Document:

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EXHIBIT 10.1

                            SHARE EXCHANGE AGREEMENT

         AGREEMENT made as of the 3rd day of January, 2003, by and between
Autocarbon, Inc., a Delaware corporation with an office at 136-M Tenth Street,
Ramona, California 92063 ("AutoC"), and Autocarbon Limited, a UK registered
company with an office at 26 Nailsworth Mills, Nailsworth, Gloucestershire,
England GL6 0BS ("Autocarbon LTD") and James Millichap-Merrick, Gavin Hartland,
Denis Potter, OSTS, S.A., J. Miller, Presco, Inc., Rennel Trading, Ron Murphy,
Sebastian Reidl, Seth Scally, Kim Tate, Terry Hunt, Teo Montoya, Peter Moseley,
Sir Jack Brabham, Robert Miller, M2 Education Fund, 3LP Assets and Advanced
Resource Technologies (Millichap-Merrick, Hartland, Potter, OSTS, S.A., Miller,
Presco, Inc., Rennel Trading, Murphy, Reidl, Scally, Tate, Hunt, Montoya,
Moseley, Brabham, R. Miller, M2 Education Fund, 3LP Assets and Advanced Resource
Technologies are hereinafter collectively referred to as the "Shareholders").

                                   WITNESSETH:

         WHEREAS, AutoC is authorized to issue 100,000,000 ordinary shares of
$0.0001 par value, of which, 9,679,754 shares will be issued and outstanding on
the Closing Date (as hereinafter defined);

         WHEREAS, the issued and authorized ordinary shares of Autocarbon LTD on
the Closing Date (the "Autocarbon LTD Shares") will be owned beneficially and of
record by the persons (the "Shareholders"), and in the amounts set forth on
EXHIBIT 4.19 hereto;

         WHEREAS, AutoC desires to acquire the Autocarbon LTD Shares in exchange
for shares of AutoC common stock; and the Shareholders and Autocarbon LTD desire
to exchange the Autocarbon LTD Shares for shares of AutoC common stock, in a
transaction qualifying as a "tax free reorganization" as that term is used in
the Internal Revenue Code of 1986; as amended, and otherwise meeting the
requirements of Section 252 of the General Corporation Code of the State of
Delaware and the laws of England & Wales (the "Exchange"); and

         WHEREAS, the Board of Directors of AutoC and Autocarbon LTD deem it
advisable and in the best interests of each of AutoC and Autocarbon LTD and
their respective shareholders to consummate the Exchange upon the terms and
conditions hereinafter set forth.

         NOW THEREFORE, in consideration of the mutual covenants and promises
herein contained and upon the terms and conditions hereinafter set forth, the
parties hereto, intending to be legally bound, agree as follows:

1.       THE EXCHANGE

1.1 Agreement to Exchange. Upon the terms and conditions herein set forth, at
the Closing (as hereinafter defined), Autocarbon LTD and the Shareholders agree
to deliver all of their right, title and interest in and to the Autocarbon LTD
Shares to AutoC, free and clear of all liens, claims, pledges, restrictions,
obligations, security interests and encumbrances of any kind, nature and
description (collectively "Liens"), save and except only for Liens in favor of
AutoC.

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1.2 Agreement to Acquire. Upon the terms and conditions herein set forth, at the
Closing, AutoC agrees to accept the Autocarbon LTD Shares and to issue to the
Shareholders, in exchange for the Autocarbon LTD Shares, solely shares of AutoC
common stock, $.0001 par value per share ("AutoC Common Stock").

2.       TERMS OF EXCHANGE

2.1 Rate of Exchange. The Autocarbon LTD Shares delivered at Closing shall be
exchanged for an aggregate of 9,447,160 shares of AutoC Common Stock (the "AutoC
Shares"), at the rate of 10 AutoC Shares for each of the Autocarbon LTD Shares
(the "Exchange Ratio").

2.2 Registration of the AutoC Shares. The AutoC Shares issuable in the Exchange
shall be registered in the name(s) of the Shareholder(s) and in the amounts set
forth on EXHIBIT 4.19 hereto.

2.3 Status of AutoC Shares. The AutoC Shares will not be registered under the
Securities Act of 1933, as amended (the "1933 Act") and may not be sold,
transferred or otherwise disposed of except in compliance with the 1933 Act and
the Securities Exchange Act of 1934, as amended (the "1934 Act").

2.4 Restrictive Legends. Each Certificate evidencing any of the AutoC Shares
shall bear the following or substantially similar legend:

         "The Shares represented by this Certificate have not been registered
         under the Securities Act of 1933, as amended. These Shares have been
         acquired for investment purposes and not with a view to distribution or
         resale, and may not be sold, assigned, pledged, hypothecated or
         otherwise transferred without an effective Registration Statement for
         such Shares under the Securities Act of 1933, as amended, or an opinion
         of counsel to the effect that registration is not required under such
         Act."

2.6 Effective Date of the Exchange. The Exchange shall become effective when the
Secretary of State of Delaware and the Registrar of Companies for England
&Wales, respectively, file duly executed Certificates of Exchange pursuant to
the provisions of their respective laws. AutoC and Autocarbon LTD agree to use
their best efforts to cause such filings to occur as promptly as practicable
following the Closing Date. As used herein, the term "Effective Date" shall mean
the date upon which the Certificate of Exchange is filed by the Secretary of
State of Delaware or theregistrar of Companies of England & Wales, whichever is
the later to occur.

2.7 Effect of Exchange. From and after the Effective Date of the Exchange,
ownership of the Autocarbon LTD Shares shall vest in AutoC, whether or not
certificates evidencing the Autocarbon LTD Shares are surrendered for exchange,
and AutoC shall be entitled to have new certificates evidencing the Autocarbon
LTD Shares registered in its name or at its direction. From and after the
Effective Date, certificates theretofore evidencing the Autocarbon LTD Shares
shall evidence only the right to receive the AutoC Shares issuable upon exchange
thereof.

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2.8 Directors and Officers. On the Effective Date and thereafter (until
otherwise determined in accordance with the provisions of applicable law and the
By-Laws of AutoC), the Board of Directors of AutoC shall consist of four
directors, each of whom shall hold office until the next annual meeting of the
shareholders of AutoC and until his or her successor shall have been duly
elected or appointed and shall have qualified, or until his or her earlier
death, resignation, or removal. The respective names and residence addresses of
such four directors are as follows:

James Miller
28 Nailsworth Mills
Nailsworth Glos GL6 08S
United Kingdom

Kimberly Tate
14573 Rios Canyon Road
El Cajon, California 92021

Seth Scally
3969 Charles Street
La Mesa, California 91941

Terry Hunt
The Greenhouse
Church Road, Thurston
Bury St., Edmond Suffolk IP31 3RT
United Kingdom

On the Effective Date, the principal officers of AutoC, each of whom shall hold
office until the next annual meeting of the Board of Directors of AutoC and
until his or her successor shall have been duly elected or appointed and shall
have qualified, or until his or her earlier death, resignation, or removal. The
respective names, residence addresses, and offices shall be as follows:

James Miller
Chief Executive Officer and Chairman of the Board
28 Nailsworth Mills
Nailsworth Glos GL6 08S
United Kingdom

Kimberly Tate
Chief Financial Officer and Secretary
14573 Rios Canyon Road
El Cajon, California 92021

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Seth Scally
Vice-President
3969 Charles Street
La Mesa, California 91941

AutoC may have such other officers as shall be provided for in its By-Laws. If,
on the Effective Date, a vacancy shall exist on the Board of Directors or in any
of the offices above specified, by reason of the inability or failure of any of
the above persons to accept the office to which he or she is designated, such
vacancy may thereafter be filled in the manner provided by law or in the By-Laws
of AutoC.

3.       CLOSING

3.1 Time and Place of Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place on January 20, 2003, at 10:00
a.m., local time, at the offices of Sichenzia Ross Friedman Ference LLP in New
York City, or, at such other date, hour or place as AutoC and Autocarbon LTD
shall hereafter agree in writing, but in, no event later than November 30th,
2002 (the date the Closing occurs is herein referred to as the "Closing Date").
The Closing shall be effective as of 11:59 p.m. E.D.T. on the day immediately
preceding the Closing Date, with all occurrences and transactions after that
time being for the account of AutoC.

3.2 Deliveries by Autocarbon LTD. At the Closing, Autocarbon LTD shall use its
best efforts to deliver to AutoC, certificates evidencing all of the Autocarbon
LTD Shares, and, in addition, Autocarbon LTD shall deliver to AutoC the
following:

         (a) the letters described in Section 8.1(j) hereof (or, in lieu
thereof, such other information as shall be deemed necessary by AutoC in order
to enable AutoC to comply with its obligations under Federal and state
securities laws with respect to the Exchange and the transactions contemplated
hereby), and all of the issued and outstanding shares of capital stock of each
of the subsidiaries of Autocarbon LTD identified on EXHIBIT 4.1 hereto (each a
"Subsidiary" or, collectively, the "Subsidiaries");

         (b) the Certificate described in Sections 8.1(a) and 8.1(b) hereof;

         (c) the legal opinion of counsel to Autocarbon Ltd which opinion shall
be in form and substance which is acceptable to counsel for AutoC;

         (d) "Long Form" Good Standing Certificates of Autocarbon Ltd and each
of the Subsidiaries, certified by the Company Secretary of Autocarbon Ltd and
Good Standing Certificates certified by the Secretary of Autocarbon Ltd of each
other jurisdiction in which Autocarbon LTD or any of the Subsidiaries transacts
business; such Certificates to be of a date not more than 10 days prior to the
Closing Date;

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         (e) copies of the Certificate of Incorporation of Autocarbon Ltd and
each of the Subsidiaries, including all amendments thereto, certified by the
Registrar of companies, as of a date not more than 10 days prior to the Closing
Date;

         (f) resolutions of Autocarbon LTD's Board of Directors, certified by
the Secretary of Autocarbon Ltd as of the Closing Date, authorizing this
Agreement and the transactions contemplated hereby;

         (g) copies of the By-Laws of Autocarbon LTD and each of the
Subsidiaries, as amended, certified by the Secretary of Autocarbon LTD or each
of the subsidiaries, as applicable, as of the Closing Date; and

         (h) Certificate of Incumbency of Autocarbon LTD as to each officer
authorized to execute this Agreement and the documents to be delivered pursuant
hereto.

3.3 Deliveries by AutoC. At the Closing, AutoC shall deliver the following:

         (a) the AutoC Shares, registered in the name(s) of the persons and in
the amounts set forth on EXHIBIT 4.19 hereto, or in lieu thereof, instructions
to AutoC's transfer agent, duly executed on behalf of AutoC, directing the
issuance of the AutoC Shares, as aforesaid;

         (b) the Certificate described in Sections 8.2(a) and 8.2(b) hereof;

         (c) the legal opinion of counsel to AutoC, which opinion shall be in
form and substance which is acceptable to counsel for Autocarbon LTD;

         (d) "Long Form" Good Standing Certificate of AutoC, certified by the
Secretary of State of Arizona as of a date not more than 10 days prior to the
Closing Date; and

         (e) Certificate of Incumbency of AutoC as to each officer authorized to
execute this Agreement and the documents to be delivered pursuant hereto.

3.4 Additional Deliveries. At the Closing, AutoC and Autocarbon LTD shall
execute and/or deliver the following:

         (a) a Delaware Certificate of Exchange, substantially in the form of
EXHIBIT 3.4(A) hereto; and

         (b) such other documents as may reasonably be deemed necessary in order
to consummate the transactions contemplated hereby.

4.       REPRESENTATIONS AND WARRANTIES OF AUTOCARBON LTD Autocarbon Ltd
including each of the Subsidiaries, hereby represents and warrants to AutoC as
follows:

4.1 Status. Autocarbon LTD and each of its Subsidiaries is, and at the Closing
will be, a corporation duly organized, validly existing and in good standing
under the laws of England & Wales, and qualified to transact business in each
jurisdiction in which it is required to be qualified to do business in order to
conduct its business operations. Autocarbon LTD is the record and beneficial

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owner of 100% of the issued and outstanding capital shares or membership
interest of each of the Subsidiaries and, subject to security interests in favor
of AutoC, owns such shares free and clear of all liens, claims, pledges,
restrictions, obligations, security interests and encumbrances of any kind.
Unless the context otherwise requires, Autocarbon LTD and its Subsidiaries are
herein collectively referred to as "Autocarbon LTD". On the Closing Date,
Autocarbon LTD will have no subsidiaries other than those identified on EXHIBIT
4.1 hereto.

