Document:

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                                                                     Exhibit 4.8

THE TERMS OF THIS WARRANT ARE SUBJECT TO THE TERMS OF A SUBSCRIPTION AGREEMENT,
COPIES OF WHICH ARE AVAILABLE FROM NEPHROS, INC. NEITHER THIS WARRANT NOR THE
SECURITIES FOR WHICH IT IS EXERCISABLE HAVE BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT OR
AN EXEMPTION FROM THE SECURITIES ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND THE LAWS OF OTHER
APPLICABLE JURISDICTIONS.

THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES
IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO THE TERMS AND CONDITIONS
OF A STOCKHOLDERS' AGREEMENT DATED AS OF MAY 17, 2000 AMONG NEPHROS, INC. AND
THE HOLDERS OF OUTSTANDING CAPITAL STOCK OF SUCH COMPANY. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF NEPHROS, INC.

                                  NEPHROS, INC.

                  Class A Warrant for the Purchase of Shares of
                                 Common Stock*

No. A-1                                                          August 5, 2002

     FOR VALUE RECEIVED, NEPHROS, INC., a Delaware corporation (the "Company"),
hereby certifies that Lancer Offshore, Inc. or its registered assigns (the
"Holder") is entitled to purchase from the Company, subject to the provisions of
this Warrant (the "Warrant"), at any time on or after the date hereof (the
"Initial Exercise Date"), and prior to 12:01 A.M., New York City time, on
December 1, 2007 (the "Termination Date"), 120,000 fully paid and non-assessable
shares of the Common Stock, $.001 par value, of the Company ("Common Stock"), at
an exercise price of $2.50 per share of Common Stock for an aggregate exercise
price of three hundred thousand dollars ($300,000) (the aggregate purchase price

----------
*    [Please note: this Warrant was amended by the Settlement Agreement, dated
     as of January 31, 2003, between Nephros, Inc. and Lancer Offshore, Inc.]

<PAGE>

payable for the Warrant Shares hereunder is hereinafter sometimes referred to as
the "Aggregate Exercise Price"). The number of shares of Common Stock to be
received upon exercise of this Warrant and the price to be paid for each share
of Common Stock are subject to possible adjustment from time to time as
hereinafter set forth. The shares of Common Stock or other securities or
property deliverable upon such exercise as adjusted from time to time is
hereinafter sometimes referred to as the "Warrant Shares." The exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Per Share Exercise Price." The Per
Share Exercise Price is subject to adjustment as hereinafter provided; in the
event of any such adjustment, the number of Warrant Shares shall also be
adjusted, by dividing the Aggregate Exercise Price by the Per Share Exercise
Price in effect immediately after such adjustment. The Aggregate Exercise Price
is not subject to adjustment except to the extent of any partial exercise of
this Warrant. This Warrant constitutes one in a series of warrants (the "Class A
Warrants") which includes this Warrant and any other Class A Warrants issued
pursuant to Section 1 and/or Section 2.2 of the Subscription Agreement dated as
of even date herewith (the "Subscription Agreement") by and among the Company
and the Purchasers (as defined in the Subscription Agreement).

     1. Exercise of Warrant.

     (a) This Warrant may be exercised in whole or in part, at any time by its
holder commencing on the Initial Exercise Date and prior to the Termination Date
by presentation and surrender of this Warrant, together with the duly executed
subscription form attached at the end hereof, at the address set forth in
Subsection 8(a) hereof, together with payment, by certified or official bank
check or wire transfer payable to the order of the Company, of the Aggregate
Exercise Price or the proportionate part thereof if exercised in part.

     (b) If this Warrant is exercised in part only, the Company shall, upon
presentation of this Warrant upon such exercise, execute and deliver (along with
the certificate for the Warrant Shares purchased) a new Warrant evidencing the
rights of the Holder hereof to purchase the balance of the Warrant Shares
purchasable hereunder upon the same terms and conditions as herein set forth.
Upon proper exercise of this Warrant, the Company promptly shall deliver
certificates for the Warrant Shares to the Holder duly legended as authorized by
the subscription form. No fractional shares or scrip representing fractional
shares shall be issued upon exercise of this Warrant; provided that the Company
shall pay to the Holder of the Warrant cash in lieu of such fractional shares.

     2. Reservation of Warrant Shares; Fully Paid Shares; Taxes. The Company
hereby represents that it has, and until expiration of this Warrant agrees that
it shall, reserve for issuance or delivery upon exercise of this Warrant, such
number of shares of the Common Stock as shall be required for issuance and/or
delivery upon exercise of this Warrant in full, and agrees that all Warrant
Shares so issued and/or delivered will be validly issued, fully paid and
non-assessable, and further agrees to pay all taxes (other than income taxes)
and charges that may be imposed upon such issuance and/or delivery. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of Common Stock (or other
securities or assets) in a name other than that in which the Warrants so
exercised were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount of
such tax or has established, to the satisfaction of the Company, that such tax
has been paid.

                                     - 2 -

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     3. Protection Against Dilution.

     (a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company (each of (i) through (iv) an "Action"), the Per Share
Exercise Price shall be adjusted to be equal to a fraction, the numerator of
which shall be the Aggregate Exercise Price and the denominator of which shall
be the number of shares of Common Stock or other capital stock of the Company
that the Holder would have held (solely as a result of the exercise of this
Warrant and the operation of such Action) immediately following such Action if
this Warrant had been exercised immediately prior to such Action. An adjustment
made pursuant to this Subsection 3(b) shall become effective immediately after
the record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.

     (b) In the event of any capital reorganization or reclassification, or any
consolidation or merger to which the Company is a party other than a merger or
consolidation in which the Company is the continuing corporation, or in case of
any sale or conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), the Holder
of this Warrant shall have the right thereafter to receive on the exercise of
this Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Section 3 with respect to the rights and interests thereafter of
the Holder of this Warrant to the end that the provisions set forth in this
Section 3 shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. The above
provisions of this Subsection 3(b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances.

