Document:

LICENSE AGREEMENT

BY AND BETWEEN:           POLYVALOR,   Societe   en   commandite,    hereinafter
                          represented by its General  Partner,  Polyvalor  inc.,
                          having  its  principal  place  of  business  at  3744,
                          Jean-Brillant  Street,  6th floor,  Montreal (Quebec);
                          H3T 1P1;

                                       (hereinafter referred to as "Polyvalor");

AND:                      MCGILL   UNIVERSITY-THE   ROYAL  INSTITUTION  FOR  THE
                          ADVANCEMENT OF LEARNING,  having its place of business
                          at 3550, University Street, Montreal (Quebec), H3A2A7;

                                           (hereinafter referred to as "McGill")
         (Polyvalor and McGill being collectively referred to as the "Licensor")

AND:                      LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGIES INC., having
                          its  place of  business  at 481,  Victoria,  Westmount
                          (Quebec), H3Y 2R3;

                                         (hereinafter referred to as "Licensee")

         WHEREAS  Licensor is the owner of  valuable  Know-How  (as  hereinafter
defined) relating to integrated optical components for Dense Wavelength Division
Multiplexing   ("DWDM")  and  Plastic   Optical   Fibre   ("POF")   devices  for
telecommunication, data communications and sensor applications;

         WHEREAS Licensor is the owner of Patents (as hereinafter defined);

         WHEREAS  Licensor  wishes to grant unto Licensee and Licensee wishes to
acquire  from  Licensor an exclusive  Patent and  Know-How  License as to enable
Licensee to produce,  sell,  distribute  and promote  Products  (as  hereinafter
defined) throughout the world (the "Territory").

         NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS
HEREIN CONTAINED,  IT IS HEREBY COVENANTED AND AGREED BY AND BETWEEN THE PARTIES
HERETO AS FOLLOWS:

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DWDM/POF Licence Agreement                                                Page 2
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SECTION I - DEFINITIONS

1.1      In this Agreement,

1.1.1    "Patents"  shall mean an Invention  of M. Amir Farfad,  Mark P. Andrews
         and S. Iraj  Najafi  entitled  "Solvent-assisted  lithographic  process
         using  photosensitive   sol-gel  derived  glass  for  depositing  ridge
         waveguides  on  silicon"  as more  particularly  described  in a patent
         application therefor filed in the Canadian Patent Office on October 10,
         1997 under No. 2,218,273 and in the U.S. Patent and Trademark Office on
         October  10,  1997  under  No.08/948,511  as well  as all  improvements
         referred  to in section  5.1 and all patent  applications  which may be
         filed in relation  thereto in the  Territory  and all patents which may
         issue therefrom and any continuation, extension, division, revalidation
         , reissue or other combination or renewal of same;

1.1.2    "Know-How"  shall  mean  all  the  present   technical   knowledge  and
         accumulated  experience  acquired by Licensor and its  predecessors  in
         title under the supervision of Mark P. Andrews and/or S. Iraj Najafi as
         a result of research, practical experience or otherwise, in the design,
         manufacture,  production,  and/or use of integrated  optical components
         for DWDM and POF devices for telecommunication, data communications and
         sensor applications  including,  without limiting the generality of the
         foregoing:  ideas,  unpatented  inventions,  processes,   manufacturing
         procedures, methods, designs and data;

1.1.3    "Product"  shall mean any  product  produced,  sold or  distributed  by
         Licensee embodying or using the Patents or the Know-How;

1.1.4    "Contract  Year"  shall  mean  that  period of time  commencing  on the
         Effective  Date (as  defined  in section  10.1) and ending on  December
         31st, 1999 and any subsequent calendar year.

SECTION II - GRANT OF LICENSE

2.1      Subject only to the license granted to OPS Technology  Inc.  ("QPS") on
         May 4, 1998,  Licensor  hereby grants unto Licensee,  the latter hereby
         accepting, the exclusive license to use the Patents and/or the Know-How
         to manufacture, produce , sell and distribute Products in the Territory
         and for no other purpose.

2.2      For so  long  as  this  Agreement  shall  remain  in  effect,  Licensor
         undertakes  and agrees that it will not distribute or sell, now will it
         grant to any  party  other  than QPS any  other  right  or  license  to
         manufacture,  produce,  import,  distribute,  sell or otherwise deal in
         Products or parts thereof anywhere in the Territory.