4.2 Authority. Autocarbon LTD has, and at the Closing will have, all necessary
corporate power and authority to enter into this Agreement and to perform the
obligations to be performed by it hereunder. This Agreement is, and at the
Closing will be, valid and legally binding upon Autocarbon LTD, enforceable in
accordance with its terms, except only as may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not, and at the Closing
will not, violate any law, or any rule or regulation of any administrative
agency or any governmental body, or any order, writ, injunction or decree of any
court, administrative agency or governmental body applicable to Autocarbon LTD,
or the Certificate of Incorporation or By-Laws of Autocarbon LTD, as amended, or
any indenture, loan agreement, contract or other instrument to which Autocarbon
LTD is a party or by which Autocarbon LTD or any of its assets is bound.

4.3 Third Party Consents. No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or other person is
required for the execution and delivery of this Agreement or the consummation by
Autocarbon LTD of any of the transactions contemplated hereby.

4.4 Title to Assets. Autocarbon LTD has, and at the Closing will have, good and
marketable title to all of its assets, and except as set forth on EXHIBIT 4.4
hereto, at the Closing such assets will be free and clear of all liens, charges,
security interests or other encumbrances except liens for current taxes not yet
due.

4.5 Trade Names. Autocarbon LTD has no knowledge of facts which would adversely
affect the validity enforceability and scope of any of the trade names used in
conjunction with its business, each of which trade names is identified on
EXHIBIT 4.5 hereto (collectively, the "Trade Names"). None of the Trade Names,
as presently used by Autocarbon LTD, infringes upon or otherwise violates any
rights of any third party. Autocarbon LTD has not granted any licenses of the
Trade Names. None of the Trade Names have been registered with the United States
Patent and Trademark Office.

4.6 Condition of Assets. Autocarbon LTD's assets have been maintained for their
respective intended purposes in the ordinary course of business and are in good
condition and repair except for ordinary wear and tear; and the facilities
leased in connection with Autocarbon LTD's business operations have been
maintained in the ordinary course and no material expenditures are presently
required for the repair and maintenance thereof.

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4.7 Change in Assets. Since the date of the most recent of the Autocarbon LTD
Financial Statements (as hereinafter defined) included in EXHIBIT 4.8 hereto,
Autocarbon LTD has not disposed of any material portion of its assets, except in
the usual and ordinary course of business as conducted prior to such date.

4.8 Financial Statements. EXHIBIT 4.8 contains the consolidated financial
statements of Autocarbon LTD as at 22nd November 2002, (collectively; the
"Autocarbon LTD Financial Statements"). The Autocarbon LTD Financial Statements
include the assets, liabilities and results of operations of Autocarbon LTD for
the periods indicated; are consistent with the books and records of Autocarbon
LTD; were prepared in accordance with generally accepted accounting principles,
prepared on a consistent basis throughout the periods indicated; and present
fairly the consolidated financial position of Autocarbon LTD as of the dates
thereof and the results of operations for the periods indicated.

4.9 Collectibility of Accounts. The accounts, notes and other receivables which
are reflected on the Autocarbon LTD Financial Statements were acquired in the
ordinary and regular course of business of Autocarbon LTD and are collectible in
the ordinary course of business subject to the allowance for doubtful accounts
on such financial statements.

4.10 Books and Records. Except with respect to taxes not yet assessed, the
underlying books and records of Autocarbon LTD reflect all of the debts,
liabilities and obligations of any nature (whether absolute, accrued or
otherwise, and whether due or to become due) of Autocarbon LTD at the dates
thereof. Autocarbon LTD has not given any guarantees of the obligations of any
other person or entity except as specifically reflected in the Autocarbon LTD
Financial Statements included in EXHIBIT 4.8 hereto.

4.11 Undisclosed Liabilities. As of the date of the latest Autocarbon LTD
Financial Statements included in EXHIBIT 4.8 hereto, Autocarbon LTD had no
liabilities of any nature, whether accrued, absolute, contingent, or otherwise;
including without limitation, tax liabilities due or to become due, and whether
incurred in respect of or measured by the income of Autocarbon LTD for any
period prior to such date, or arising out of transactions entered into, or any
state of facts existing, prior thereto, except as reflected in the Autocarbon
LTD Financial Statements included in EXHIBIT 4.8 hereto. Autocarbon LTD does not
know or have reasonable grounds to know of any basis for the assertion against
Autocarbon LTD of any liability of any nature or in any amount not fully
reflected or reserved against, except to the extent reflected in the Autocarbon
LTD Financial Statements.

4.12 Litigation. Except as set forth on EXHIBIT 4.12, there is no litigation,
action, suit or other proceeding pending or, to the best of Autocarbon LTD's
knowledge, any material litigation, action, suit or other proceeding threatened
against Autocarbon LTD relating to the business or the assets of Autocarbon LTD,
or which could adversely affect the transactions contemplated by this Agreement.

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4.13 Taxes. Autocarbon LTD and each of the Subsidiaries has duly filed all tax
reports and returns (federal, state and local income, corporate, franchise and
other) required by it to be filed. These returns and reports are true and
correct in all material respects and all taxes due pursuant thereto have been
paid. Copies of all such tax returns have been provided to AutoC. The provision
for taxes shown in the Autocarbon LTD Financial Statements is adequate for taxes
due or accrued as of the dates thereof. Autocarbon LTD has not received notice
of any tax deficiency outstanding, proposed or assessed against it, nor has it
executed any waiver of any statute of limitations on the assessment or
collection of any tax. There are no tax liens upon, pending against, or to the
best knowledge of Autocarbon LTD, threatened against any of the assets of
Autocarbon LTD. Autocarbon LTD is current in its payment obligations for workers
compensation and disability insurance, withholding and payroll taxes and other
required payments in respect of its employees.

4.14 Compliance with Laws. The business of Autocarbon LTD is, and at the Closing
will be, in compliance in all material respects with all laws, federal, state or
local, and all provisions of all rules, and regulations of any federal agency,
authority, board, commission, or the like, or any state or local government, or
any authority, agency, board, commission, or the like having jurisdiction over
such business; including those relating to environmental laws and regulations.
Autocarbon LTD possesses all material licenses, permits and governmental
approvals and authorizations, which are required to own its assets and conduct
its business as heretofore conducted.

4.15 Material Agreements. Attached hereto as EXHIBIT 4.15 is a schedule of all
written and oral contracts, leases and other agreements which are material to
the business conducted by Autocarbon LTD. Copies of all such written contracts;
leases and agreements have been. provided to AutoC. Except as indicated on
EXHIBIT 4.15, all such material contracts, leases and agreements permit the
transactions contemplated by this Agreement without the consent of any other
party, or, if such consent is required, the consent has been obtained or will be
obtained prior to Closing. Except as set forth on EXHIBIT 4:15, all such
material contracts, leases and agreements are in full force and binding upon the
parties thereto, and no party thereto is in material default of any such
agreements.

4.16 Environmental Matters. To the best of Autocarbon LTD's knowledge, there has
not been, and is not occurring, any "release" of any "hazardous substance" at
any premises owned, leased, and/or used by Autocarbon LTD. For purposes of this
Agreement the terms "release" and "hazardous substance" shall have the same
meaning as those terms are given in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. 9601, et. seq. ("CERCLA"),
except that for purposes of this Agreement, "petroleum" (including crude oil or
any fraction thereo shall be deemed a "hazardous substance." Autocarbon LTD has
never sent hazardous substances from any such premises to a site (a) which
pursuant to CERCLA or any similar state law has been placed, or is proposed to
be placed, on the "National Priorities List" of hazardous waste sites, or (b)
which is subject to a claim, an administrative order or other request to take
"removal" or "remedial" action (as defined under CERCLA) or to pay for any costs
relating to such site. To the best of Autocarbon LTD's knowledge, no asbestos is
contained in the buildings, fixtures or appurtenances at any premises owned,
leased or used by Autocarbon LTD.

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4.17 Employees.

         (a) Attached hereto as EXHIBIT 4.17 is a list of the hourly and
salaried employees of Autocarbon LTD (the "List of Employees"). Except as
described on EXHIBIT 4.17; there are no employment, severance or termination
agreements or similar arrangements with any of Autocarbon LTD's management or
other employees which would subject either AutoC or Autocarbon LTD to any
payment or other obligation as a result of the consummation of the transactions
contemplated by this Agreement. The List of Employees shows (i) each employee's
gross compensation from Autocarbon LTD for the year ended December 31, 2001, and
each such employee's gross annual salary or hourly rate, as applicable, as of
the date hereof. Except in the ordinary course of business, since December 31,
2001, Autocarbon LTD has not increased the salary or other compensation of any
of its employees. .

         (b) Since the date of its incorporation (and dates of incorporation of
each of its Subsidiaries), Autocarbon LTD has not maintained, sponsored or
contributed to any employee pension benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA"). Autocarbon LTD; has no employee welfare benefit plan (within the
meaning of Section 3( 1 ) of ERISA), stock option, stock purchase, incentive,
severance, bonus, deferred compensation, or similar benefit plans and
amendments, in which any employee of Autocarbon LTD participates.

         (c) Except as asset forth on EXHIBIT 4.17, Autocarbon LTD has complied
with the Immigration Reform and Control Act of 1986, as amended, with respect to
its employees including, but not limited to, Immigration and Naturalization
Service Form I-9 requirements.

4.18 Labor Matters. Autocarbon LTD is not a party to any collective bargaining
agreement affecting its business, nor are there any pending efforts by any union
to organize employees utilized in its business. Within the past five years there
have been no work stoppages or strikes or any significant labor troubles
affecting Autocarbon LTD. There are not pending complaints before the National
Labor Relations Board, nor, to the best of Autocarbon LTD's knowledge has
Autocarbon LTD engaged in any activity relating to its business which would
constitute an unfair labor practice. There are no pending OSHA investigations
involving the business of Autocarbon LTD, nor, to the best of Autocarbon LTD's
knowledge, will any condition exist on the Closing Date which condition would
constitute a violation of any applicable state or federal safety_ laws or
regulations.

4.19 Shareholders List. The list of Autocarbon LTD's shareholders annexed hereto
as EXHIBIT 4.L9 is a true, correct and complete list of the shareholders of
Autocarbon LTD as of the date hereof and, to the-best of Autocarbon LTD's
knowledge, no person, not identified on EXHIBIT 4.19 has any beneficial interest
in any of the Autocarbon LTD Shares.

4.20 Capital Shares. Autocarbon LTD is authorized to issue only one class of
capital stock, i.e: Common Stock, 1.00 UK pound par value, of which there are
10,000,000 shares authorized and 944,716 shares to be issued and outstanding
(the "Autocarbon LTD Shares") as of the Closing Date. All of the Autocarbon LTD
Shares have been duly authorized and, on the Closing Date will be, validly
issued, fully paid and non-assessable, and offered and sold in accordance with

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applicable corporate and securities laws or applicable exemptions thereunder,
and there are and will be no preemptive rights in respect thereof. Except as
described on EXHIBIT 4.20, there are no outstanding options, warrants, rights,
calls, puts, commitments, plans or other, agreements of any character providing
for the purchase or issuance of any authorized but unissued shares of the
capital stock of Autocarbon LTD or any of its Subsidiaries.

4.21 Officers and Directors. EXHIBIT 4.21 hereto sets forth a true and complete
list, as of the date of this Agreement, showing the names of all of the
directors and officers of Autocarbon LTD and each of its Subsidiaries.

4.22 Bank Accounts. EXHIBIT 4.22 hereto sets forth a true and complete list as
of the date hereof, certified by the Secretary of Autocarbon LTD, showing the
name of each bank in which Autocarbon LTD has an account or safety deposit box,
and the names of all persons authorized to draw thereon, or to have access
thereto.

4.23 Charter. EXHIBIT 4.23 hereto contains true and complete copies of the
Certificate of Incorporation of Autocarbon LTD and all amendments thereto, and
its By-Laws and all amendments thereto. True and correct copies of all of its
minute and stock record books have been delivered to Autocarbon.

4.24 Insurance. EXHIBIT 4.24 hereto sets forth a complete and correct list and
summary description of all policies of fire, liability and other forms of
insurance held by Autocarbon LTD: Such policies are in amounts deemed by
Autocarbon LTD to be sufficient, and valid policies, in such amounts; will be
outstanding and duly in force on the Closing Date.

4.25 Guarantees. Neither Autocarbon LTD nor any of its Subsidiaries is liable
for and/or has guaranteed the obligations of any person or entity other than the
obligations of a Subsidiary, which obligation is disclosed in the latest
Autocarbon LTD Financial Statements included in EXHIBIT 4.8 hereto, nor is
Autocarbon LTD or any such Subsidiary a party to any agreement to do so.