     (c) Whenever the Per Share Exercise Price payable upon exercise of this
Warrant is adjusted pursuant to this Section 3, the number of shares of Common
Stock underlying this Warrant shall simultaneously be adjusted to equal the
number obtained by dividing the Aggregate Exercise Price (as the same shall be
reduced to the extent of any partial exercise of this Warrant) by the adjusted
Per Share Exercise Price.

     (d) If, as a result of an adjustment made pursuant to this Section 3, the
Holder shall become entitled to receive, upon exercise of the Warrant, shares of
two or more classes of capital stock or shares of Common Stock and other capital
stock of the Company, the Board of Directors (whose determination shall be
conclusive) shall determine the allocation of the

                                     - 3 -

<PAGE>

adjusted Per Share Exercise Price between or among shares or such classes of
capital stock or shares of Common Stock and other capital stock.

     4. Limited Transferability. This Warrant may not be sold, transferred,
assigned or hypothecated by the Holder except in compliance with the provisions
of the Act and the applicable state securities "blue sky" laws, and is so
transferable only upon the books of the Company which it shall cause to be
maintained for such purpose. The Company may treat the registered Holder of this
Warrant as he or it appears on the Company's books at any time as the Holder for
all purposes.

     5. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company (which may include a bond), if
lost, stolen or destroyed, and upon surrender and cancellation of this Warrant,
if mutilated, the Company shall execute and deliver to the Holder a new Warrant
of like date, tenor and denomination.

     6. Investment Intent.

     (a) The Holder represents, by accepting this Warrant, that it understands
that this Warrant and any securities obtainable upon exercise of this Warrant
have not been registered for sale under Federal or state securities laws and are
being offered and sold to the Holder pursuant to one or more exemptions from the
registration requirements of such securities laws. The Holder is an "accredited
investor" within the meaning of Regulation D under the Securities Act of 1933,
as amended (the "Act"). In the absence of an effective registration of such
securities or an exemption therefrom, any certificates for such securities shall
bear the legend set forth on the first page hereof. The Holder understands that
it must bear the economic risk of its investment in this Warrant and any
securities obtainable upon exercise of this Warrant for an indefinite period of
time, as this Warrant and such securities have not been registered under Federal
or state securities laws and therefore cannot be sold unless subsequently
registered under such laws, unless as exemption from such registration is
available.

     (b) The Holder, by its acceptance of its Warrant, represents to the Company
that it is acquiring this Warrant and will acquire any securities obtainable
upon exercise of this Warrant for its own account for investment and not with a
view to, or for sale in connection with, any distribution thereof in violation
of the Act. The Holder agrees that this Warrant and any such securities will not
be sold or otherwise transferred unless (i) a registration statement with
respect to such transfer is effective under the Act and any applicable state
securities laws or (ii) such sale or transfer is made pursuant to one or more
exemptions from the Act.

     7. Status of Holder. This Warrant does not confer upon the Holder any right
to vote or to consent to or receive notice as a stockholder of the Company, as
such, in respect of any matters whatsoever, or any other rights or liabilities
as a stockholder, prior to the exercise hereof.

     8. Notices. No notice or other communication under this Warrant shall be
effective unless, but any notice or other communication shall be effective and
shall be deemed to

                                     - 4 -

<PAGE>

have been given if, the same is in writing and is mailed by first-class mail,
postage prepaid, addressed to:

     (a) the Company c/o Audubon Business and Technology Center,
Columbia-Presbyterian Medical Center, 3960 Broadway, 4th Floor, New York, NY
10032, Attention: President, or such other address as the Company has designated
in writing to the Holder; or

     (b) the Holder at Kaya Flamboyan 9, Curacao, Netherlands, Antilles,
Attention: Investment Manager, or such other address as the Holder has
designated in writing to the Company.

     9. Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.

     10. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of New York without giving effect to
principles of conflicts of law thereof.

     11. Amendments. This Warrant may be amended only by mutual written
agreement of the Company and the holder or holders holding Class A Warrants
exercisable for a majority of the shares of Common Stock issuable upon exercise
of all then-outstanding Class A Warrants (the "Majority Holders"), and the
Company may take any action herein prohibited or omit to take any action herein
required to be performed by it, and any breach of any covenant, agreement,
warranty or representation may be waived, only if the Company has obtained the
written consent or waiver of the Majority Holders.

                                     - 5 -

<PAGE>

     IN WITNESS WHEREOF, the undersigned, acting for and on behalf of the
Company, has executed this Warrant as of the date first written above.

                                      NEPHROS, INC.

                                      By:/s/ Norman Barta
                                         --------------------------------------
                                         Name:  Norman Barta
                                         Title: President and Chief Executive
                                                Officer

                                     - 6 -

<PAGE>

                                  SUBSCRIPTION

                  The undersigned,                           ,  pursuant to the
                                   --------------------------
provisions of the foregoing Warrant, hereby elects to exercise the within
Warrant to the extent of purchasing           shares of Common Stock thereunder
                                    ---------
and hereby makes payment of $           by certified or official bank check in
                             ----------
payment of the exercise price therefor.

Dated:                                  Signature:
      -------------                               ------------------------

      Address:
              -----------------------------------

                                     - 7 -

<PAGE>

                                   ASSIGNMENT

     FOR VALUE RECEIVED                                      hereby sells,
                       -------------------------------------
assigns and transfers unto                                       the foregoing
                          -------------------------------------
Warrant and all rights evidenced thereby, and does irrevocably constitute and
appoint                             , attorney, to transfer said Warrant on the
       -----------------------------
books of Nephros, Inc.