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DWDM/POF Licence Agreement                                                Page 3
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2.3      However,  it is  understood  that the Licensor and Ecole  Polytechnique
         shall  have the  right to use and to allow  its  students,  professors,
         staff and other  researchers  affiliated  therewith  and those of their
         affiliates  to use the Patents and  Know-How  but only for research and
         teaching purposes.

2.4      Notwithstanding  the  above,  it is  understood  that the  Patents  and
         Know-How  are  licensed  on an  "as  is  basis".  Except  as  otherwise
         expressly set forth in this  Agreement,  McGill and  Polyvalor  make no
         representations  and extend no warranties of any kind, either expressed
         or implied,  including but not limited to warranties of merchantability
         fitness for any  particular  purpose and validity of the Patents or the
         Know-How.

SECTION III - CONSIDERATION

3.1      As  consideration  for the entering into of this  Agreement and for the
         rights granted herein, Licensee undertakes and agrees to:

3.1.1    pay to  each  of The  Office  of  Technology  Transfer  of  McGill  and
         Polyvalor a licensing fee of $5,000.00  payable upon  signature of this
         agreement;

3.1.2    pay to each of McGill  and  Polyvalor  a royalty at the rate of two and
         one half percent  (2.5%) of  Licensee's  total gross sales and those of
         any sub-licensee to dealers, distributors and users of any products and
         services  up to  cumulative  total  royalty of  $1,750,000  for each of
         McGill and Polyvalor;

3.1.3    to issue to each of McGill and  Polyvalor or their  nominee(s)  750,000
         publicly  traded  common  shares  of  Licensee.   However,  McGill  and
         Polyvalor  agree that such share will be subject to a hold period of up
         to one year. Such hold period shall not be more  unfavourable to McGill
         and  Polyvalor  than  the one  imposed  on the  other  shareholders  of
         Licensee  which have  similar  shareholdings  in  Licensee.  As long as
         Licensor remains the beneficial owner of at least 500,000 common shares
         of  Licensee.  Licensor  shall  have  the  right,  to  have  one of its
         representatives  to be advised of and attend all board  meetings  as an
         observer.   If  requested  by  Licensor,   Licensee   shall  cause  its
         shareholders  to appoint  Licensor's  representative  as a director  of
         Licensee.  In the event  Licensor  appoints a director,  Licensee shall
         obtain and pay for director liability insurance covering such director.
         In  addition,   Licensor  shall  have  the  same  rights  to  subscribe
         additional  common  shares,  to receive  warrants  and options for such
         common  shares  and  to  be  issued  convertible  debentures  or  other
         securities  of Licensee as the  principal  shareholders,  officers  and
         directors of Licensee.

3.2      As used herein, the term "gross sales" mean the gross amount charged by
         Licensee to its customers,  less all sales,  use or other similar taxes
         paid or payable by Licensee in connection with such sales, quantity and
         cash discounts actually allowed and credits for returned goods,

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DWDM/POF Licence Agreement                                                Page 4
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         cancelled  sales or bad  debts.  In the event such sales are made to an
         entity  which is  directly  or  indirectly  controlled  by  Licensee or
         related to Licensee in any way,  "gross  sales" for such sales shall be
         deemed to be the gross sales price  charged by Licensee  for  identical
         products or services  sold in the same period to similar  customers not
         so related or controlled to or by Licensee.  If there are no such other
         sales,  then the "gross  sales"  shall be the gross sales price of such
         related and/or controlled customers of Licensee to their customers.

3.3      For the purpose of computing when royalties  pursuant to the provisions
         of  section  3.1.2  are due,  a "gross  sale"  shall be  deemed to have
         occurred  on the date on which the  Licensee  issues,  in the  ordinary
         course of trade,  an invoice to a customer with respect to the wares or
         services referred to in section 3.1.2.

3.4      For the  purposes of this section the term  "License"  includes any and
         all allowed sub- licensees.

3.5      All such  royalties  shall be paid  quarterly  within  thirty (30) days
         after the end of each calendar  quarter,  and shall be accompanied by a
         report  reflecting  the  quantities  of Products,  produced and sold by
         Licensee  during  each  such  quarter  and such  other  information  as
         Licensor may reasonably  require to substantiate  the royalties due and
         payable by Licensee hereunder.