4.26 Accuracy; Survival. The representations, warranties and statements of
Autocarbon LTD contained in this Agreement or any Exhibit hereto, or in any
Certificate delivered by Autocarbon LTD pursuant to this Agreement, are true and
correct in all material respects and do not omit to state a material fact
necessary in order to make the representations, warranties or statements
contained herein or therein not misleading. All such representations, warranties
and statements shall survive the Closing (and none shall merge into any
instrument of conveyance), regardless of any investigation or lack of
investigation by either of the parries to this Agreement.

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5.       COVENANTS BY AUTOCARBON LTD

5.1 Nature of Covenants. Since the date of the latest Autocarbon LTD Financial
Statements, included in EXHIBIT 4.8 hereto, Autocarbon LTD has not, and prior to
the Closing Date, will not have:

       (a) incurred any material adverse change in its liabilities;
capitalization and/or condition (financial or otherwise), other than changes in
the ordinary course of business, none of which will have been materially
adverse;

       (b) experienced any event or condition, or threat thereof, which does; or
reasonably. might, materially adversely affect its condition (financial or
otherwise);

       (c) made any loan or advance to any person;

       (d) declared or paid any dividends on its capital stock or redeemed,
purchased or otherwise acquired any shares of its capital stock (including
without limitation; by the payment or obligation to pay dissenter's or appraisal
right);

       (e) subjected any of its assets to any mortgage, deed of trust, lien,
pledge, conditional sales contract, lease, encumbrance or charge, sold, leased,
or otherwise transferred any of its assets;

       (g) entered into any agreement other than those described or referred to
in this Agreement or any Exhibit hereto, other than in the ordinary course of
business;

       (h) incurred any obligation or liability for borrowed money, or incurred
any other obligations or liability, other than those incurred to AutoC and those
incurred in the ordinary course of business;

       (i) issued or sold any of its equity or debt securities;

       (j) except as set forth on EXHIBIT 5.1 (J), increased the salary, fringe
benefits or other compensation of, or paid any bonus or similar compensation to,
any of their employees, officers or directors of Autocarbon LTD; or

       (k) agreed to do any of the things described in the preceding clauses (a)
through (j).

5.2 Access to Information. Commencing on the date hereof and continuing to the
Closing Date, Autocarbon LTD, upon reasonable notice, shall give to AutoC and
its officers, employees, attorneys, consultants, accountants and other
representatives, access during normal business hours, to the, employees of
Autocarbon LTD, its business locations, and all books, contracts, documents and
records relating to the business and the assets of Autocarbon LTD, and shall
furnish to AutoC such information as AutoC may at any time and from time to time
reasonably request with respect to Autocarbon LTD, its business and assets.

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6.       REPRESENTATIONS AND WARRANTIES OF AUTOC. AutoC hereby represents and
warrants to Autocarbon LTD as follows:

6.1 Status. AutoC is, and at the Closing will be, a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona,
and qualified to transact business in each jurisdiction in which it is required
to be qualified to do business in order to conduct its business operations.
AutoC is the record and beneficial owner of 100% of the issued and outstanding
capital shares of each of the Subsidiaries and owns such shares free and clear
of all liens, claims, pledges, restrictions, obligations, security interests and
encumbrances of any kind. Unless the context otherwise requires, AutoC and its
Subsidiaries are herein collectively referred to as "AutoC". On the Closing
Date, AutoC will have no subsidiaries other than those identified on EXHIBIT 6.1
hereto.

6.2 Authority. AutoC has, and at the Closing will have, all necessary corporate
power and authority to enter into this Agreement and to perform the obligations
to be performed by it hereunder. This Agreement is, and at the Closing will be,
valid and legally binding upon AutoC, enforceable in accordance with its terms,
except only as may be affected by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally; and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby do not, and at the Closing will not, violate
any law, or any rule or regulation of any administrative agency or any
governmental body, or any order, writ, injunction or decree of any court,
administrative agency or governmental body applicable to AutoC, or the
Certificate of Incorporation or By-Laws of AutoC, as amended, or any indenture,
loan agreement, contract or other instrument to which AutoC is a party or by
which AutoC or any of its assets is bound.

6.3 Third Party Consents. No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or other person is
required for the execution and delivery of this Agreement or the consummation by
AutoC of any of the transactions contemplated hereby.

6.4 Title to Assets. AutoC has, and at the Closing will have, good and
marketable title to all of its assets, and except as set forth on EXHIBIT 6.4
hereto, at the Closing such assets will be free and clear of all liens, charges,
security interests or other encumbrances except liens for current taxes not yet
due.

6.5 Trade Names. AutoC has no knowledge of facts which would adversely affect
the validity enforceability and scope of any of the trade names used in
conjunction with its business, each of which trade names is identified on
EXHIBIT 6.5 hereto (collectively, the "Trade Names"). None of the Trade Names,
as presently used by AutoC, infringes upon or otherwise violates any rights of
any third party. AutoC has not granted any licenses of the Trade Names. None of
the Trade Names have been registered with the United States Patent and Trademark
Office.

6.6 Condition of Assets. AutoC's assets have been maintained for their
respective intended purposes in the ordinary course of business and are in good
condition and repair except for ordinary wear and tear; and the facilities
leased in connection with AutoC's business operations have been maintained in
the ordinary course and no material expenditures are presently required for the
repair and maintenance thereof.

<PAGE>

6.7 Change in Assets. Since the date of the most recent of the AutoC Financial
Statements (as hereinafter defined) included in EXHIBIT 6.8 hereto, AutoC has
not disposed of any material portion of its assets, except in the usual and
ordinary course of business as conducted prior to such date.

6.8 Financial Statements. EXHIBIT 6.8 contains the audited consolidated
financial statements of AutoC for the last two fiscal years (collectively; the
"AutoC Financial Statements"). The AutoC Financial Statements include the
assets, liabilities and results of operations of AutoC for the periods
indicated; are consistent with the books and records of AutoC; were prepared in
accordance with generally accepted accounting principles, prepared on a
consistent basis throughout the periods indicated; and present fairly the
consolidated financial position of AutoC as of the dates thereof and the results
of operations for the periods indicated.

6.9 Collectibility of Accounts. The accounts, notes and other receivables which
are reflected on the AutoC Financial Statements were acquired in the ordinary
and regular course of business of AutoC and are collectible in the ordinary
course of business subject to the allowance for doubtful accounts on such
financial statements.

6.10 Books and Records. Except with respect to taxes not yet assessed, the
underlying books and records of AutoC reflect all of the debts, liabilities and
obligations of any nature (whether absolute, accrued or otherwise, and whether
due or to become due) of AutoC at the dates thereof. AutoC has not given any
guarantees of the obligations of any other person or entity except as
specifically reflected in the AutoC Financial Statements included in EXHIBIT 6.8
hereto.

6.11 Undisclosed Liabilities. As of the date of the latest AutoC Financial
Statements included in EXHIBIT 6.8 hereto, AutoC had no liabilities of any
nature, whether accrued, absolute, contingent, or otherwise; including without
limitation, tax liabilities due or to become due, and whether incurred in
respect of or measured by the income of AutoC for any period prior to such date,
or arising out of transactions entered into, or any state of facts existing,
prior thereto, except as reflected in the AutoC Financial Statements included in
EXHIBIT 6.8 hereto. AutoC does not know or have reasonable grounds to know of
any basis for the assertion against AutoC of any liability of any nature or in
any amount not fully reflected or reserved against, except to the extent
reflected in the AutoC Financial Statements.

6.12 Litigation. Except as set forth on EXHIBIT 6.12, there is no litigation,
action, suit or other proceeding pending or, to the best of AutoC 's knowledge,
any material litigation, action, suit or other proceeding threatened against
AutoC relating to the business or the assets of AutoC, or which could adversely
affect the transactions contemplated by this Agreement.

6.13 Taxes. AutoC and each of the Subsidiaries has duly filed all tax reports
and returns (federal, state and local income, corporate, franchise and other)
required by it to be filed. These returns and reports are true and correct in
all material respects and all taxes due pursuant thereto have been paid. Copies
of all such tax returns have been provided to AutoC. The provision for taxes
shown in the AutoC Financial Statements is adequate for taxes due or accrued as

<PAGE>

of the dates thereof. AutoC has not received notice of any tax deficiency
outstanding, proposed or assessed against it, nor has it executed any waiver of
any statute of limitations on the assessment or collection of any tax. There are
no tax liens upon, pending against, or to the best knowledge of AutoC,
threatened against any of the assets of AutoC. AutoC is current in its payment
obligations for workers compensation and disability insurance, withholding and
payroll taxes and other required payments in respect of its employees.

6.14 Compliance with Laws. The business of AutoC is, and at the Closing will be,
in compliance in all material respects with all laws, federal, state or local,
and all provisions of all rules, and regulations of any federal agency,
authority, board, commission, or the like, or any state or local government, or
any authority, agency, board, commission, or the like having jurisdiction over
such business; including those relating to environmental laws and regulations.
AutoC possesses all material licenses, permits and governmental approvals and
authorizations which are required to own its assets and conduct its business as
heretofore conducted.

6.15 Material Agreements. Attached hereto as EXHIBIT 6.15 is a schedule of all
written and oral contracts, leases and other agreements which are material to
the business conducted by AutoC. Copies of all such written contracts; leases
and agreements have been. provided to AutoC. Except as indicated on EXHIBIT
6.15, all such material contracts, leases and agreements permit the transactions
contemplated by this Agreement without the consent of any other party, or, if
such consent is required, the consent has been obtained or will be obtained
prior to Closing. Except as set forth on EXHIBIT 6.15, all such material
contracts, leases and agreements are in full force and binding upon the parties
thereto, and no party thereto is in material default of any such agreements.

6.16 Environmental Matters. To the best of AutoC's knowledge, there has not
been, and is not occurring, any "release" of any "hazardous substance" at any
premises owned, leased, and/or used by AutoC. For purposes of this Agreement the
terms "release" and "hazardous substance" shall have the same meaning as those
terms are given in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U.S.C. 9601, et. seq. ("CERCLA"), except that for
purposes of this Agreement, "petroleum" (including crude oil or any fraction
thereo shall be deemed a "hazardous substance." AutoC has never sent hazardous
substances from any such premises to a site (a) which pursuant to CERCLA or any
similar state law has been placed, or is proposed to be placed, on the "National
Priorities List" of hazardous waste sites, or (b) which is subject to a claim,
an administrative order or other request to take "removal" or "remedial" action
(as defined under CERCLA) or to pay for any costs relating to such site. To the
best of AutoC's knowledge, no asbestos is contained in the buildings, fixtures
or appurtenances at any premises owned, leased or used by AutoC.

6.17 Employees.

         (a) Attached hereto as EXHIBIT 6.17 is a list of the hourly and
salaried employees of AutoC (the "List of Employees"). Except as described on
EXHIBIT 6.17; there are no employment, severance or termination agreements or
similar arrangements with any of AutoC's management or other employees which
would subject either AutoC or Autocarbon LTD to any payment or other obligation

<PAGE>

as a result of the consummation of the transactions contemplated by this
Agreement. The List of Employees shows (i) each employee's gross compensation
from AutoC for the year ended December 31, 2001, and each such employee's gross
annual salary or hourly rate, as applicable, as of the date hereof. Except in
the ordinary course of business, since December 31, 2001, AutoC has not
increased the salary or other compensation of any of its employees. .

         (b) Since the date of its incorporation (and dates of incorporation of
each of its Subsidiaries), AutoC has not maintained, sponsored or contributed to
any employee pension benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, ("ERISA"). AutoC
has no employee welfare benefit plan (within the meaning of Section 3(1) of
ERISA), stock option, stock purchase, incentive, severance, bonus, deferred
compensation, or similar benefit plans and amendments, in which any employee of
AutoC participates.

         (c) Except as asset forth on EXHIBIT 6.17, AutoC has complied with the
Immigration Reform and Control Act of 1986, as amended, with respect to its
employees including, but not limited to, Immigration and Naturalization Service
Form I-9 requirements.

6.18 Labor Matters. AutoC is not a party to any collective bargaining agreement
affecting its business, nor are there any pending efforts by any union to
organize employees utilized in its business. Within the past five years there
have been no work stoppages or strikes or any significant labor troubles
affecting AutoC. There are not pending complaints before the National Labor
Relations Board, nor, to the best of AutoC 's knowledge has AutoC engaged in any
activity relating to its business, which would constitute an unfair labor
practice. There are no pending OSHA investigations involving the business of
AutoC, nor, to the best of AutoC 's knowledge, will any condition exist on the
Closing Date which condition would constitute a violation of any applicable
state or federal safety laws or regulations.

