indemnification
shall in writing  offer the  Company the  opportunity,  at its own  expense,  to
handle and defend such claim, action, suit or proceeding.

11.      ADJUSTMENT OF SHARES

         11.1  Recapitalization  of the Company.  Except as  otherwise  provided
herein,  appropriate and  proportionate  adjustments shall be made in the number
and class of shares  subject to the Plan and to the  Options  granted  under the
Plan, and the exercise  price of such Options,  in the event of a stock dividend
(but only on Common Stock), stock split, reverse stock split,  recapitalization,
reorganization or like change in the capital structure of the Company. To the

                                       16

<PAGE>

extent  that the  foregoing  adjustments  relate to stock or  securities  of the
Company,  such  adjustments  shall  be made by the  Board  of  Directors  or the
Committee,  the determination of which in that respect shall be final,  binding,
and conclusive;  provided that no Incentive  Option granted under the Plan shall
be adjusted in a manner that causes the Option to fail to continue to qualify as
an incentive stock option within the meaning of Section 422 of the Code.

         11.2 Reorganization or Liquidation of the Company.

                  11.2.1  Operative  Events.  In the  event of (a) the  complete
liquidation of the Company,  (b) a merger,  reorganization,  or consolidation of
the Company with any other corporation  (other than a Subsidiary of the Company)
in which the Company is not the surviving  corporation or the Company becomes an
eighty percent (80%) or greater owned subsidiary of another corporation,  or (c)
the sale of all or substantially  all of the Company's  assets,  any unexercised
Options  then  outstanding   shall  be  deemed  canceled  unless  the  surviving
corporation in any such merger, reorganization or consolidation or the acquiring
corporation  in any such sale elects to assume the Options  under the Plan or to
issue substitute options in place thereof;  provided that if any Options granted
under the Plan would be canceled in accordance with the foregoing,  the Optionee
shall have the right, exercisable during a 10-day period ending on the fifth day
prior  to the  effective  date  of  such  liquidation,  merger,  reorganization,
consolidation  or sale,  to exercise the  Optionee's  Option in whole or in part
without regard to any installment  exercise  provisions in the Optionee's  Stock
Option  Agreement.  Notwithstanding  anything  in this Plan or any Stock  Option
Agreement  to the  contrary,  the  Company  shall  not be  deemed  to have  been
liquidated by reason of the merger or  consolidation of the Company with or into
a  Subsidiary  of the Company in a  transaction  in which the Company is not the
surviving  corporation.  If any Options or portion thereof originally designated
as Incentive Options would cease to qualify as incentive stock options under the
Code as a  result  of the  exercise  of such  Options  in  accordance  with  the
preceding  sentence,  then such  Incentive  Options or portion  thereof shall be
redesignated as Non-qualified Options.

                  11.2.2  Notice of Event.  The Company shall give each Optionee
at least thirty (30) days prior written notice of the anticipated effective date
of  any  such  liquidation,  merger,  reorganization,   consolidation  or  sale.
Notwithstanding  anything in this Plan or in any Stock  Option  Agreement to the
contrary,  (i) all Option exercises  effected during the foregoing 10-day period
shall  be  deemed  to be  effective  immediately  prior to the  closing  of such
liquidation,  merger,  reorganization,  consolidation  or sale and (ii),  if the
Company  abandons  or  otherwise  fails to close any such  liquidation,  merger,
reorganization,  consolidation  or  sale,  then  (A) all  exercises  during  the
foregoing  10-day  period  shall  cease to be  effective  ab initio  and (B) the
outstanding  Options  shall be  exercisable  as otherwise  determined  under the
applicable Stock Option  Agreement and without  consideration of this Section or
the corresponding provisions of any Stock Option Agreement.

12.      TERM; TERMINATION; AND AMENDMENT OF THE PLAN

         12.1 Term of Plan.  The term of the Plan shall  continue  until January
29, 2002,  unless  terminated  sooner in accordance  with the  provisions of the
Plan.

         12.2 Approval of Stockholders; Effective Date. This Plan shall not take
effect until  approved by the  affirmative  vote of the holders of a majority of
the Common Stock of the Company present, or represented, and entitled to vote at
a meeting of stockholders  duly held in accordance with the laws of the State of
California,  solicited  in  accordance  with the  rules and  regulations  of the
Securities and Exchange Commission,  which approval must occur within the period
beginning twelve (12) months before and ending twelve (12) months after the date
such amendments are adopted by the Board of Directors.

                                       17

<PAGE>

         12.3 Effect of Suspension or  Termination of the Plan. No Option may be
granted during any suspension,  or after termination,  of this Plan.  Amendment,
suspension,  or  termination  of the Plan shall not,  without the consent of the
Option  holder,  alter or impair any rights or  obligations  under any Option or
Stock Option Agreement theretofore granted under the Plan.