3.6      If the payment of any  royalties  is delayed  for any reason,  interest
         shall accrue on the unpaid  principal amount of such royalties from and
         after the date on which the same became due pursuant to this Section at
         a rate equal four percent (4%) over the prime rate of interest  charged
         from  time to time by the  Laurentian  Bank to its  most  credit-worthy
         customers. This shall not be interpreted as giving the Licensee a right
         not to pay on time under section 3.5.

3.7      In  order  that  the  royalties  payable  hereunder  may be  accurately
         determined,  and the statements  provided for  hereinabove be verified,
         Licensee  undertakes  and  agrees to keep  full,  clear,  accurate  and
         complete  books and  records  relating  to its  operations  under  this
         Agreement,  to be kept  available for at least three (30 years from the
         end of the financial year during which a sale was reported to Licensor.
         All of the said  records  and  books of  Licensee  shall be open at all
         reasonable  times and upon a five (5) day notice during  business hours
         for  inspection  and  audit by any duly  authorized  representative  or
         representatives of Licensor,  at the latter's expense, to ascertain the
         accuracy of the royalty  payments made hereunder by Licensee or claimed
         to be due hereunder by Licensor,  provided however, that if there shall
         have been an error in favour of Licensee in excess of two percent  (2%)
         in computing royalties for the period audited,  all reasonable expenses
         in connection with such inspection and audit shall be borne by and paid
         for by Licensee.

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DWDM/POF Licence Agreement                                                Page 5
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3.8      Licensor  shall hold strictly  confidential  and secret,  and shall not
         disclose and information concerning royalty payments or any information
         learned  in the course of any  inpection  or audit of the  records  and
         accounts of Licensee, except as required by law or when it is necessary
         for Licensor to reveal such  information in order to enforce its rights
         pursuant to the provisions of this Agreement.

3.9      Upon the demand of Licensor, but not more than once during any calendar
         year,  Licensee  shall at its  expense  furnish to  Licensor a detailed
         statement  by an  independent  Chartered  Accountant,  attesting to the
         royalties due and payable  hereunder as of Licensee's  last fiscal year
         end.

3.10     Receipt or acceptance by Licensor of any statement  furnished  pursuant
         to this Agreement or any sum paid hereunder shall not preclude Licensor
         from questioning the correctness  thereof at any time during the period
         three (3) years from  receipt  thereof but not  thereafter,  and in the
         event that any mistake is discovered in any such  statement or payment,
         and Licensee is appraised thereof,  Licensee shall immediately  rectify
         same.

3.11     Licensee  shall  allocate  and  pay  Licensor  all  royalties   payable
         hereunder separately for each country and all required statements to be
         provided  to Licensor  hereunder  by  Licensee  shall be  separate  and
         distinct with respect to each country.

3.12     All monetary  amounts stated herein shall refer to the lawful  currency
         of Canada and all payments to Licensor  hereunder  shall be in Canadian
         dollars based upon the foreign  exchange rate existing upon the date of
         payment to Licensee.

SECTION IV - MARKETING AND SALES PROMOTIONS

4.1      Licensee shall use its best efforts to develop,  manufacture,  produce,
         promote,  sell and distribute the Product in accordance  with the terms
         and conditions set forth in this Agreement.

SECTION V - DEVELOPMENTS AND IMPROVEMENTS

5.1      If  during  the term of this  Agreement,  Licensor  shall  develop  new
         improvements  and/or  additional  know-how  pertaining  to DWDM or POF,
         Licensor  shall  forth  with  supply  Licensee  with  complete  details
         thereof.  Licensee  shall  have a period of  thirty  (30) days from the
         receipt of such details to notify Licensor in writing of its intentions
         to obtain a license for the use of such  improvements  and/or Know-how.
         Failure to  respond  shall be deemed a refusal.  The  parties  agree to
         negotiate  in good  faith  the terms and  conditions  of such  licence.
         Licensor  agrees not to disclose  such  details  until the first of: i)
         termination of licence

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DWDM/POF Licence Agreement                                                Page 6
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         negotiations or ii) six (6) months have elapsed since the date on which
         the details where disclosed to Licensee.