6.19 Capital Stock. AutoC is authorized to issue only one class of capital
stock, i.e.: Common Stock, $.0001 par value, of which there are 100, 000,000
shares authorized and 9,679,754 shares to be issued and outstanding (the "AutoC
Shares") as of the Closing Date. All of the AutoC Shares have been duly
authorized and, on the Closing Date will be, validly issued, fully paid and
non-assessable, and offered and sold in accordance with applicable federal and
state securities laws or applicable exemptions thereunder, and there are and
will be no preemptive rights in respect thereof. Except as described on EXHIBIT
6.19, there are no outstanding options, warrants, rights, calls, puts,
commitments, plans or other, agreements of any character providing for the
purchase or issuance of any authorized but unissued shares of the capital stock
of AutoC or any of its Subsidiaries.

6.20 Officers and Directors. EXHIBIT 6.20 hereto sets forth a true and complete
list, as of the date of this Agreement, showing the names of all of the
directors and officers of AutoC and each of its Subsidiaries.

<PAGE>

6.21 Bank Accounts. EXHIBIT 6.21 hereto sets forth a true and complete list as
of the date hereof, certified by the Treasurer of AutoC, showing the name of
each bank in which AutoC has an account or safety deposit box, and the names of
all persons authorized to draw thereon, or to have access thereto.

6.22 Charter. EXHIBIT 6.22 hereto contains true and complete copies of the
Certificate of Incorporation of AutoC and all amendments thereto, and its
By-Laws and all amendments thereto. True and correct copies of all of its minute
and stock record books have been delivered to AutoC.

6.23 Insurance. EXHIBIT 6.23 hereto sets forth a complete and correct list and
summary description of all policies of fire, liability and other forms of
insurance held by AutoC. Such policies are in amounts deemed by AutoC to be
sufficient, and valid policies, in such amounts will be outstanding and duly in
force on the Closing Date.

6.24 Guarantees. Neither AutoC nor any of its Subsidiaries is liable for and/or
has guaranteed the obligations of any person or entity other than the
obligations of a Subsidiary, which obligation is disclosed in the latest AutoC
Financial Statements included in EXHIBIT 6.8 hereto, nor is AutoC or any such
Subsidiary a party to any agreement to do so.

6.25 Accuracy; Survival. The representations, warranties and statements of AutoC
contained in this Agreement or any Exhibit hereto, or in any Certificate
delivered by AutoC pursuant to this Agreement, are true and correct in all
material respects and do not omit to state a material fact necessary in order to
make the representations, warranties or statements contained herein or therein
not misleading. All such representations, warranties and statements shall
survive the Closing (and none shall merge into any instrument of conveyance),
regardless of any investigation or lack of investigation by either of the
parries to this Agreement.

7.       COVENANT BY AUTOC

7.1 Nature of Covenants. Since the date of the latest AutoC's Financial
Statements included in EXHIBIT 6.8 hereto, AutoC has not, and prior to the
Closing Date, will not have:.

         (a) incurred any material adverse change in its liabilities,
capitalization and/or condition (financial or otherwise), other than changes in
the ordinary course of business, none of which will have been materially
adverse;

         (b) experienced any event or condition, or threat thereof, which does,
or reasonably might, materially adversely affect its condition (financially or
otherwise);

         (c) made any loan or advance to any person other than in the ordinary
course of business;

         (d) declared or paid any dividends on its capital stock or redeemed,
purchased or otherwise acquired any shares of its capital stock;

<PAGE>

         (e) subjected any of its assets to any mortgage, deed of trust, lien,
pledge, conditional sales contract, lease, encumbrance or charge;

         (f) sold, leased, or otherwise transferred any of its assets;

         (g) entered into any agreement other than those described or referred
to in this Agreement or any Exhibit hereto, other than in the ordinary course of
business;

             (h) incurred any obligation or liability for borrowed money, or
incurred any other obligations or liability, other than those incurred in the
ordinary course of business;

         (i) issued or sold any of its equity or debt securities, except
securities reserved for issuance as of the date hereof;

         (j) increased the salary, fringe benefits or other compensation of, or
paid any bonus or similar compensation to, any of their employees, officers or
directors of AutoC; or

         (k) agreed to do any of the things described in the preceding clauses
(a) through (j).

7.2 Access to Information. Commencing on the date hereof and continuing to the
Closing Date, AutoC upon reasonable notice, shall give to Autocarbon LTD and its
officers, employees, attorneys, consultants, accountants and other
representatives, access during normal business hours, to the employees of AutoC,
its business locations, and all books, contracts, documents and records relating
to the business and the assets of AutoC, and shall furnish to Autocarbon LTD
such information as Autocarbon LTD may at any time and from time to time
reasonably request with respect to AutoC, its business and assets.

8.       CONDITIONS PRECEDENT

8.1 Conditions Precedent to AutoC's Obligations. The obligations of AutoC under
this Agreement, including without limitation, AutoC's obligation to consummate
the transactions contemplated hereby, are subject to the satisfaction, at or
prior to the Closing Date, of the following conditions:

         (a) Representations and Warranties. The representations and warranties
of Autocarbon LTD set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, and AutoC shall have received a
Certificate signed by an officer of Autocarbon LTD to such effect.

         (b) Performance of Obligations of Autocarbon LTD. Autocarbon LTD shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and AutoC shall have received a
Certificate signed by an officer of Autocarbon LTD to such effect.

<PAGE>

         (c) No Adverse Change. The assets of Autocarbon LTD shall not have been
adversely affected in any material way, including, without limitation, as a
result of any fire, accident or other casualty or act of God or the public
enemy, whether insured against or not.

         (d) Instruments. All actions, proceedings, instruments or other legal
matters required to carry out this Agreement shall have been delivered to AutoC.

         (e) Litigation. No preliminary or permanent injunction or other order
by any federal or state court in the United States which prevents the
consummation of the transactions contemplated by this Agreement shall be in
effect nor shall any person have brought suit to seek such an injunction or
order to prevent the consummation of the transactions contemplated by this
Agreement.

         (f) Closing Documents. AutoC shall have received all documents to be
delivered pursuant to Section 3.2 hereof.

         (g) Consents. All consents and approvals that AutoC reasonably deems
necessary to have obtained prior to the Closing Date in order to consummate the
transactions contemplated by this Agreement shall have been obtained, including
authorization of this Agreement by a majority of the outstanding Autocarbon LTD
Common Stock.

         (h) Resignations. Each current officer and/or director of Autocarbon
LTD and each of its Subsidiaries shall have resigned as such, unless authorised
to remain as such by AutoC.

         (i) Outstanding Securities. Except as otherwise set forth in this
Agreement or on Exhibit hereto, there shall be no outstanding options, warrants
or other securities of Autocarbon LTD convertible into any securities of
Autocarbon LTD; and Autocarbon LTD shall have no outstanding securities other
than the Autocarbon LTD Shares.

         (j) Subscription and Investment Letters. AutoC shall have received
letters in the form of EXHIBIT 8.1 (J) hereto, duly executed by each record and
beneficial owner of the Autocarbon LTD Shares, or in lieu thereof, AutoC shall
have received such information as deemed necessary by AutoC in order to enable
AutoC to comply with its obligations under Federal and state securities laws
with respect to the Exchange and the transactions contemplated hereby.

         (k) Dissenting Shareholders. The holders of five percent (5%) or more
of the outstanding AutoC Shares shall not have exercised their dissenter's
rights of appraisal under the Arizona Business Corporation Act.

8.2 Conditions Precedent to Autocarbon LTD's Obligations. The obligations of
Autocarbon LTD under this Agreement, including without limitation, Autocarbon
LTD's obligation to consummate the transactions contemplated hereby, are subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:

         (a) Representations and Warranties. The representations and warranties
of AutoC set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, and Autocarbon LTD shall have received a
Certificate signed by an officer of AutoC to such effect.

<PAGE>

         (b) Performance of Obligations of AutoC. AutoC shall have performed all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date and Autocarbon LTD shall have received a Certificate signed by
an officer of AutoC to such effect.

         (c) No Adverse Change. The assets of AutoC shall not have been
adversely affected in any material way, including, without limitation, as a
result of any fire, accident or other casualty or act of God or the public
enemy, whether insured against or not;

         (d) Instruments. All actions, proceedings, instruments or other legal
matters required to carry out this Agreement shall have been delivered to
Autocarbon LTD

         (e) Litigation. No preliminary or permanent injunction or other order
by any federal or state court in the United States which prevents the
consummation of the transactions contemplated by this Agreement shall be in
effect nor shall any person have brought suit to seek such an injunction or
order to prevent the consummation of the transactions contemplated by this
Agreement.

         (f) Closing Documents. Autocarbon LTD shall have received all documents
to be delivered pursuant to Section 3.3 hereof.

         (g) Consents. All consents and approvals that Autocarbon LTD reasonably
deems necessary to have obtained prior to the Closing Date in, order to
consummate the transactions contemplated by this Stock Exchange Agreement shall
have been obtained, including authorization of this Agreement by a majority of
the Autocarbon LTD Shares.

         (h) Dissenting Shareholders. The holders of five percent (5%) or more
of the outstanding Autocarbon LTD Shares shall not have exercised their
dissenter's rights of appraisal under the laws of England & Wales.

9.       INDEMNIFICATION

9.1 "Losses" Defined. As used in this Agreement, "Losses" shall mean all
damages, losses, liabilities, costs and expenses of a party seeking
indemnification pursuant to this Agreement (including, without limitation,
reasonable attorneys' fees and disbursements charged to or paid by the party
seeking indemnification) but excluding any punitive damages awarded against such
party seeking indemnification as a result of its own acts or omissions.

9.2 Indemnification by Autocarbon LTD. Autocarbon LTD hereby agrees to indemnify
and hold harmless AutoC its directors, officers, employees, agents, successors
and assigns, and any person who controls AutoC and any affiliate of AutoC
(within the meaning of the Securities Act of 1933), from and against any and all
Losses arising our of or resulting from (i) any and all liabilities and
obligations of Autocarbon LTD, other than those reflected on the latest
Autocarbon LTD Financial Statements delivered pursuant to Section 4.8 hereto or
otherwise disclosed to AutoC in this Agreement or an Exhibit hereto; (ii) the
material breach of any representation or warranty or other agreement of

<PAGE>

Autocarbon LTD or any Shareholder contained in this Agreement or any Exhibit
hereto or in any Certificate by Autocarbon LTD or any Shareholder pursuant to
this Agreement; and (iii) claims by any or all of the Shareholders of Autocarbon
LTD in connection with the manner in which the transactions contemplated by this
Agreement are disclosed to or approved by Autocarbon LTD's Shareholders, any
agreements among the Shareholders of Autocarbon LTD, and/or any information
furnished to Autocarbon LTD's Shareholders that is not provided in writing, by
or on behalf of AutoC.

9.3 Indemnification by AutoC. AutoC hereby indemnifies and holds harmless
Autocarbon LTD, its directors, officers, employees, agents, successors and
assigns, and any person who controls Autocarbon LTD and any affiliate of
Autocarbon LTD (within the meaning of the Securities Act of 1933), from and
against all Losses arising out of or resulting from the material breach of any
representation or warranty or other agreement of AutoC contained in this
Agreement or in any Exhibit hereto or in any Certificate delivered by AutoC
pursuant to this Agreement.

9.4 Claims. For the purposes of this Section 9.4 the party from whom
indemnification is sought under this Agreement shall be referred to as the
"Indemnitor" and the party who is seeking such indemnification shall be referred
to as the "Indemnitee". Should any claim be made by a person not a party to this
Agreement with respect to any matter to which the foregoing indemnification
provisions relate or should any claim for indemnification otherwise come to the
attention of the Indemnitee, the Indemnitee shall promptly give the Indemnitor
written notice of such claim, and the Indemnitor shall thereafter defend or
settle any such claim, at its sole expense, on its behalf and with counsel of
its choosing; provided, however, that the, Indemnitee's written consent to any
settlement or disposition shall be a requirement thereto, which consent shall
not be unreasonably withheld. In such defense or settlement, the Indemnitee
shall cooperate and assist the Indemnitor to the maximum extent reasonably
possible and the Indemnitee may participate therein at its own expense and with
counsel of its own choosing.