Dated:                                  Signature:
      -------------                               ------------------------

      Address:
              -----------------------------------

                               PARTIAL ASSIGNMENT

     FOR VALUE RECEIVED                            hereby assigns and transfers
                       ---------------------------
unto                          the right to purchase            shares of the
    -------------------------                      -----------
Common Stock, no par value per share, of Nephros, Inc. covered by the foregoing
Warrant, and a proportionate part of said Warrant and the rights evidenced
thereby, and does irrevocably constitute and appoint                           ,
                                                    ---------------------------
attorney, to transfer that part of said Warrant on the books of Nephros, Inc.

Dated:                                   Signature:
      ------------                                 ------------------------

      Address:
              -------------------------------------

                                      - 8 -<PAGE>

                                                                    Exhibit 10.1

Amended and Restated Nephros 2000 Equity Incentive Plan

SECTION 1
PURPOSE

The Nephros 2000 Equity Incentive Plan (the "Plan") was adopted by the board of
directors of Nephros, Inc., a Delaware corporation (the "Corporation"), in 2000
and was amended and restated in January 2003 and renamed the Amended and
Restated Nephros 2000 Equity Incentive Plan. The purpose of the Amended and
Restated Nephros 2000 Equity Incentive Plan is to provide a means whereby
Nephros, Inc., a Delaware corporation (the "Corporation"), may attract able
persons to remain in or to enter the employ of the Corporation, a Parent
Corporation or a Subsidiary and to provide a means whereby those employees,
directors, officers, and other individuals or entities upon whom the
responsibilities of the successful administration, management, planning, and/or
organization of the Corporation may rest, and whose present and potential
contributions to the welfare of the Corporation, a Parent Corporation or a
Subsidiary are of importance, can acquire and maintain stock ownership, thereby
strengthening their concern for the long-term welfare of the Corporation. A
further purpose of the Plan is to provide such employees and individuals or
entities with additional incentive and reward opportunities designed to enhance
the profitable growth of the Corporation over the long term. Accordingly, the
Plan provides for granting Common Stock, Incentive Stock Options, options which
do not constitute Incentive Stock Options, or any combination of the foregoing,
as is best suited to the circumstances of the particular employees and
individuals or entities as provided herein.

SECTION 2
DEFINITIONS

The following definitions shall be applicable during the term of the Plan unless
specifically modified by any paragraph:

(a)  Approval of the stockholders, or words of similar import, means the
     approval of the holders of a majority of the voting power of all stock
     having the right, under the Corporation's certificate of incorporation, as
     it may be amended from time to time, to vote on all matters submitted to
     stockholders.

(b)  Award means, individually or collectively, any Option granted pursuant to
     the Plan.

(c)  Board means the board of directors of the Corporation. The Board may
     delegate any of its responsibilities hereunder to the Committee.

(d)  Cause means, for the purposes of employment, (1) the definition provided in
     any employment, severance or other agreement governing the relationship
     between the Grantee or Holder and the Corporation that is in effect at the
     time of reference; and (2) if

                                       A-1

<PAGE>

     there is no such agreement or any such agreement does not include a
     definition of Cause, any of the following: (i) the gross neglect or willful
     failure or refusal to perform duties (other than as a result of total or
     partial incapacity due to physical or mental illness); (ii) engaging in
     misconduct which is materially injurious to the Company, monetarily or
     otherwise; (iii) perpetration of an intentional and knowing fraud against
     or affecting the Company or any customer, client, agent, or employee
     thereof; or (iv) conviction (including conviction on a nolo contendere
     plea) of a felony or any crime involving, in the good faith judgment of the
     Company, fraud, or dishonesty.

(e)  Change of Control Value means the amount determined in Clause (i), (ii) or
     (iii), whichever is applicable, as follows: (i) the per share price offered
     to stockholders of the Corporation in any merger, consolidation, sale or
     assets or dissolution transaction, (ii) the price per share offered to
     stockholders of the corporation in any tender offer or exchange offer
     whereby a Corporate Change takes place or (iii) if a Corporate Change
     occurs other than as described in Clause (i) or Clause (ii), the fair
     market value per share determined by the Board as of the date determined by
     the Board to be the date of cancellation and surrender of an Option. If the
     consideration offered to stockholders of the Corporation in any transaction
     described in this paragraph or paragraphs (d) and (e) of Section 8 consists
     of anything other than cash, the Board shall determine the fair cash
     equivalent of the portion of the consideration offered which is other than
     cash.

(f)  Code means the Internal Revenue Code of 1986, as amended. Reference in the
     Plan to any Section of the Code shall be deemed to include any amendments
     or successor provisions to such Section and any regulations under such
     Section.

(g)  Committee means the committee, consisting of three officers of the Company
     or members of the Board of the Company, established by the Board to
     administer the Plan; provided, however, that prior to the consummation of
     an initial public offering of the Company's stock, one member of the
     Committee must be appointed by WP Nephros Partners, LLC, or any successor
     entity. If the Committee does not exist, or for any other reason determined
     by the Board, the Board may take any action under the Plan that would
     otherwise be the responsibility of the Committee. To the extent necessary
     for section 162(m) of the Code, the Committee shall be comprised solely of
     outside directors pursuant to Section 4(d) hereof and to the extent
     necessary for Rule 16b-3, the Committee shall be comprised solely of
     non-employee directors.

(h)  Common Stock means the common stock of the Corporation.

(i)  Corporation means Nephros, Inc.