5.2      If  during  the  term  of  this   Agreement,   Licensee  shall  develop
         independently   new  improvements  to  the  Product  and/or  additional
         know-how  pertaining to the design,  manufacture,  production or use of
         the Product,  Licensee  shall supply  Licensor  with  complete  details
         thereof including details relating to all intellectual  property rights
         and any other rights relating to same. Licensee shall be the sole owner
         of all of the above. Licensor as well as Ecole Polytechnique shall have
         a perpetual paid-up  non-exclusive license to use such improvements for
         the purposes set forth in section 2.3 once adequate  patent  protection
         is filed for.

SECTION VI - PATENTS

6.1      Licensor shall, at the reasonable request of Licensee,  diligently file
         and prosecute applications for the Patents for the strongest protection
         reasonably  available,  maintain  the  Patents  in force  and  transmit
         promptly  to the  Licensee  a copy  of all  applications,  Patents  and
         official  communications  to and  from  any  Patent  Office  as soon as
         received.  Licensee  shall  bear  the fees  and  disbursements  for the
         preparation,  filing,  prosecution and maintenance of such applications
         and Patents.

6.2      In the event Licensor refuses to file or prosecute a patent application
         when requested by Licensee pursuant to section 6.1, intends not to file
         or prosecute  an  application  prior to a statutory or other  deadline,
         intends not to maintain a patent in force when so requested by Licensee
         pursuant to Section 6.1 or fails to do any of the above,  Licensor must
         notify  Licensee at least thirty (30) days prior to such deadline,  and
         Licensee  may,  in the name of the  Licensor,  file or  prosecute  such
         application or maintain such Patent.

SECTION VII - INFRINGEMENT

7.1      Licensee  agrees  to  notify  Licensor,  in  writing,  of any  acts  of
         infringement  or  violation of the Patents  immediately  after any such
         acts  are  brought  to  its  attention  or it  has  otherwise  acquired
         knowledge  thereof.  The parties agree to consult with each other as to
         how to respond to each infringement or violation of the Patents. If the
         parties jointly conclude that legal action should be taken with respect
         to such infringement or violation, Licensor and Licensee shall promptly
         and diligently prosecute such action. In such event, each shall pay the
         following  proportion  of all costs and  expenses  and receive the same
         proportion of all recoveries and awards with respect to said action:

         Licensor:    5%
         Licensee:  95%

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DWDM/POF Licence Agreement                                                Page 7
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7.2      In the event Licensee  advises Licensor that it will not participate in
         such legal action,  the Licensor shall be free to prosecute such action
         as Licensor may deem advisable and in that  connection,  Licensee shall
         assist Licensor in all reasonable ways and at all reasonable times, and
         Licensor shall have the right to use the name of Licensee as a party to
         the  proceedings,  either solely or jointly with  Licensor's  own name,
         provided that Licensor  shall pay all costs and expenses and in such an
         event,  Licensor shall be entitled to receive all recoveries and awards
         in connection with such proceedings.

7.3      In the event Licensor  advises Licensee that it will not participate in
         such legal action,  the Licensee shall be free to prosecute such action
         as Licensee may deem advisable and in that  connection,  Licensor shall
         assist Licensee in all reasonable ways and at all reasonable times, and
         Licensee shall have the right to use the name of Licensor as a party to
         the  proceedings,  either solely or jointly with  Licensee's  own name,
         provided that Licensee  shall pay all costs and expenses and in such an
         event,  Licensee shall be entitled to receive all recoveries and awards
         in connection with such proceedings.

7.4      In the  event  that any  suit,  action,  or other  proceeding  shall be
         brought  against  Licensee  involving any claim of patent  infringement
         based upon Licensee's manufacture and/or use, or sale of any Product:

7.4.1    Licensee  shall  promptly  send to  Licensor a copy of all  proceedings
         which have been served in such suit, action or other proceeding;

7.4.2    in the defence of any such claim,  Licensor will  cooperate  fully with
         Licensee,  and will,  from time to time, make available to Licensee all
         relevant records,  papers,  information,  samples,  specimens and other
         similar material;

7.4.3    should  such suit,  action or other  proceeding  relate to any  Product
         produced,  sold or  distributed  by Licensee or method used by any user
         thereof  embodying  or using the  Patents  or the  Know-How  and should
         independent patent counsel acceptable to Licensor and to Licensee be of
         the opinion that such Product or method constitute a clear infringement
         of one or more of the claims  mentioned  in such suit,  action or other
         proceeding  which  has not  been  settled  to the full  exoneration  of
         Licensee  six (6)  months  after the date of service  thereof  upon the
         Licensee,  Licensee  shall  have,  as its sole  recourse,  the right to
         terminate this Agreement upon written notice to Licensor.