10.      INTENTIONALLY LEFT BLANK.

11.      GENERAL

11.1 Termination.

         (a) This Agreement may be terminated:,

                  (i) by the mutual written consent of AutoC and Autocarbon LTD;

                  (ii) by AutoC, in the event that any of the conditions
precedent enumerated in Section 8.1 to be performed by Autocarbon LTD have not
been satisfied by Autocarbon LTD or waived by AutoC at or prior to the Closing,
or cured by Autocarbon LTD within seven days following written notice thereof;

<PAGE>

                  (iii) by Autocarbon LTD, in the event that any of the
conditions precedent enumerated in Section 8.2 to be performed by AutoC have not
been satisfied by AutoC or waived by Autocarbon LTD at or prior to the Closing,
or cured by AutoC within seven days following written notice thereof;

                  (iv) INTENTIONALLY LEFT BLANK;

                  (v) automatically, as provided in Section 11.4(b);

                  (vi) by AutoC, if AutoC is a Receiving Party (as defined in
Article 11 hereto), as provided in Section 11.4(c);

                  (vii) by Autocarbon LTD, if Autocarbon LTD is a Receiving
Party, as provided in Section 11.4(c); or

                  (viii) by either party, in the event the Closing has not
occurred by February 28th, 2003. In the event of termination of this Agreement
in accordance with the provisions of this Section 11.1, this Agreement shall
forthwith become null and void and there shall be no liability or obligation on
the part of AutoC or Autocarbon LTD, or their respective officers and directors,
except as set forth in or pursuant to Article 9 and Sections 11.1 (b),11.2 and
11.3 hereof. In addition to the foregoing, in the event the transactions
contemplated by this Agreement are not consummated for any reason, Autocarbon
LTD shall remain obligated to repay advances heretofore made by AutoC, including
those advances evidenced by the promissory notes attached hereto as EXHIBIT
11.1. AutoC acknowledges that in the event of a Closing of the transactions
contemplated by this Agreement, all prior loans and advances made by AutoC to
Autocarbon LTD shall be consolidated in the financial statements of AutoC and
none of the Shareholders, in their capacities as such, shall have any obligation
for the repayment of any such loans and/or advance's.

         (b) Notwithstanding any provision of this Agreement to the contrary, in
the event this Agreement is terminated for any reason other than pursuant to
Sections 11.1(a)(i), 11.1(a)(ii), 11.1(a)(iv), 11.1(a)(v) if AutoC is a
Delivering Party, or 11(a)(vi), AutoC, in addition to all rights it may
otherwise have hereunder or under applicable law, shall receive capital stock of
Autocarbon LTD representing 10% of the their issued and outstanding Common Stock
of Autocarbon LTD on a fully diluted basis.

11.2 Brokers. AutoC and Autocarbon LTD agree to indemnify, defend and hold
harmless each other from and against any liability or expense arising out of any
claim asserted by any third party for brokerage or finder's fees or agent's
commissions, based on an allegation that the other impliedly or expressly
engaged such claimant as a finder, broker or agent, or brought such claimant
into the negotiations between Autocarbon LTD and AutoC.

<PAGE>

11.3 Fees and Expenses. Except as otherwise expressly provided in this Agreement
or assumed by AutoC in writing; attorneys' fees, accounting fees and all other
fees for professional services incurred by each party in effectuating the
transactions contemplated by this Agreement shall be paid by the party which
incurred such fees. Except as otherwise expressly provided in this Agreement,
AutoC and Autocarbon LTD shall each bear its own expenses incurred in connection
with this Agreement and the transactions contemplated by this Agreement whether
or not such transactions shall be consummated.

11.4 Exhibits and Schedules to be Provided.

         (a) In the event that any Exhibit or Schedule hereto is not available
for delivery on the date hereof (an "Unavailable Exhibit"), then the party
charged with the obligation to deliver such Unavailable Exhibit (the "Delivering
Party") shall have until February 28th, 2003 to deliver such Unavailable Exhibit
to the other party hereto (the "Receiving Party").

         (b) In the event that a Delivering Party fails to deliver an
Unavailable Exhibit to the Receiving Party on or prior to February 28th, 2003,
then this Agreement shall automatically terminate and cease to be of any further
force or effect, except as set forth in Section 11.1 hereof.

         (c) In the event that a Delivering Party delivers an Unavailable
Exhibit to the Receiving Party on or prior to February 28th, 2003, and the
disclosure contained in such Unavailable Exhibit makes any of the
representations, warranties, covenants or other provisions of this Agreement
materially false or incorrect, or contains material, adverse information not
previously disclosed to the Receiving Party, then the Receiving Party, at its
option, may terminate this Agreement. Upon any such termination, this Agreement
shall cease to be of further force or effect, except as set forth in Section
11.1 hereof. Notwithstanding the foregoing; a Receiving Party may not terminate
this Agreement pursuant to this Section 11.4(c) prior to the expiration of ten
(10) days following written notice to the Delivering Party of the Receiving
Party's intention to terminate this Agreement and the failure of the Delivering
Party to cure the deficiency claimed by the Receiving Party to the reasonable
satisfaction of the Receiving Party prior to the expiration of such ten (10) day
period.

11.5 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original and all such counterparts shall
constitute but one instrument.

11.6 Notices. All notices, requests and other communications which any party may
give pursuant to this Agreement shall be in writing and shall be either hand
delivered, sent by certified or registered mail with postage fully prepaid, or
sent by facsimile transmission and confirmed by certified or registered mail,
addressed as specified herein. Any such notice, request or other communication
shall be effective upon receipt. All notices shall be addressed as follows:

<PAGE>

              (a) If to AutoC, to:

                  Autocarbon, Inc.
                  136-M Tenth Street
                  Ramona, California 92063
                  Facsimile: (619) 722-6637
                  Attention: James Miller, Chief Executive Officer

                  with a copy to:

                  Sichenzia Ross Friedman Ference LLP
                  1065 Avenue of the Americas
                  New York, New York 10018
                  Facsimile: 212-930-9725
                  Attention: Richard A. Friedman, Esq.

                  (b) If to Autocarbon LTD, to:

                  Autocarbon, LTD
                  26 Nailsworth Mills, Nailsworth, Gloucester, GL6 0BS
                  Facsimile:__+44 1453 835701
                  Attention: James Miller

provided; however, that if either party shall have designated (in the manner
provided above) a different address by notice to the other, then notice shall be
directed to the last address so designated.

11.7 Assignment. This Agreement shall not be assigned by either party without
the express written consent of the other, and if such assignment is consented to
and made it shall be binding upon, and inure to the benefit of, such assignee;
provided, however, that this Agreement may be assigned by AutoC to any wholly
owned subsidiary of AutoC without Autocarbon LTD's consent.

11.8 Exhibits; Complete Agreement.

         (a) All Exhibits referred to in and attached to this Agreement are
intended to be and are specifically made a part of this Agreement.

         (b) This Agreement sets forth the entire understanding of the parties
and supersedes all prior agreements, covenants, arrangements, communications,
representations or warranties, whether oral or written by any officer, employee
or representative of either party.

11.9 Interpretation, Severability and Construction. The headings of the Articles
and Sections of this Agreement are inserted for convenience only and shall not
be deemed to constitute a part hereof. In the event that any provision of this
Agreement shall finally be determined to be unlawful by a court or regulatory
authority having competent jurisdiction, such provision shall be deemed to be
severed from this Agreement but every other provision of this Agreement shall
remain in full force and affect. This Agreement shall be construed in
accordance, with, and governed by, the laws of the State of Delaware, without
regard to the conflicts of laws provisions thereof.

<PAGE>

11.10 Third Parties; Amendment. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person, firm or corporation,
other than the parties and their respective successors and permitted assigns,
any rights or remedies under or by reason of this Agreement. Only an instrument
in writing duly executed by the parties may amend this Agreement.

11.11 Public Announcement. Prior to Closing, neither AutoC nor Autocarbon LTD
shall, make a public announcement of this Agreement, its contents or the
consummation of the transactions contemplated herein without the written consent
of the other, which consent shall not be unreasonably withheld, except to the
extent required by law (including pursuant to the requirements of the 1933 Act
and the 1934 Act) and in such case will give the other party as much notice and
as much opportunity to comment as time may reasonably allow.

11.12 Post-Closing Information. After the Closing, each party shall provide to
the, other, upon request and without charge, such information as either requires
(a) to prepare its financial statements, (b) to prepare its tax returns, (c) to
perform any other acts reasonably related to consummation of the transactions
contemplated by this Agreement, and (d) for litigation or other legitimate
purposes.

11.13 Arbitration. Any dispute or controversy arising out of or relating to this
Agreement or any actual or alleged breach of this Agreement shall be settled by
arbitration to be held in the City of New York in accordance with the rules then
in effect of the American Arbitration Association or any successor thereto. The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive, and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's decision
in any court having jurisdiction, and the parties irrevocably consent to the
jurisdiction of the New York State courts for this purpose. Each party shall pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its own attorneys' fees and expenses.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
         first date set forth above.

         AUTOCARBON, INC.

         By: /s/ James Miller
             --------------------------
         Name: James Miller
         Title: Chief Executive Officer
                                                             Witness
         By: /s/ Terry Hunt                          By:
             --------------------------                  -----------------------
         Name: Terry Hunt                            Name:
         Title:   Director                           Address:

<PAGE>

         AUTOCARBON, LTD

         By:
             --------------------------
         Name:
         Title: Director

         AUTOCARBON, LTD
                                                              Witness
         By:                                         By:
             --------------------------                   ----------------------
         Name: Emma Sims                             Name:
         Title: Company Secretary                    Address:

         /s/ James Millichap-Merrick                 /s/ Gavin Hartland
         --------------------------                  ---------------------------
         James Millichap-Merrick                     Gavin Hartland

                                                     OSTS, S.A.

         /s/ Denis Potter
         --------------------------                  ---------------------------
         Denis Potter                                Name:
                                                     Title:

                                                     Rennel Trading

         /s/ James Miller
         --------------------------                  ---------------------------
         James Miller                                Name:
                                                     Title:

         Presco, Inc.

         ------------------------------
         Name:
         Title:

<PAGE>

         /s/ Ron Murphy                              /s/ Sebastian Reidl
         --------------------------                  ---------------------------
         Ron Murphy                                  Sebastian Reidl

         /s/ Seth Scally                             /s/ Kim Tate
         --------------------------                  ---------------------------
         Seth Scally                                 Kim Tate

         /s/ Terry Hunt                              /s/ Teo Montoya
         --------------------------                  ---------------------------
         Terry Hunt                                  Teo Montoya

         /s/ Peter Moseley                           /s/ Sir Jack Brabham
         --------------------------                  ---------------------------
         Peter Moseley                               Sir Jack Brabham

                                                     M2 Education Fund

         /s/ Robert Miller                           /s/ James Miler
         --------------------------                  ---------------------------
         Robert Miller                               Name: James Miler
                                                     Title: Trustee

         3LP Assets                               Advanced Resource Technologies

         --------------------------                  ---------------------------
         Name:                                       Name:
         Title:                                      Title:<PAGE>

                                                                    Exhibit 4.0

                           MANHATTAN SCIENTIFICS, INC.

                           2000 EQUITY INCENTIVE PLAN

         This Manhattan Scientifics, Inc. 2000 Equity Incentive Plan (the
"Plan") is established by Manhattan Scientifics, Inc., a Delaware corporation
(the "Company"), effective as of October 20, 2000 (the "Effective Date"),
subject to the approval of the shareholders of the Company within twelve (12)
months thereafter. Capitalized terms not otherwise defined shall have the
meanings set forth in Section 25.

         1. Purpose. The Plan is intended to provide qualifying Employees
(including officers and directors), Independent Directors and Consultants with
equity ownership in the Company, thereby strengthening their commitment to the
success of the Company, promoting the identity of interests between the
Company's shareholders and such Employees, Independent Directors and Consultants
and stimulating their efforts on behalf of the Company, and to assist the
Company in attracting and retaining talented personnel.

         2. Scope of the Plan. Subject to adjustment in accordance with Section
20, the total number of Shares for which grants under the Plan shall be
available is 30,000,000. If any Shares subject to any Award granted hereunder
are forfeited or such Award otherwise terminates without the issuance of such
Shares or for other consideration in lieu of such Shares, the Shares subject to
such Award, to the extent of any such forfeiture or termination, shall again be
available for grant under the Plan. Shares awarded under the Plan may be
treasury shares or newly issued shares.

         3. Administration.

           (a) The Plan shall be administered by a Committee which shall consist
of at least two or more members of the Board, all of whom, so long as the
Company remains a Public Company, shall qualify as "non-employee directors"
under Section (b)(3)(i) of Rule 16b-3. If applicable requirements of Rule 16b-3
are met, grants of equity based compensation are not deemed to be purchases or
sales of underlying securities for purposes of Section 16(b) of the 1934 Act
(short swing liability). The number of members of the Committee may from time to
time be increased or decreased, and so long as the Company remains a Public
Company, shall be subject to such conditions, as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 as then in effect. In the event there is not Committee or the
Committee is unable to act, the Board shall be take any and all actions required
or permitted to be taken by the Committee under the Plan and shall serve as the
Committee.