(j)  Corporate Change means one of the following events: (i) the merger,
     consolidation or other reorganization of the Corporation in which the
     outstanding Common Stock is converted into or exchanged for a different
     class of securities of the Corporation, a class of securities of any other
     issuer (except a Subsidiary or Parent Corporation), cash or other property
     other than (a) a merger, consolidation or reorganization of the Corporation
     which would result in the voting stock of the Corporation outstanding

                                       A-2

<PAGE>

     immediately prior thereto continuing to represent (either by remaining
     outstanding or by being converted into voting securities of the surviving
     entity), in combination with the ownership of any trustee or other
     fiduciary holding securities under an employee benefit plan of the
     Corporation, at least sixty percent (60%) of the combined voting power of
     the voting stock of the Corporation or such surviving entity outstanding
     immediately after such merger, consolidation or reorganization of the
     Corporation, or (b) merger, consolidation or reorganization of the
     Corporation effected to implement a recapitalization of the Corporation (or
     similar transaction) in which no person acquires more than forty-nine
     percent (49%) of the combined voting power of the Corporation's then
     outstanding stock; (ii) the sale, lease or exchange of all or substantially
     all of the assets of the Corporation to any other corporation or entity
     (except a Subsidiary or Parent Corporation); (iii) the adoption by the
     stockholders of the Corporation of a plan of liquidation and dissolution;
     (iv) the acquisition (other than acquisition pursuant to any other clause
     of this definition) by any person or entity, including without limitation a
     "group" as contemplated by Section 13(d)(3) of the Exchange Act, of
     beneficial ownership, as contemplated by such Section, of more than fifty
     percent (50%) (based on voting power) of the Corporation's outstanding
     capital stock or acquisition by a person or entity who currently has
     beneficial ownership which increases such person's or entity's beneficial
     ownership to fifty percent (50%) or more (based on voting power) of the
     Corporation's outstanding capital stock; or (v) as a result of or in
     connection with a contested election of directors, the persons who were
     directors of the Corporation before such election shall cease to constitute
     a majority of the Board. Notwithstanding the provisions of clause (iv)
     above, a Corporate Change shall not be considered to have occurred upon the
     acquisition (other than acquisition pursuant to any other clause of the
     preceding sentence) by any person or entity, including without limitation a
     "group" as contemplated by Section 13(d)(3) of the Exchange Act, of
     beneficial ownership, as contemplated by such Section, of more than
     twenty-five percent (25%) (based on voting power) of the Corporation's
     outstanding capital stock or the requisite percentage to increase their
     ownership to fifty percent (50%) resulting from a public offering of
     securities of the Corporation under the Securities Act of 1933, as amended.

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

(l)  Fair Market Value means, as of any specified date, the closing price of the
     Common Stock on the NASDAQ (or, if the Common Stock is not listed on such
     exchange, such other national securities exchange on which the Common Stock
     is then listed) on that date, or if no prices are reported on that date, on
     the last preceding date on which such prices of the Common Stock are so
     reported. If the Common Stock is not then listed on any national securities
     exchange but is traded over the counter at the time determination of its
     Fair Market Value is required to be made hereunder, its Fair Market Value
     shall be deemed to be equal to the average between the reported high and
     low sales prices of Common Stock on the most recent date on which Common
     Stock was publicly traded. If the Common Stock is not publicly traded at
     the time a determination of its value is required to be made hereunder, the
     determination of its Fair Market Value shall be made by the Board in
     good-faith as required by Section 422(c)(1) of the Code and may be based on
     the advice of an independent investment banker or appraiser recognized to
     be expert in making such valuation).

                                       A-3

<PAGE>

(m)  Good Reason means, for the purposes of employment, any of the following:
     (i) any material adverse alteration in the Optionee's title, position,
     status, duties or responsibilities with the Corporation; (ii) any reduction
     in the Optionee's annual base salary or annual or long term aggregate
     compensation and benefits; or (iii) any relocation of the Corporation's
     principal executive offices outside of the New York metropolitan area or
     requiring the Optionee to travel on business in unreasonable amounts in
     relation to the Optionee's duties with the Corporation.

(n)  Grant means individually or collectively, any Common Stock granted pursuant
     to the Plan.

(o)  Grantee means an employee, director, officer, other individual or entity
     who has been granted Common Stock pursuant to the Plan.

(p)  Holder means an individual or entity who has been granted an Award.

(q)  Incentive Stock Option means an Option intended to qualify and designated
     as an "incentive stock option" within the meaning of Section 422(b) of the
     Code.

(r)  Non-Qualified Stock Option means an Option not designated as an Incentive
     Stock Option.

(s)  Option means an Award granted under Section 7 of the Plan and includes both
     Incentive Stock Options to purchase Common Stock and Options which do not
     constitute Incentive Stock Options to purchase Common Stock.

(t)  Option Agreement means a written agreement between the Corporation and an
     employee with respect to an Option.

(u)  Optionee means an employee, director, officer, entity or individual who has
     been granted an Option.

(v)  Parent Corporation shall have the meaning set forth in Section 424(e) of
     the Code.

(w)  Plan means the Amended and Restated Nephros 2000 Equity Incentive Plan.

(x)  Rule 16b-3 means Rule 16b-3 of the General Rules and Regulations of the
     Securities and Exchange Commission under the Exchange Act, as such rule is
     currently in effect or as hereafter modified or amended.

(y)  Subsidiary means a company (whether a corporation, partnership, joint
     venture or other form of entity) in which the Corporation, or a corporation
     in which the Corporation owns a majority of the shares of capital stock,
     directly or indirectly, owns an equity interest of fifty percent (50%) or
     more, except solely with respect to the issuance of Incentive Stock Options
     the term "Subsidiary" shall have the same meaning as the term "subsidiary
     corporation" as defined in Section 424(f) of the Code.