7.5      Licensee and Licensor agree not to contest the ownership or validity of
         the Patents either directly or indirectly in any way whatsoever.

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DWDM/POF Licence Agreement                                                Page 8
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SECTION VIII - MAINTENANCE OF STANDARDS

8.1      All Products shall be  manufactured,  sold and advertised in compliance
         with all applicable governmental laws, rules and regulations as well as
         those of applicable certification agencies such as CSA and UL. Licensee
         shall  cause  truthful  and  accurate  labelling  regarding  the  care,
         maintenance and use of the Products, where applicable, to be affixed to
         such Products.

SECTION IX - SUB-LICENSE AND ASSIGNMENT

9.1      Licensee shall not sub-license the rights and license granted  pursuant
         to the terms of this Agreement, except under the following conditions:

9.2      such  sub-license  shall  terminate  not  later  than  on the  date  of
         termination  of this  Agreement,  whenever and for whatever  cause such
         agreement may be terminated;

9.2.1    Licensee  will  remain  liable  for the  payment  of the  full  royalty
         required to be paid  hereunder,  aggregating  all of the gross sales of
         Licensee and such sub-licensees;

9.2.2    such  sub-license  shall require the sub-licensee to comply with all of
         the terms,  covenants and provisions of this  Agreement  other than the
         payment of  royalties  of fees to  Licensor  as if it was the  Licensee
         under this Agreement;

9.2.3    save as other wise specified herein,  Licensee will remain  responsible
         for the performance of all the terms,  covenants and provisions of this
         Agreement.

9.3      Licensee  shall not have the right to assign  the  rights  and  license
         granted  pursuant to this  Agreement,  without the consent of Licensor,
         which consent may not be  unreasonably  withheld.  However,  Licensor's
         consent shall not be required if such assignment is made in the context
         of  a  corporate   reorganization  and  Licensor  remains  jointly  and
         severally  responsible for the performance of all the terms,  covenants
         and provisions of this agreemently such assignee.

SECTION X  - TERM OF AGREEMENT

10.1     The Effective Date of this Agreement and its  obligations  shall be the
         day  following  the  last  closing  of the  proposed  issue of up to US
         $5,000,000  special  warrants by private  placement as specified in the
         confidential  information  memorandum  dated  October 23, 1998.  In the
         event such closing does not occur prior to May 31, 1999, Licensor shall
         have no further  obligations  under this Agreement  which shall then be
         deemed to never have existed.

10.2     This  Agreement  shall endure and continue in force and effect from the
         Effective Date until October 10, 2017 unless  previously  terminated in
         accordance with the provisions of this Agreement.

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DWDM/POF Licence Agreement                                                Page 9
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SECTION XI - TERMINATION

11.1     The  occurrence  of any  one or  more  of the  Following  events  shall
         constitute a default under this Agreement.

11.1.1   if any payment on account of the royalty is not made on due day;

11.1.2   Licensee  institutes  proceedings seeking relief under a bankruptcy law
         or any similar law, or consents to entry of an order for relief against
         it in any bankruptcy or insolvency proceeding or similar proceeding, or
         files a petition for or consent or answer  consenting to reorganization
         or other  relief  under any  bankruptcy  act or other  similar  law, or
         consents to the filing  against it of any petition for the  appointment
         of a receiver,  liquidator,  assignee, trustee,  sequestrator (or other
         similar official) of it or of any substantial part of its property,  or
         makes an  assignment  or a proposal  for the benefit of  creditors,  or
         admits in writing its inability to pay its debts as they become due, or
         takes any action in furtherance of the foregoing;

11.1.3   the calling of a meeting of  creditors,  appointment  of a committee of
         creditors  or  liquidating  agents,  or  offering of a  composition  or
         extension to creditors by, for or of Licensee;

11.1.4   if Licensee or Licensor breaches materially any other provision of this
         Agreement.