           (b) Subject to the express provisions of the Plan, the Committee has
full and final authority and discretion as follows:

                                       22
<PAGE>

                  (i) to determine when and to whom Awards should be granted and
the terms, conditions and restrictions applicable to each Award, including,
without limitation, (A) the exercise price of the Award, (B) the method of
payment for Shares purchased upon the exercise of the Award, (C) the method of
satisfaction of any tax withholding obligation arising in connection with the
Award, (D) the timing, terms and conditions of the exercisability of the Award
or the vesting of any Shares acquired upon the exercise thereof, (E) the time of
the expiration of the vesting of any Shares acquired upon the exercise thereof,
(F) the effect of the Grantee's termination of employment or service with the
Company on any of the foregoing, (G) all other terms, conditions and
restrictions applicable to the Award or such Shares not inconsistent with the
terms of the Plan, (H) the benefit payable under any SAR or Performance Share,
and (I) whether or not specific Awards shall be identified with other specific
Awards, and if so whether they shall be exercisable cumulatively with, or
alternatively to, such other specific Awards;

                  (ii) to determine the amount, if any, that a Grantee shall pay
for Restricted Shares, whether to permit or require the payment of cash
dividends thereon to be deferred and the terms related thereto, when Restricted
Shares (including Restricted Shares acquired upon the exercise of any Award)
shall be forfeited and whether such Shares shall be held in escrow;

                  (iii) to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;

                  (iv) to make, amend and rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, rules with respect to the
exercisability and forfeitability of Awards upon the termination of employment
or service of a Grantee;

                  (v) to determine the terms, conditions and restrictions of all
Award Agreements (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other things, to
permit transfers of such Awards to the extent permitted by the Plan, except that
the consent of the Grantee shall not be required for any amendment which (A)
does not adversely affect the rights of the Grantee or (B) is necessary or
advisable (as determined by the Committee) to carry out the purpose of the Award
as a result of any change in applicable law;

                  (vi) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;

                  (vii) to accelerate the exercisability of, and to accelerate
or waive any or all of the terms, conditions and restrictions applicable to, any
Award or any group of Awards for any reason and at any time, including in
connection with a termination of employment or service (other than for Cause);

                  (viii) subject to Section 6(c), to extend the time during
which any Award or group of Awards may be exercised;

                                       23
<PAGE>

                  (ix) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are advisable to fulfill the
purposes of the Plan;

                  (x) to impose such additional terms, conditions and
restrictions upon the grant, exercise or retention of Awards as the Committee
may, before or concurrent with the grant thereof, deem appropriate; and

                  (xi) to take any other action with respect to any matters
relating to the Plan for which it is responsible. The determination of the
Committee on all matters relating to the Plan or any Award Agreement shall be
final.

         4. Indemnification and Reimbursement. Service as a member of the
Committee or any other duly appointed subcommittee shall constitute service as a
Board member, and such members shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service as members
of the Committee or any other duly appointed subcommittee. No Committee or other
duly appointed subcommittee member shall be liable for any act or omission made
in good faith with respect to the Plan or any Award granted under the Plan.

         5. Eligibility. The Committee may, in its discretion, grant Awards to
any Eligible Person, whether or not he or she has previously received an Award,
except in the case of an ISO, which can only be granted to an Employee of the
Company or any Subsidiary.

         6. Conditions to Grants.

           (a) General Conditions. Awards shall be evidenced by written Award
Agreements specifying the number of Shares covered thereby, in such form as the
Committee shall from time to time establish. Award Agreements may incorporate
all or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:

                  (i) The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by the
Committee;

                  (ii) In the case of an Award of options, the Option Term shall
under no circumstances extend more than ten (10) years after the Grant Date and
shall be subject to earlier termination as herein provided; and

                  (iii) Any terms and conditions of an Award not set forth in
the Plan shall be set forth in the Award Agreement related to that Award.

           (b) Grant of Options. No later than the Grant Date of any option, the
Committee shall determine the Option Price of such option. Subject to Section
6(c), the Option Price of an option may be the Fair Market Value of a Share on
the Grant Date or may be less than or more than that Fair Market Value. An
option shall be exercisable for unrestricted Shares, unless the Award Agreement
provides that it is exercisable for Restricted Shares.

                                       24
<PAGE>

           (c) Grant of ISOs. At the time of the grant of any option, the
Committee may, in its discretion, designate that such option shall be made
subject to additional restrictions to permit the option to qualify as an
"incentive stock option" under the requirements of Section 422 of the Code. Any
option designated as an ISO:

                  (i) shall have an Option Price that is not less than the Fair
Market Value of a Share on the Grant Date and, if granted to a Ten Percent
Owner, have an Option Price that is not less than 110% of the Fair Market Value
of a Share on the Grant Date;

                  (ii)shall be for a period of not more than ten (10) years and,
if granted to a Ten Percent Owner, not more than five (5) years, from the Grant
Date and shall be subject to earlier termination as provided herein or in the
applicable Award Agreement;

                  (iii) shall meet the limitations of this subparagraph
6(c)(iii). If the aggregate Fair Market Value of Shares with respect to which
ISOs first become exercisable by a Grantee in any calendar year exceeds the
limit determined in accordance with the provisions of Section 422 of the Code
(the "Limit") taking into account Shares subject to all ISOs granted by the
Company that are held by the Grantee, the excess will be treated as nonqualified
options. To determine whether the Limit is exceeded, the Fair Market Value of
Shares subject to options shall be determined as of the Grant Dates of the
options. In reducing the number of options treated as ISOs to meet the Limit,
the most recently granted options will be reduced first. If a reduction of
simultaneously granted options is necessary to meet the Limit, the Committee may
designate which Shares are to be treated as Shares acquired pursuant to an ISO;

                  (iv) shall be granted within ten (10) years from the Effective
Date;

                  (v) shall require the Grantee to notify the Committee of any
disposition of any Shares issued upon the exercise of the ISO under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions, a "Disqualifying Disposition"), within ten (10)
business days after such Disqualifying Disposition; and

                  (vi)unless otherwise permitted by the Code, shall by its terms
not be assignable or transferable other than by will or the laws of descent and
distribution and may be exercised, during the Grantee's lifetime, only by the
Grantee, except that the Grantee may, in accordance with Section 7, designate in
writing a beneficiary to exercise his or her ISOs after the Grantee's death.

           (d) Grant of SARs.

                  (i) When granted, SARs may, but need not, be identified with a
specific option, specific Restricted Shares, or specific Performance Shares of
the Grantee (including any option, Restricted Shares, or Performance Shares
granted on or before the Grant Date of the SARs) in a number equal to or
different from the number of SARs so granted. If SARs are identified with Shares
subject to an option, with Restricted Shares, or with Performance Shares, then,
unless otherwise provided in the applicable Award Agreement, the Grantee's
associated SARs shall terminate upon (A) the expiration, termination,

                                       25
<PAGE>

forfeiture, or cancellation of such option, Restricted Shares or Performance
Shares, (B) the exercise of such option or Performance Shares, or (C) the date
such Restricted Shares become nonforfeitable.

                  ii) The strike price (the "Strike Price") of any SAR shall
equal, for any SAR that is identified with an option, the Option Price of such
option, or for any other SAR, one hundred percent (100%) of the Fair Market
Value of a Share on the Grant Date of such SAR, except that the Committee may
(A) specify a higher Strike Price in the Award Agreement or (B) provide that the
benefit payable upon exercise of any SAR shall not exceed such percentage of the
Fair Market Value of a Share on such Grant Date as the Committee shall specify.

           (e) Grant of Performance Shares.

                  (i) Before the grant of Performance Shares, the Committee
shall:

                           (A) determine objective performance goals, which may
consist of any one or more of the following goals deemed appropriate by the
Committee: earnings (either in the aggregate or on a per share basis), operating
income, cash flow, EBITDA (earnings before interest, taxes, depreciation and
amortization), return on equity, indices related to EVA (economic value added),
per share rate of return on the Common Stock (including dividends), general
indices relative to levels of general customer service satisfaction, as measured
through various randomly-generated customer service surveys, market share (in
one or more markets), customer retention rates, market penetration rates,
revenues, reductions in expense levels, the attainment by the Common Stock of a
specified market value for a specified period of time, and any other object
performance goal deemed appropriate by the Committee, in each case where
applicable to be determined either on a company-wide basis, individual basis or
in respect of any one or more business units, and the amount of compensation
under the goals applicable to such grant;

                           (B) designate a period for the measurement of the
extent to which performance goals are attained, which may begin simultaneously
with, prior to or following the Grant Date (the "Performance Period"); and

                           (C) assign a performance percentage to each level of
attainment of performance goals during the Performance Period, with the
percentage applicable to minimum attainment being zero percent and the
percentage applicable to maximum attainment to be determined by the Committee
from time to time (the "Performance Percentage").

                  (ii) If a Grantee is promoted, demoted, or transferred to a
different business unit of the Company during a Performance Period, then, to the
extent the Committee determines any one or more of the performance goals,
Performance Period or Performance Percentage are no longer appropriate, the
Committee may make any changes thereto as it deems appropriate in order to make
them appropriate.

                  (iii) When granted, Performance Shares may, but need not, be
identified with Shares subject to a specific option, specific Restricted Shares
or specific SARs of the Grantee granted under the Plan in a number equal to or

                                       26
<PAGE>

different from the number of the Performance Shares so granted. If Performance
Shares are so identified, then, unless otherwise provided in the applicable
Award Agreement, the Grantee's associated Performance Shares shall terminate
upon (A) the expiration, termination, forfeiture or cancellation of the option,
Restricted Shares or SARs with which the Performance Shares are identified, (B)
the exercise of such option or SARs, or (C) the date Restricted Shares become
nonforfeitable.

           (f) Grant of Restricted Shares.

                  (i) The Committee shall determine the amount, if any, that a
Grantee shall pay for Restricted Shares, subject to the following sentence. The
Committee shall require the Grantee to pay at least the Minimum Consideration
for each Restricted Share. Such payment shall be made in full by the Grantee
before the delivery of the shares and in any event no later than ten (10)
business days after the Grant Date. In the discretion of the Committee and to
the extent permitted by law, payment may also be made in accordance with Section
9.

                  (ii)The Committee may, but need not, provide that all or any
portion of a Grantee's Restricted Shares, or Restricted Shares acquired upon
exercise of an option, shall be forfeited:

                           (A) except as otherwise specified in the Plan or the
Award Agreement, upon the Grantee's termination of employment or service within
a specified time period after the Grant Date; or

                           (B) if the Company or the Grantee does not achieve
specified performance goals (if any) within a specified time period after the
Grant Date and before the Grantee's termination of employment or service; or

                           (C) upon failure to satisfy such other conditions as
the Committee may specify in the Award Agreement.

                  (iii) If Restricted Shares are forfeited and the Grantee was
required to pay for such shares or acquired such Restricted Shares upon the
exercise of an option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (A) the
amount paid by the Grantee for such Restricted Shares or (B) the Fair Market
Value of the Restricted Shares on the date of forfeiture, which shall be paid to
the Grantee in cash as soon as administratively practicable. Such Restricted
Shares shall cease to be outstanding and shall no longer confer on the Grantee
thereof any rights as a shareholder of the Company, from and after the date of
the event causing the forfeiture, whether or not the Grantee accepts the
Company's tender of payment for such Restricted Shares.

                  (iv) The Committee may provide that the certificates for any
Restricted Shares (A) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited or (B) shall bear an
appropriate legend restricting then transfer of such Restricted Shares. If any
Restricted Shares become nonforfeitable, the Company shall cause certificates
for such shares to be issued without such legend.

                                       27
<PAGE>

                  (v) At the time of a grant of Restricted Shares, the Committee
may require the payment of cash dividends thereon to be deferred and, if the
Committee so determines, reinvested in additional Restricted Shares. Stock
dividends or deferred cash dividends issued with respect to Restricted Shares
shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The Committee
may in its discretion provide for payment of interest on deferred cash
dividends.

           (g) Grant of Stock Bonuses. The Committee may grant Bonus Shares to
any Eligible Employee.

         7. Non-Transferability. An Award granted hereunder shall not be
assignable or transferable other than by will or the laws of descent and
distribution and may be exercised during the Grantee's lifetime only by the
Grantee or his or her guardian or legal representative, except that, subject to
Section 6(c) in respect of ISOs, a Grantee may, if permitted by the Committee,
in its discretion, (a) designate in writing a beneficiary to exercise an Award
after his or her death (if that designation has been received by the Company
prior to the Grantee's death) and (b) transfer the Award to one or more members
of the Grantee's Immediate Family or any other individuals or entities.

         8. Exercise.

           (a) Exercise of Options.

                  (i) Subject to Section 6, each option shall become exercisable
at such time or times as may be specified by the Committee from time to time in
the applicable Award Agreement.

                  (ii) An option shall be exercised by the delivery to the
Company during the Option Term of (A) a written notice of intent to purchase a
specific number of Shares subject to the option in accordance with the terms of
the option by the person entitled to exercise the option and (B) payment in full
of the Option Price of such specific number of Shares in accordance with Section
8(a)(iii).