                                       A-4

<PAGE>

(z)  References to termination of employment and the like mean, except with
     respect to the second paragraph of Section 10(f), (i) the date the Optionee
     ceases to be employed by, or to provide consulting services for, the
     Company or a Subsidiary or Parent Corporation, or any corporation (or any
     of its subsidiaries) which assumes the Optionee's Award in a transaction to
     which section 424(a) of the Code applies or (ii) the date the Optionee
     ceases to be a Board member, provided, however, that an Optionee (x) who is
     at the time of reference both an employee or consultant and a Board member
     or (y) who ceases to be engaged as an employee, consultant or Board member
     and immediately is engaged in another of such relationships with the
     Company or a Subsidiary or Parent Corporation, shall be deemed to have a
     "termination of employment" only upon the later of the dates determined
     pursuant to (i) and (ii) above. For purposes of clause (i) above, an
     Optionee who continues his or her employment or consulting relationship
     with a Subsidiary or Parent Corporation subsequent to the date that such
     entity ceases to be a Subsidiary or Parent Corporation shall have a
     termination of employment upon the date that such entity ceases to be a
     Subsidiary or Parent Corporation. The Committee may in its discretion
     determine whether any leave of absence constitutes a termination of
     employment for purposes of the Plan. For purposes of the second paragraph
     of Section 10(f), a termination of employment shall be the date the
     individual ceases to be employed by the Company within the meaning of
     section 422 of the Code.

SECTION 3
EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall be effective as of the date of its adoption by the Board.
Following such adoption, the Board shall submit the Plan to the stockholders for
approval in order to remain in compliance with requirements for Incentive Stock
Option plans under the Code. If approval of the stockholders is not obtained,
all Awards of Incentive Stock Options hereunder shall then be deemed to be
Awards of Non-Qualified Stock Options. Subject to the provisions of Section 9,
the Plan shall remain in effect for ten years from the date of its adoption by
the Board or, if earlier, until terminated by the Board.

SECTION 4
ADMINISTRATION

(a)  Administration of Plan by Board. The Plan shall be administered by the
     Board or the Committee in compliance with Rule 16b-3. Members of the Board
     shall abstain from participating in and deciding matters which directly
     affect their individual ownership interests under the Plan.

(b)  Powers. Subject to the terms of the Plan, the Board shall have sole
     authority, in its discretion, to determine which employees, officers,
     directors, individuals or entities shall receive an Award or Grant, the
     time or times when such Award or Grant shall be made, whether Common Stock,
     an Incentive Stock Option or non-qualified Option shall be granted and the
     number of shares of Common Stock which may be issued under each Option. In
     making such determinations, the Board may take into account the nature of

                                       A-5

<PAGE>

     the services rendered by these individuals, their present and potential
     contribution to the success of the Corporation, a Parent Corporation or a
     Subsidiary, and such other factors as the Board in its discretion shall
     deem relevant.

(c)  Additional Powers. The Board shall have such additional powers as are
     delegated to it by the other provisions of the Plan. Subject to the express
     provisions of the Plan, the Board is authorized to prescribe such rules and
     regulations relating to the Plan as it may deem advisable to carry out the
     Plan, and to determine the terms, restrictions and provisions of each Award
     or Grant, including such terms, restrictions and provisions as shall be
     requisite in the judgment of the Board to cause designated Options to
     qualify as Incentive Stock Options, and to make all other determinations
     necessary or advisable for administering the Plan. The Board may correct
     any defect or supply any omission or reconcile any inconsistency in any
     agreement relating to an Award or Grant in the manner and to the extent it
     shall deem expedient to carry it into effect.

(d)  Compliance With Code (S)162(m). In the event the Corporation, a Parent
     Corporation or a Subsidiary becomes a "publicly-held corporation" as
     defined in Section 162(m)(2) of the Code, the Corporation may establish a
     committee of outside directors meeting the requirements of Code (S)162(m)
     to (i) approve the grant of Options which might reasonably be anticipated
     to result in the payment of employee remuneration that would otherwise
     exceed the limit on employee remuneration deductible for income tax
     purposes by the Corporation pursuant to Code (S)162(m) and (ii) administer
     the Plan. In such event, the powers reserved to the Board in the Plan shall
     be exercised by such compensation committee. In addition, Options under the
     Plan shall be granted upon satisfaction of the conditions to such grants
     provided pursuant to Code (S)162(m) and any Treasury Regulations
     promulgated thereunder.

SECTION 5
GRANT OF OPTIONS AND STOCK SUBJECT TO THE PLAN

(a)  Award Limits. The Committee may from time to time grant Awards and/or make
     Grants to one or more employees, directors, officers, individuals or
     entities determined by him or her to be eligible for participation in the
     Plan in accordance with the provisions of Section 6 of the Plan. The
     aggregate number of shares of Common Stock that may be issued under the
     Plan shall not exceed 5,000,000 shares. The aggregate amount of shares of
     Common Stock with respect to which Awards or Grants may be made to any one
     individual under the Plan during any three-year period shall not exceed
     thirty percent (30%) of the aggregate number of shares referred to in the
     preceding sentence. Any of such shares which remain unissued and which are
     not subject to outstanding Options and/or Grants at the termination of the
     Plan shall cease to be subject to the Plan but, until termination of the
     Plan, the Corporation shall at all times reserve a sufficient number of
     shares to meet the requirements of the Plan. Shares shall be deemed to have
     been issued under the Plan only to the extent actually issued and delivered
     pursuant to an Award or Grant. To the extent that an Award or Grant lapses
     or the rights of its Holder or Grantee terminate, any shares of Common
     Stock subject to such Award or

                                       A-6

<PAGE>

     Grant shall again be available for the grant of an Award or making of a
     Grant. The aggregate number of shares which may be issued under the Plan
     shall be subject to adjustment in the same manner as provided in Section 8
     of the Plan with respect to shares of Common Stock subject to Options then
     outstanding. Separate stock certificates shall be issued by the Corporation
     for those shares acquired pursuant to a Grant, the exercise of an Incentive
     Stock Option and for those shares acquired pursuant to the exercise of any
     Option which does not constitute an Incentive Stock Option.