         12.4 Amendment and Termination of the Plan.

                  12.4.1 Amendment and  Termination.  The Board of Directors may
at any time amend, alter, suspend or terminate the Plan.

                  12.4.2   Stockholder   Approval.   The  Company  shall  obtain
stockholder  approval of any Plan  amendment  to the extent  necessary to comply
with  Section  422 of the  Code  (or any  successor  rule or  statute)  or other
Applicable Law,  including the  requirements of any exchange or quotation system
on which the Common Stock is listed or quoted.  Such  stockholder  approval,  if
required, shall be obtained in such a manner and to such a degree as is required
by the Applicable Law.

                  12.4.3  Effect of  Amendment  or  Termination.  No  amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee or Restricted Stockholder, unless mutually agreed otherwise between the
Optionee or the Restricted  Stockholder and the  Administrator,  which agreement
must be in writing and signed by the Optionee or the Restricted  Stockholder and
the Company.

                  12.4.4  Limits  on  Amendments.  This  Plan may  not,  without
approval of the stockholders of the Company,  be amended in any manner that will
cause  Incentive  Options  issued under it to fail to meet the  requirements  of
incentive  stock options as defined in Section 422 of the Code, or to change the
maximum number of shares which any one person may receive.

         12.5  Effect  of  Amendments.  Non-Qualified  Options.  From and  after
December 17, 1996,  all of the terms and  provisions  of the Plan as amended and
restated shall apply to all  Non-Qualified  Options which are  outstanding as of
such date and the Stock Option Agreements  covering such  Non-Qualified  Options
shall be deemed automatically  amended to reflect the amended and restated terms
of this Plan.

         12.6 Incentive  Options.  From and after the Effective Date, all of the
terms and  provisions  of the Plan as amended  and  restated  shall apply to all
Incentive  Options  which are  outstanding  as of such date and the Stock Option
Agreements covering such Incentive Options shall be deemed automatically amended
to reflect the  amended and  restated  terms of this Plan;  provided  that in no
event shall any of the terms or  provisions  of the Plan as amended and restated
apply to any Incentive  Option,  and no Stock Option  Agreement for an Incentive
Option shall be deemed amended to include any of the terms and provisions of the
Plan as amended and restated,  if such  application or amendment would be deemed
to  be  a  modification  of  the  Incentive  Option  under  the  Code  and  such
modification  would  result in such  Incentive  Option  ceasing to qualify as an
incentive stock option under the Code.

                  12.6.1 No Change in Price or Term. Notwithstanding anything in
this Plan to the  contrary,  in no event shall the amendment of any Stock Option
Agreement in accordance with the provisions of this Section 19 change any or all
of the number of shares  covered by any Option or the  exercise  price,  vesting
schedule or term of the Option.

                                       18

<PAGE>

                  12.6.2 Amended Stock Option Agreements. Any Optionee who holds
an Option that is deemed  amended  under this Section may at any time deliver to
the Company his or her  existing  Stock  Option  Agreement  and request that the
Company deliver to the Optionee a new Stock Option Agreement  incorporating  the
amended and restated terms and provisions of the Plan. The Company shall deliver
to the  Optionee a new Stock  Option  Agreement  promptly  after the  Optionee's
delivery of the existing  Stock Option  Agreement.  NOTWITHSTANDING  ANYTHING IN
THIS  PLAN TO THE  CONTRARY,  THE  OPTIONEE  SHALL  BE  SOLELY  RESPONSIBLE  FOR
DETERMINING  WHETHER THE AMENDMENT OF A STOCK OPTION AGREEMENT WILL CONSTITUTE A
MODIFICATION  OF THE OPTION AND THE  COMPANY  SHALL  HAVE NO  RESPONSIBILITY  OR
LIABILITY TO THE OPTIONEE BY REASON OF THE AMENDMENT OF A STOCK OPTION AGREEMENT
BEING A MODIFICATION OF THE OPTION.

<PAGE>

                            CERTIFICATE OF SECRETARY

         The  undersigned,  being the Corporate  Secretary of the Company,  does
hereby certify that the Amended and Restated  Restricted Stock Plan effective as
of February 22, 2000,  was adopted by the Board of Directors of the Company at a
duly called and held meeting of the Board of Directors on February 22, 2000, and
was duly  approved by the  stockholders  of the  Company  duly held on April 25,
2000.

Dated: August 9, 2000                   ____________________________________
                                        Jay D. Smith, Esq., Corporate Secretary

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