                  (iii) Payment of the Option Price may be made by any one or
more of the following means:

                           (A) cash, check, or wire transfer;

                           (B) with the approval of the Committee, Mature
Shares, valued at their Fair Market Value on the date of exercise;

                           (C) with the approval of the Committee, Restricted
Shares held by the Grantee for at least six (6) months prior to the exercise of
the option, each such share valued at the Fair Market Value of a Share on the
date of exercise;

                                       28
<PAGE>

                           (D) so long as the Company remains a Public Company,
in accordance with procedures previously approved by the Company, through the
sale of the Shares acquired on exercise of the option through a bank or
broker-dealer to whom the Grantee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay for such Shares, together
with, if requested by the Company, the amount of federal, state, local or
foreign withholding taxes payable by Grantee by reason of such exercise; or

                           (E) in the discretion of the Committee, payment may
also be made in accordance with Section 9.

                           (F) with the approval of the Committee, in any
combination of the foregoing or such other manner determined by the Committee.
The Committee may in its discretion specify that, if any Restricted Shares are
used to pay the Option Price ("Tendered Restricted Shares"), (A) all the Shares
acquired on exercise of the option shall be subject to the same restrictions as
the Tendered Restricted Shares, determined as of the date of exercise of the
option or (B) a number of Shares acquired on exercise of the option equal to the
number of Tendered Restricted Shares shall be subject to the same restrictions
as the Tendered Restricted Shares, determined as of the date of exercise of the
option.

           (b) Exercise of SARs.

                  (i) Subject to Section 6(d), (A) each SAR not identified with
any other Award shall become exercisable at such time or times as may be
specified by the Committee from time to time in the applicable Award Agreement
and (B) except as otherwise provided in the applicable Award Agreement, each SAR
which is identified with any other Award shall become exercisable as and to the
extent that the option or Restricted Shares with which such SAR is identified
may be exercised or becomes nonforfeitable, as the case may be.

                  (ii) SARs shall be exercised by delivery to the Company of
written notice of intent to exercise a specific number of SARs. Unless otherwise
provided in the applicable Award Agreement, the exercise of SARs that are
identified with Shares subject to an option or Restricted Shares shall result in
the cancellation or forfeiture of such option or Restricted Shares, as the case
may be, to the extent of such exercise.

                  (iii) The benefit for each SAR exercised shall be equal to (A)
the Fair Market Value of a Share on the date of such exercise, minus (B) the
Strike Price specified in such SAR. Such benefit shall be payable in cash,
except that the Committee may provide in the Award Agreement that benefits may
be paid wholly or partly in Shares.

           (c) Payment of Performance Shares. Unless otherwise provided in the
Award Agreement with respect to an Award of Performance Shares, if the minimum
performance goals applicable to such Performance Shares have been achieved
during the applicable Performance Period, then the Company shall pay to the
Grantee of such Award that number of Shares equal to the product of:

                                       29
<PAGE>

                  (i) the sum of (A) number of Performance Shares specified in
the applicable Award Agreement and (B) the number of additional Shares that
would have been issuable if such Performance Shares had been Shares outstanding
throughout the Performance Period and the stock dividends, cash dividends
(except as otherwise provided in the Award Agreement), and other property paid
in respect of such Shares had been reinvested in additional Shares as of each
dividend payment date, multiplied by

                  (ii) the Performance Percentage achieved during such
Performance Period. The Committee may, in its discretion, determine that cash be
paid in lieu of some or all of such Shares. The amount of cash payable in lieu
of a Share shall be determined by valuing such Share at its Fair Market Value on
the business day immediately preceding the date such cash is to be paid.
Payments pursuant to this Section 8 shall be made as soon as administratively
practical after the end of the applicable Performance Period. Any Performance
Shares with respect to which the performance goals shall not have been achieved
by the end of the applicable Performance Period shall expire.

         9. Loans. The Committee may in its discretion allow a Grantee to defer
payment to the Company of all or any portion of (a) the Option Price of an
option, (b) the purchase price of Restricted Shares, or (c) any taxes associated
with the exercise, nonforfeitability of, or payment of benefits in connection
with, an Award. Any such payment deferral by the Company shall be on such terms
and conditions as the Committee may determine, except that a Grantee shall not
be entitled to defer the payment of such Option Price, purchase price, or any
related taxes unless the Grantee (a) enters into a binding obligation to pay the
deferred amount and (b) other than with respect to treasury shares, pays upon
exercise of an option or grant of Restricted Shares, as applicable, an amount at
least equal to the Minimum Consideration therefor. If the Committee has
permitted a payment deferral in accordance with this Section 9, then the
Committee may require the immediate payment of such deferred amount upon the
Grantee's termination of employment or if the Grantee sells or otherwise
transfers his or her Shares purchased pursuant to such deferral. The Committee
may at any time in its discretion forgive the repayment of any or all of the
principal of, or interest on, any such deferred payment obligation.

         10. Notification under Section 83(b). If the Grantee, in connection
with the exercise of any option or the grant of Restricted Shares, makes the
election permitted under Section 83(b) of the Code to include in such Grantee's
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code, then such Grantee shall notify the Company, in writing, of such
election within ten (10) days after filing the notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under Section 83(b) of the Code. The Committee
may, in connection with the grant of an Award or at any time thereafter,
prohibit a Grantee from making the election described in this Section 10.

         11. Mandatory Tax Withholding.

           (a) Whenever under the Plan, Shares are to be delivered upon exercise
or payment of an Award or upon Restricted Shares becoming nonforfeitable, or any
other event with respect to rights and benefits hereunder, the Company shall be
entitled to require (i) that the Grantee remit an amount in cash, or in the

                                       30
<PAGE>

Company's discretion, Mature Shares or any other form of consideration,
sufficient to satisfy all federal, state and local tax withholding requirements
related thereto ("Required Withholding"), (ii) the withholding of such Required
Withholding from compensation otherwise due to the Grantee or from any Shares
due to the Grantee under the Plan, or (iii) any combination of the foregoing.

           (b) Any Grantee who makes a Disqualifying Disposition or an election
under Section 83(b) of the Code shall remit to the Company an amount sufficient
to satisfy all resulting Required Withholding, except that in lieu of or in
addition to the foregoing, the Company shall have the right to withhold such
Required Withholding from compensation otherwise due to the Grantee or from any
Shares or other payment due to the Grantee under the Plan.

           (c) Any surrender by a Section 16 Grantee of previously owned shares
of Common Stock to satisfy tax withholding arising upon exercise of the Award
must comply with the applicable provisions of Rule 16b-3(e) under the 1934 Act.

         12. Elective Share Withholding. At the Company's discretion, a Grantee
may, with the prior consent of the Committee, elect the withholding by the
Company of a portion of the Shares otherwise deliverable to such Grantee upon
the exercise of an Award or upon Restricted Shares becoming nonforfeitable
(each, a "Taxable Event") having a Fair Market Value equal to the minimum amount
necessary to satisfy the Required Withholding liability attributable to the
Taxable Event.

         13. Termination of Employment or Service.

           (a) For Cause. Except as otherwise provided by the Committee in an
Award Agreement, if a Grantee's employment or service is terminated for Cause,
(i) the Grantee's Restricted Shares (and any SARs identified therewith) that are
then forfeitable shall on the date of the Grantee's termination of employment or
service be forfeited on such date, subject to the provisions of Section
6(f)(iii) regarding repayment of certain amounts to the Grantee; and (ii) any
unexercised option, SAR or Performance Share shall terminate effective
immediately upon such termination of employment or service.

           (b) On Account of Death. Except as otherwise provided by the
Committee in the Award Agreement, if a Grantee's employment or service
terminates on account of death, then:

                  (i) the Grantee's Restricted Shares (and any SARs identified
therewith) that are then forfeitable shall on the date of the Grantee's
termination of employment or service be forfeited on such date;

                  (ii) any unexercised option or SAR, to the extent exercisable
on the date of such termination of employment or service, may be exercised, in
whole or in part, within the first twelve (12) months after such termination of
employment or service (but only during the Option Term) after the death of the
Grantee by (A) his or her personal representative or by the person to whom the
option or SAR, as applicable, is transferred by will or the applicable laws of
descent and distribution, (B) the Grantee's designated beneficiary, or (C) a
Permitted Transferee; and

                                       31
<PAGE>

                  (iii) any unexercised Performance Shares may be exercised in
whole or in part, at any time within six (6) months after such termination of
employment or service on account of the death of the Grantee, by (A) his or her
personal representative or by the person to whom the Performance Shares are
transferred by will or the applicable laws of descent and distribution, (B) the
Grantee's designated beneficiary, or (C) a Permitted Transferee, except that the
benefit payable with respect to any Performance Shares for which the Performance
Period has not ended as of the date of such termination of employment or service
on account of death shall be equal to the product of Fair Market Value of such
Performance Shares multiplied successively by each of the following:

                           (A) a fraction, the numerator of which is the number
of months (including as a whole month any partial month) that has elapsed since
the beginning of such Performance Period until the date of such termination of
employment or service and the denominator of which is the number of months
(including as a whole month any partial month) in the Performance Period; and

                           (B) a percentage determined in the discretion of the
Committee that would be earned under the terms of the applicable Award Agreement
assuming that the rate at which the performance goals have been achieved as of
the date of such termination of employment or service would continue until the
end of the Performance Period, or, if the Committee elects to compute the
benefit after the end of the Performance Period, the Performance Percentage, as
determined by the Committee, attained during the Performance Period for such
Performance Shares.

                           (C) On Account of Disability. Except as otherwise
provided by the Committee in the Award Agreement, if a Grantee's employment or
service terminates on account of Disability, then:

                                    (i) the Grantee's Restricted Shares (and any
                           SARs identified therewith) that are then forfeitable
                           shall on the date of the Grantee's termination of
                           employment or service be forfeited on such date;

                                    (ii) any unexercised option or SAR, to the
                           extent exercisable on the date of such termination of
                           employment or service, may be exercised in whole or
                           in part, within the first twelve (12) months after
                           such termination of employment or service (but only
                           during the Option Term) by the Grantee, or by (A) his
                           or her personal representative or by the person to
                           whom the option or SAR, as applicable, is transferred
                           by will or the applicable laws of descent and
                           distribution, (B) the Grantee's designated
                           beneficiary, or (C) a Permitted Transferee; and

                                    (iii) any unexercised Performance Shares may
                           be exercised in whole or in part, i at any time
                           within six (6) months after such termination of

                                       32
<PAGE>

                           employment or service on account of Disability by the
                           Grantee, or by (A) his personal representative or by
                           the person to whom the Performance Shares are
                           transferred by will or the applicable laws of descent
                           and distribution, (B) the Grantee's designated
                           beneficiary, or (C) a Permitted Transferee, except
                           that the benefit payable with respect to any
                           Performance Shares for which the Performance Period
                           has not ended as of the date of such termination of
                           employment or service on account of Disability shall
                           be equal to the product of the Fair Market Value of
                           the Performance Shares multiplied successively by
                           each of the following:

                                             (A) a fraction, the numerator of
                                    which is the number of months (including as
                                    a whole month any partial month) that have
                                    elapsed since the beginning of such
                                    Performance Period until the date of such
                                    termination of employment or service and the
                                    denominator of which is the number of months
                                    (including as a whole month any partial
                                    month) in the Performance Period; and

                                             (B) a percentage determined in the
                                    discretion of the Committee that would be
                                    earned under the terms of the applicable
                                    Award Agreement assuming that the rate at
                                    which the performance goals have been
                                    achieved as of the date of such termination
                                    of employment or service would continue
                                    until the end of the Performance Period, or,
                                    if the Committee elects to compute the
                                    benefit after the end of the Performance
                                    Period, the Performance Percentage, as
                                    determined by the Committee, attained during
                                    the Performance Period for such Performance
                                    Shares.

           (d) Any Reason Other Than For Cause Or On Account of Death or
Disability. Except as otherwise provided by the Committee in the Award
Agreement, if a Grantee's employment or service terminates for any reason other
than for Cause, or on account of death or Disability, then:

                  (i) the Grantee's Restricted Shares (and any SARs identified
therewith), that are then forfeitable shall on the date of the Grantee's
termination of employment or service be forfeited on such date;

                  (ii) any unexercised option or SAR (other than a SAR
identified with a Restricted Share or Performance Share), to the extent
exercisable immediately before the Grantee's termination of employment or
service, may be exercised in whole or in part, not later than three (3) months
after such termination of employment or service (but only during the Option
Term); and

                                       33
<PAGE>

                  (iii) the Grantee's Performance Shares (and any SARs
identified therewith) shall terminate effective immediately upon such
termination of employment or service.