(b)  Stock Offered. The stock to be offered pursuant to an Award or Grant may be
     authorized but unissued Common Stock or Common Stock previously issued and
     outstanding and reacquired by the Corporation.

SECTION 6
ELIGIBILITY

An Incentive Stock Option Award made pursuant to the Plan may be granted only to
an individual who, at the time of grant, is an employee of the Corporation, a
Parent Corporation or a Subsidiary. An Award of an Option which is not an
Incentive Stock Option or a Grant of Common Stock may be made to an individual
who, at the time of Award or Grant, is an employee of the Corporation, a Parent
Corporation or a Subsidiary, or to an individual who has been identified by the
Board or the Committee to receive an Award or Grant due to the individual's
contribution or service to the Corporation, including members of the Board of
Directors of the Corporation, a Parent Corporation or a Subsidiary. An Award or
Grant made pursuant to the Plan may be made on more than one occasion to the
same person, and such Award or Grant may include a Common Stock Grant, an
Incentive Stock Option, an Option which is not an Incentive Stock Option, or any
combination thereof. Each Award or Grant shall be evidenced by a written
instrument duly executed by or on behalf of the Corporation.

SECTION 7
STOCK OPTIONS/GRANTS

(a)  Stock Option Agreement. Each Option shall be evidenced by an Option
     Agreement between the Corporation and the Optionee which shall contain such
     terms and conditions as may be approved by the Board or the Committee and
     agreed upon by the Holder. The terms and conditions of the respective
     Option Agreements need not be identical. Each Option Agreement shall
     designate the Option as an Incentive Stock Option (in the event its terms,
     and the individual to whom it is granted, satisfy the requirements for
     Incentive Stock Options under the Code) or a Non-Qualified Stock Option,
     specify the effect of termination of employment, total and permanent
     disability, retirement or death on the exercisability of the Option. Under
     each Option Agreement, a Holder shall have the right to appoint any
     individual or legal entity in writing as his or her beneficiary under the
     Plan in the event of his death. Such designation may be revoked in writing
     by the Holder at any time and a new beneficiary may be appointed in writing
     on the form provided by the Board or the Committee for such purpose. In the

                                       A-7

<PAGE>

     absence of such appointment, the beneficiary shall be the legal
     representative of the Holder's estate.

(b)  Option Period. The term of each Option shall be as specified by the Board
     or the Committee at the date of grant and shall be stated in the Option
     Agreement; provided, however, that an Incentive Stock Option may not be
     exercised more than one hundred twenty (120) months from the date it is
     granted.

(c)  Limitations on Exercise of Option. Any Option granted hereunder shall be
     exercisable at such times and under such conditions as determined by the
     Board or the Committee and as shall be permissible under the terms of the
     Plan, which shall be specified in the Option Agreement evidencing the
     Option.

(d)  Special Limitations on Incentive Stock Options. To the extent that the
     aggregate Fair Market Value (determined at the time the respective
     Incentive Stock Option is granted) of Common Stock with respect to which
     Incentive Stock Options are exercisable for the first time by an individual
     during any calendar year under all incentive stock option plans of the
     Corporation (and any Parent Corporation or Subsidiary) exceeds One Hundred
     Thousand Dollars ($100,000) (within the meaning of Section 422 of the
     Code), such excess Incentive Stock Options shall be treated as Options
     which do not constitute Incentive Stock Options. The Board or the Committee
     shall determine, in accordance with applicable provisions of the Code,
     Treasury Regulations and other administrative pronouncements, which of an
     Optionee's Incentive Stock Options will not constitute Incentive Stock
     Options because of such limitation and shall notify the Optionee of such
     determination as soon as practicable after such determination. No Incentive
     Stock Option shall be granted to an individual if, at the time the Option
     is granted, such individual owns stock possessing more than ten percent
     (10%) of the total combined voting power of all classes of stock of the
     Corporation or of its Parent Corporation or a Subsidiary, within the
     meaning of Section 422(b)(6) of the Code, unless (i) at the time such
     Option is granted the Option price is at least one hundred ten percent
     (110%) of the Fair Market Value of the Common Stock subject to the Option
     and (ii) such Option by its terms is not exercisable after the expiration
     of five years from the date of grant.

(e)  Exercise Price. The purchase price of Common Stock issued under each Option
     shall be determined by the Board or the Committee and shall be stated in
     the Option Agreement, but such purchase price shall, in the case of
     Incentive Stock Options, not be less than the Fair Market Value of Common
     Stock subject to the Option on the date the Option is granted, except that
     the price of any Common Stock purchased pursuant to any Incentive Stock
     Option shall be at least one hundred ten percent (110%) of the fair value
     in the case of any person or entity who owns stock comprising more than ten
     percent (10%) of the total combined voting power of all classes of stock of
     the Corporation or its Parent Corporation or Subsidiary. Fair value in the
     case of options that do not constitute Incentive Stock Options shall be
     defined in accordance with applicable Delaware law.

(f)  Options and Rights in Substitution for Stock Options Made by Other
     Corporations. Options may be granted under the Plan from time to time in
     substitution for stock options held by employees of corporations who
     become, or who became prior to the effective date of

                                       A-8

<PAGE>

     the Plan, employees of the Corporation, of any Parent Corporation or of any
     Subsidiary as a result of a merger or consolidation of the employing
     corporation with the Corporation, such Parent Corporation or such
     Subsidiary, or the acquisition by the Corporation, a Parent Corporation or
     a Subsidiary of all or a portion of the assets of the employing
     corporation, or the acquisition by the Corporation, a Parent Corporation or
     a Subsidiary of stock of the employing corporation with the result that
     such employing corporation becomes a Subsidiary.

SECTION 8
RECAPITALIZATION OR REORGANIZATION

(a)  Except to the extent otherwise provided in this Section 8, in the event of
     changes in the outstanding Common Stock by reason of stock dividends, stock
     splits, reverse stock splits, reclassifications, recapitalizations,
     reorganizations, mergers, consolidations, combinations, exchanges or other
     similar changes in capitalization, (i) the aggregate number of shares that
     may be issued under the plan and the aggregate number of shares with
     respect to which Awards or Grants may be made to any one individual in any
     three-year period, as set forth in Section 5 hereof, automatically shall be
     appropriately adjusted consistent with such corporate change, and (ii) the
     number of shares subject to any outstanding Award or Grant and the exercise
     price-per-share of any outstanding Award automatically shall be adjusted so
     that the aggregate exercise price remains the same and the Award or Grant
     relates to the number of shares to which the Holder or Grantee would have
     been entitled pursuant to the terms of such corporate change if immediately
     prior to such corporate change, such Holder or Grantee had been the holder
     of the number of shares then covered by such Award or Grant. The Board
     shall, in good faith, compute the amount of any adjustment which may be
     required by this paragraph, which computation shall be final and binding on
     all parties.

(b)  The existence of the Plan and the Awards and/or Grants made hereunder shall
     not affect in any way the right or power of the Board or the stockholders
     of the Corporation to make or authorize any adjustment, recapitalization,
     reorganization or other change in the capital structure of the Corporation,
     a Parent Corporation or a Subsidiary or their business, any merger or
     consolidation of the Corporation, a Parent Corporation or a Subsidiary, any
     issue of debt or equity securities having any priority or preference with
     respect to or affecting Common Stock or the rights thereof, the dissolution
     or liquidation of the Corporation, a Parent Corporation or a Subsidiary, or
     any sale, lease, exchange or other disposition of all or any part of their
     assets or business or any other corporate act or proceeding.

(c)  If the Corporation recapitalizes or otherwise changes its capital
     structure, thereafter upon any exercise of an Option theretofore granted,
     the Optionee shall be entitled to purchase under such Option, in lieu of
     the number of shares of Common Stock as to which such Option shall then be
     exercisable, the number and class of shares of stock and securities, and
     the cash and other property to which the Optionee would have been entitled
     pursuant to the terms of the recapitalization if, immediately prior to such
     recapitalization, the Optionee had been the holder of such record of the
     number of

                                       A-9

<PAGE>

     shares of Common Stock then covered by such Option. The Board shall, in
     good faith, compute the amount of any adjustment which may be required by
     this paragraph, which computation shall be final and binding on all
     parties.

(d)  In the event of a Corporate Change, unless otherwise deemed to be
     impractical by the Board, then no later than (i) two business days prior to
     any Corporate Change referenced in Clause (i), (ii), or (iii) of the
     definition thereof or (ii) ten business days after any Corporate Change
     referenced in Clause (iv) or (v) of the definition thereof, the Board,
     acting in its sole discretion without the consent or approval of any
     Optionee or Grantee, shall act to effect the following alternatives with
     respect to outstanding Options which acts may vary among individual
     Optionees and, with respect to acts taken pursuant to Clause (i) above, may
     be contingent upon effectuation of the Corporate Change: (A) in the event
     of a Corporate Change referenced in Clauses (i) and (ii) acceleration of
     exercise for all Options then outstanding so that such Options may be
     exercised in full for a limited period of time on or before a specified
     date (before or after such Corporate Change) fixed by the Board, after
     which specified date all unexercised Options and all rights of Optionees
     thereunder shall terminate; (B) in the event of a Corporate Change
     referenced in Clauses (iii), (iv) and (v) require the mandatory surrender
     to the Corporation by selected Optionees of some or all of the outstanding
     Options held by such Optionees (irrespective of whether such Options are
     then exercisable under the provisions of the Plan) as of a date (before or
     after such Corporate Change) specified by the Board, in which event the
     Board shall thereupon cancel such Options and pay to each Optionee an
     amount of cash per share equal to the excess, if any, of the Change of
     Control Value of the shares subject to such Option over the exercise
     price(s) under such Options for such shares; (C) in the event of a
     Corporate Change referenced in Clauses (iii), (iv) and (v), make such
     adjustments to Options then outstanding as the Board deems appropriate to
     reflect such Corporate Change; or (D) in the event of a Corporate Change
     referenced in Clauses (iii), (iv) and (v), provide that thereafter upon any
     exercise of an Option theretofore granted the Optionee shall be entitled to
     purchase under such Option, in lieu of the number of shares of Common Stock
     as to which such Option shall then be exercisable, the number and class of
     shares of stock or other securities or property (including, without
     limitation, cash) to which the Optionee would have been entitled pursuant
     to the terms of the agreement of merger, consolidation or sale of assets or
     plan of liquidation and dissolution if, immediately prior to such merger,
     consolidation or sale of assets or any distribution in liquidation and
     dissolution of the Corporation, the Optionee had been the holder of record
     of the number of shares of Common Stock then covered by such Option.
     Notwithstanding the provisions of clauses (B), (C) and (D), above, in the
     event of a Corporate Change referenced in Clause (iv), the provisions of
     clauses (B), (C) and (D) shall only apply if, in connection with such a
     Corporate Change, there is a termination (the "Corporate Change
     Termination") of an Optionee's employment with the Corporation (x) by the
     Corporation without Cause, or (y) by the Optionee with Good Reason.

(e)  Except as hereinbefore expressly provided, issuance by the Corporation of
     shares of stock of any class or securities convertible into shares of stock
     of any class, for cash, property, labor or services, upon direct sale, upon
     the exercise of rights or warrants to subscribe therefore, or upon
     conversion of shares or obligations of the Corporation

                                      A-10

<PAGE>

     convertible into such shares or other securities, and in any case whether
     or not for fair value, shall not affect, and no adjustment by reason
     thereof shall be made with respect to, the number of shares of Common Stock
     subject to Options theretofore granted, or the purchase price per share of
     Common Stock subject to Options.