         14. Substituted Awards. If the Committee cancels any Award (whether
granted under the Plan or any plan of any entity acquired by the Company or a
Subsidiary), the Committee may, in its discretion, substitute a new Award
therefor upon such terms and conditions consistent with the Plan as the
Committee may determine, except that (a) the Option Price of any new option, and
the Strike Price of any new SAR, shall not be less than one hundred percent
(100%) (one hundred ten percent (110%) in the case of an incentive stock option
granted to a Ten Percent Owner) of the Fair Market Value of a Share on the date
of the grant of the new Award; and (b) the Grant Date of the new Award shall be
the date on which such new Award is granted.

         15. Securities Law Matters.

           (a) If the Committee deems necessary to comply with any applicable
securities law, the Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for Shares. If, based upon the advice of counsel to the
Company, the Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities laws or (ii) the listing
requirements of any national exchange or national market system on which are
listed any of the Company's equity securities, then the Committee may postpone
any such exercise, nonforfeitability or delivery, as applicable, but the Company
shall use all reasonable efforts to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable date.

           (b) Grants of options to Section 16 Grantees shall comply with Rule
16b-3 and shall contain such additional conditions or restrictions as may be
required thereunder for such grants to qualify for exemption from liability
under Section 16(b) of the 1934 Act.

         16. No Employment Rights. Neither the establishment of the Plan nor the
grant of any Award shall (a) give any Grantee the right to remain employed by or
in the service of the Company or any Subsidiary or to any benefits not
specifically provided by the Plan or (b) modify the right of the Company or any
Subsidiary to modify, amend, or terminate the Plan or any other employee benefit
plan or employment, consulting or other agreement.

         17. No Rights as a Shareholder. A Grantee shall not have any rights as
a shareholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of an Award until such
Shares have been delivered to him or her. Restricted Shares, whether held by a
Grantee or in escrow by the Company, shall confer on the Grantee all rights of a
shareholder of the Company, except as otherwise provided in the Plan or
applicable Award Agreement.

         18. Nature of Payments. Awards shall be special incentive payments to
the Grantee and shall not be taken into account in computing the amount of
salary or compensation of the Grantee for purposes of determining any pension,
retirement, death or other benefit under (a) any pension, retirement,
profit-sharing, bonus, insurance or other employee benefit plan of the Company

                                       34
<PAGE>

or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary
and (ii) the Grantee, except as such plan or agreement shall otherwise expressly
provide.

         19. Non-uniform Determinations. The Committee's determinations under
the Plan need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards, whether or not such
persons are similarly situated. Without limiting the generality of the
foregoing, the Committee shall be entitled to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, including, without limitation, vesting and manner of
payment of purchase price upon exercise, and (c) the treatment of terminations
of employment or service.

         20. Adjustments. The Committee shall make equitable adjustment of:

           (a) the aggregate number of Shares available under the Plan for
Awards and the aggregate number of Shares for which Awards may be granted to any
individual Grantee in any calendar year pursuant to the second sentence of
Section 2;

           (b) the number of Shares, SARs or Performance Shares covered by an
Award; and

           (c) the Option Price of all outstanding options and the Strike Price
of all outstanding SARs; to reflect a stock dividend, stock split, reverse stock
split, share combination, recapitalization, merger, consolidation, spin-off,
split-off, reorganization, rights offering, liquidation or similar event of or
by the Company.

         21. Amendment of the Plan. The Committee may from time to time, in its
discretion, amend the Plan without the approval of the Company's shareholders,
except (a) as such shareholder approval may be required under the listing
requirements of any securities exchange or national market system on which are
listed the Company's equity securities and (b) that the Committee may not
without the approval of the Company's shareholders amend the Plan to increase
the total number of shares reserved for the purposes of the Plan (other than in
accordance with Section 20).

         22. Termination of the Plan. The Plan shall continue in effect until
the earlier of its termination by the Committee or the date on which all of the
shares of Common Stock available for issuance under the Plan have been issued
and all restrictions on such shares under the terms of the Plan and the
agreements evidencing Awards granted under the Plan have lapsed. However, all
Awards shall be granted, if at all, within ten (10) years from the earlier of
the date the Plan is adopted by the Committee or the date the Plan is duly
approved by the shareholders of the Company. Notwithstanding the foregoing, if
the maximum number of shares of Common Stock issuable pursuant to the Plan has
been increased at any time, all Awards shall be granted, if at all, no later
than the last day preceding the ten (10) year anniversary of the earlier of (a)
the date on which the latest such increase in the maximum number of shares of
Common Stock issuable under the Plan was approved by the shareholders of the
Company or (b) the date such amendment was adopted by the Committee. No
termination shall affect any Award then outstanding under the Plan.

                                       35
<PAGE>

         23. No Illegal Transactions. The Plan and all Awards granted pursuant
to it are subject to all applicable laws and regulations. Notwithstanding any
provision of the Plan or any Award, Grantees shall not be entitled to exercise,
or receive benefits under any Award, and the Company shall not be obligated to
deliver any Shares or deliver benefits to a Grantee, if such exercise or
delivery would constitute a violation by the Grantee or the Company of any
applicable law or regulation.

         24. Constructive Sales. The Grantee shall not directly or indirectly,
through related parties or otherwise, "short" or "short against the box" (as
those terms are generally understood in the securities markets), or otherwise
directly or indirectly (through derivative instruments or otherwise) dispose of
or hedge, any securities of the Company issuable upon exercise of such Grantee's
Award(s).

         25. Definitions. The terms set forth below have the indicated meanings
which are applicable to both the singular and plural forms thereof:

         "Award" shall mean options, including ISOs, Restricted Shares, Bonus
Shares, SARs or Performance Shares granted under the Plan.

         "Award Agreement" shall mean the written agreement by which an Award
shall be evidenced.

         "Board" shall mean the Board of Directors of the Company.

         "Bonus Shares" shall mean Shares that are awarded to a Grantee without
cost and without restrictions.

         "Cause", with respect to any employee or consultant of the Company
shall have the meaning set forth in such person's employment or consulting
agreement or, in the absence of such an agreement or if such term is not defined
in such agreement, shall mean any one or more of the following, as determined by
the Committee (in the case of a Section 16 Grantee) or the Chief Executive
Officer or President of the Company (in the case of any other Grantee):

                           (i) a Grantee's commission of a crime that is likely
                  to result in injury to the Company or a Subsidiary;

                           (ii) the material violation by the Grantee of written
                  policies of the Company or a Subsidiary;

                           (iii) the habitual neglect by the Grantee in the
                  performance of his or her duties to the Company or a
                  Subsidiary; or

                           (iv) a Grantee's willful misconduct or inaction in
                  connection with his or her duties to the Company or a
                  Subsidiary resulting in a material injury to the Company or a
                  Subsidiary.

                                       36
<PAGE>

         "Code" shall mean the Internal Revenue Code of 1986, as amended or
superseded, and the regulations and rulings thereunder. Reference to a
particular section of the Code shall include references to successor provisions.

         "Committee" shall mean the committee of the Board appointed pursuant to
Section 3(a), or if not so appointed or unable to act or with reference to
Awards to Independent Directors, shall mean the entire Board.

         "Common Stock" shall mean the common stock, $0.001 par value per share,
of the Company.

         "Consultant" shall mean any person, including a Director, who is
engaged by the Company or any Parent, Subsidiary or Affiliate thereof, to render
services to or for the benefit of the Company and is compensated for such
services.

         "Director" shall mean a member of the Board.

         "Disability" shall mean a permanent and total disability, within the
meaning of Section 22(e)(3) of the Code.

         "Disqualifying Disposition" shall mean any disposition (including any
sale) of Common Stock before the later of (i) two (2) years after the date
Grantee was granted the ISOs hereunder or (ii) one year after the date Grantee
acquired the Common Stock by exercising the ISOs granted hereunder. If Grantee
dies before such Common Stock is sold, these holding period requirements do not
apply and no Disqualifying Disposition can occur thereafter.

         "Effective Date" shall mean the date set forth in the first paragraph
hereof.

         "Eligible Person" shall mean any Employee, Consultant or Director of
the Company or any Subsidiary, including any prospective Employee or Employee on
an approved leave of absence or layoff, if such leave or layoff does not qualify
as a Disability.

         "Employee" shall mean any person treated as an employee (including
officers and directors) in the records of the Company (or Subsidiary) and who is
subject to the control and direction of the Company (or Subsidiary) with regard
to both the work to be performed and the manner and method of performance. The
payment of a director's fee by the Company (or Subsidiary) to a Director shall
not be sufficient to constitute "employment" of the Director by the Company (or
Subsidiary).

         "Fair Market Value" per share of Common Stock on any relevant date
shall mean such value as determined in accordance with the following provisions:

                           (i) If the Common Stock is at that time listed on a
         national securities exchange, then the Fair Market Value shall mean the
         closing selling price per share of Common Stock on the exchange on
         which such Common Stock is principally traded on the relevant date or,

                                       37
<PAGE>

         if there were no sales on that date, the closing selling price of such
         Common Stock on the last preceding date on which there were sales.

                           (ii) If the Common Stock is at that time traded on
         the Nasdaq National Market(R), Nasdaq Small Cap Market(SM) or OTC
         Bulletin Board(R), as the case may be, then the Fair Market Value shall
         mean the closing selling price per share of Common Stock on the
         relevant date, as the price is reported by the National Association of
         Securities Dealers on the Nasdaq National Market(R), Nasdaq Small Cap
         Market(SM) or OTC Bulletin Board(R), as the case may be, or any
         successor system. If there is no closing selling price for the Common
         Stock on the relevant date, then the Fair Market Value shall mean the
         closing selling price on the last preceding date for which such
         quotation exists.

                           (iii) If the Common Stock is neither listed on any
         national securities exchange nor traded on the Nasdaq National
         Market(R), Nasdaq Small Cap Market(SM) or OTC Bulletin Board(R), then
         the Fair Market Value shall mean that value determined by the Committee
         after taking into account such factors as the Committee shall in good
         faith deem appropriate.

         "Grant Date" shall have the meaning specified in Section 6(a).

         "Grantee" shall mean a person who has been granted an Award or any
Permitted Transferee.

         "ISO" shall mean an incentive stock option within the meaning of
Section 422 of the Code.

         "Immediate Family" shall mean, with respect to a particular Grantee,
the Grantee's spouse, children and grandchildren.

         "Independent Director" shall mean a member of the Board who in not an
Employee of the Company.

         "Mature Shares" shall mean Shares, for which the holder thereof has
good title, free and clear of all liens and encumbrances, and which such holder
has held for at least six (6) months.

         "Minimum Consideration" shall mean par value per Share or such other
amount that is from time to time considered to be minimum consideration under
applicable law.

         "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
References to a particular section of the 1934 Act or rule thereunder, include
references to successor provisions.

         "Option Price" shall mean the per share exercise price of an option.

         "Option Term" shall mean the period beginning on the Grant Date of an
option and ending on the expiration date of such option, as specified in the

                                       38
<PAGE>

Award Agreement for such option and as may, in the discretion of the Committee
and consistent with the provisions of the Plan, be extended from time to time.

         "Performance Shares" shall mean an Award to a Grantee pursuant to
Section 6(e).

         "Permitted Transferee" shall mean a person to whom an Award may be
transferred or assigned in accordance with Section 7.

         "Public Company" shall mean any entity issuing any class of equity
securities that has been, or is required to be, registered under Section 12 of
the 1934 Act.

         "Restricted Shares" shall mean Shares that are subject to forfeiture if
the Grantee does not satisfy the conditions specified in the Award Agreement
applicable to those Shares.

         "Rule 16b-3" shall mean Rule 16b-3 of the SEC under the 1934 Act, as
amended from time to time, together with any successor rule.

         "SAR" shall mean a stock appreciation right.

         "SEC" shall mean the Securities and Exchange Commission.

         "Section 16 Grantee" shall mean a person who is subject to potential
liability under Section 16(b) of the 1934 Act with respect to transactions
involving equity securities of the Company.

         "Share" shall mean a share of Common Stock.

         "Strike Price" shall have the meaning specified in Section 6(d)(ii).

         "Subsidiary" shall mean a subsidiary corporation, as defined in Section
424(f) of the Code (with the Company being treated as the employer corporation
for purposes of this definition).

         "Ten Percent Owner" shall mean a person who owns capital stock
(including stock treated as owned under Section 424(d) of the Code) possessing
more than ten percent of the total combined Voting Power of all classes of
capital stock of the Company or any Subsidiary.

         "Voting Power" shall mean the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors.

         26. Controlling Law. The law of the State of Delaware, except its law
with respect to choice of law, shall control all matters relating to the Plan.

         27. Severability. If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will given effect to the terms of such Section to
the fullest extent possible while remaining lawful and valid.

                                       39

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