SECTION 9
AMENDMENT OR TERMINATION OF THE PLAN

The Board in its discretion may terminate or alter or amend the Plan or any
Award or Grant from time to time; provided that, except as may be provided in
Section 8 hereof, no change may be made which would impair the rights of a
Holder or Grantee in any previously granted Award or Grant without the consent
of such Holder or Grantee, and provided further, that the Board may not, without
approval of the stockholders, amend the Plan:

(a)  to increase the aggregate number of shares which may be issued pursuant to
     the provisions of the Plan on exercise or surrender of Options or upon
     Grants;

(b)  to change the class of employees eligible to receive Awards and/or Grants
     or increase materially the benefits accruing to employees under the Plan;

(c)  to extend the maximum period during which Awards may be granted or Grants
     may be made under the Plan;

(d)  to modify materially the requirements as to eligibility for participation
     in the Plan; or

(e)  to decrease any authority granted to the Board hereunder in contravention
     of Rule 16b-3.

SECTION 10
OTHER

(a)  No Right to an Award or Grant. Neither the adoption of the Plan nor any
     action of the Board or Designated Officer shall be deemed to give an
     employee any right to be granted an Option to purchase Common Stock, to
     receive a Grant or to any other rights hereunder except as may be evidenced
     by an Option Agreement duly executed on behalf of the Corporation, and then
     only to the extent of and on the terms and conditions expressly set forth
     therein.

(b)  No Employment Rights Conferred. Nothing contained in the Plan or in any
     Award or Grant made hereunder shall (i) confer upon any employee any right
     with respect to continuation of employment with the Corporation or any
     Parent Corporation or Subsidiary, or (ii) interfere in any way with the
     right of the Corporation or any Parent Corporation or Subsidiary to
     terminate his or her employment at any time.

(c)  Other Laws; Withholding. The Corporation shall not be obligated to issue
     any Common Stock pursuant to any Award granted or any Grant made under the
     Plan at any time

                                      A-11

<PAGE>

     when the offering of the shares covered by such Award has not been
     registered (or exempted) under the Securities Act of 1933 and such other
     state and federal laws, rules or regulations as the Corporation or the
     Board deems applicable and, in the opinion of legal counsel for the
     Corporation, there is no exemption from the registration requirements of
     such laws, rules or regulations available for the issuance and sale of such
     shares. In the event no such exemption is available, the Corporation shall
     use its best efforts to obtain such an exemption or to register such
     shares. No fractional shares of Common Stock shall be delivered, nor shall
     any cash in lieu of fractional shares be paid. As a condition of issuing
     any Common Stock pursuant to any Award granted or any Grant made under the
     Plan, the Corporation shall have the right to deduct in connection with all
     Awards or Grants any taxes required by law to be withheld and to require
     any payments necessary to enable it to satisfy its withholding obligations.
     The Board in its sole discretion may permit the Holder of an Award or Grant
     to elect to surrender, or authorize the Corporation to withhold shares of
     Common Stock (valued at their Fair Market Value on the date of surrender or
     withholding of such shares) in satisfaction of the Corporation's
     withholding obligation, subject to such restrictions as the Board deems
     necessary to satisfy the requirements of Rule 16b-3.

(d)  No Restriction of Corporate Action. Nothing contained in the Plan shall be
     construed to prevent the Corporation or any Parent Corporation or
     Subsidiary from taking any corporate action which is deemed by the
     Corporation or such Parent Corporation or Subsidiary to be appropriate or
     in its best interest, whether or not such action would have an adverse
     effect on the Plan or any Award made under the Plan. No employee,
     beneficiary or other person shall have any claim against the Corporation or
     any Parent Corporation or Subsidiary as a result of such action.

(e)  Restrictions on Transfer. An Award shall not be transferable otherwise than
     by will or the laws of descent and distribution and shall be exercisable
     during the lifetime of the Holder only by such Holder or the Holder's
     guardian or legal representative.

(f)  Effect of Death, Disability or Termination of Employment. The Agreement or
     other written instrument evidencing an Award shall specify the effect of
     the death, disability or termination of employment of the Holder on the
     Award; provided, however that, if the Option Agreement or other written
     instrument does not so specify, an Optionee or such Optionee's
     representative shall be entitled to exercise outstanding Options to the
     extent that such Options were exercisable as of the date of termination of
     employment (i) within one (1) year from the date of termination of
     employment with the Corporation if such termination is caused by death or
     disability, or (ii) within ninety (90) days from the date of termination of
     employment with the Corporation if such termination is caused by reasons
     other than death, disability or Cause, and if such termination was for
     Cause, all outstanding Options shall expire and shall be of no further
     force or effect as of the commencement of business on the effective date of
     such termination of employment.

     Pursuant to the Code, all outstanding Incentive Stock Options of a Holder
     will automatically be converted to a non-qualified stock option if the
     Optionee or its legal representative does not exercise the Incentive Stock
     Option (i) within three (3) months of the date of termination caused by
     reasons other than death or disability; or (ii) within one (1) year of the
     date of termination caused by disability.

(g)  Rule 16b-3. It is intended that the Plan and any grant of an Award made to
     a person subject to Section 16 of the Exchange Act meet all of the
     requirements of Rule 16b-3. If any provisions of the Plan or any such Award
     would disqualify the Plan or such Award hereunder, or would otherwise not
     comply with Rule 16b-3, such provision or Award shall be construed or
     deemed amended to conform to Rule 16b-3.

(h)  Governing Law. The Plan shall by construed in accordance with the laws of
     the State of Delaware and all applicable federal law.

                                      A-12

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