11.2     In the event of a default  specified in  sub-paragraph  11.1.1 which is
         not  corrected  within  thirty  (30)  days of  written  notice  of such
         default,  Licensor  thereafter  shall  have the  right  to  immediately
         terminate  this  Agreement.  In the  event  of  defaults  specified  in
         sub-paragraph  11.1.2.  or  11.1.3,  Licensor  will  have the  right to
         immediately terminate this Agreement without notice.

11.3     In the event of a default  specified in  sub-paragraph  11.1.4 which is
         not  corrected  within  sixty (60) days of  receipt  of written  notice
         specifying the respect in which the defaulting  party has breached this
         Agreement,  the  other  party  shall  have  the  right  to  immediately
         terminate this Agreement.

11.4     No  assignee  for  the  benefit  of  creditors,  receiver,  liquidator,
         sequestrator,  trustee in  bankruptcy,  sheriff or any other officer of
         the court or official  charged with taking over  custody of  Licensee's
         assets or business  shall have any right to continue to use the Patents
         or the Know-How.

11.5     Termination  of this  Agreement  shall not  release  Licensee  from any
         payments  or  obligations  due and  payable or accrued to  Licensor  or
         rescind any payment made or paid by Licensee

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DWDM/POF Licence Agreement                                               Page 10
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         to  Licensor  hereunder  prior to the  time  such  termination  becomes
         effective nor release Licensee from those  obligations  hereunder which
         survive termination.

11.6     Furthermore,  termination of this Agreement  prior to the expiration of
         its term shall be without  prejudice to any other rights which Licensor
         may have against Licensee,  including, without limitation,  damages for
         breach to the extent that same may be recoverable.

11.7     In the event of the expiration or termination of this Agreement for any
         reason, the Licensee and all allowed  sub-licensees shall cease all use
         of the Patents and the Know-How.  Notwithstanding  the  foregoing,  the
         Licensee and its allowed sub-licensees shall the right:

11.7.1   for a period not exceeding three (3) months from the date of expiration
         or  termination,  to complete the  manufacture  of Product  components,
         accessories and supplies which are in the process of manufacture at the
         date of expiration or termination;

11.7.2   for a period not exceeding three (3) months from the date of expiration
         or  termination,  to sell  Products or parts  thereof  which are in its
         possession, custody or control at the date of expiration or termination
         or are made under the authority of section 11.7.1; and

11.7.3   complete  the  performance  of  services  relating  to Products if such
         services  were  contracted  for  prior  to the  date of  expiration  or
         termination.

SECTION XII - REPRESENTATIONS AND WARRANTIES OF THE LICENSOR

12.1     Licensor hereby represents and warrants unto Licensee that:

12.1.1   it is the owner of all rights, title, property, benefit and interest in
         and to the  Patents[ ] and that it has every  legal right to enter into
         this  Agreement and to perform the terms and  conditions  hereof or its
         part to be performed, fee of any encumbrances whatsoever;

12.1.2   it has made  proper  application  in Canada  for the  Patent  under No.
         2,218,273 and in the US under No. 08/948,511.

12.1.3   it has entered no relationship or agreement, written or oral, expressed
         or implied,  inconsistent  with the provisions of this Agreement except
         for the license with QPS referred to in section 2.1;

12.1.4   Licensor has not received any notice that the manufacture,  sale or use
         any part of the Product by Licensee will  constitute an infringement of
         any patents or other proprietary rights owned by any third party;

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DWDM/POF Licence Agreement                                               Page 11
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12.1.5   Licensor  has made no  investigations  as to the  matters  set forth in
         sub-paragraph  12.1.4 Licensee agrees that Licensor will not be charged
         with constructive knowledge of any such infringement.

SECTION XIII - INDEMNIFICATION

13.1     Licensee shall  indemnify and save and hold harmless  Licensor from any
         liabilities,  claims,  causes of action,  suits,  damages and  expenses
         (including  reasonable  attorney's fees and expenses) which Licensor is
         or becomes  liable for, or may incur,  or be compelled to pay or pay by
         reason of any acts,  whether of  omission  or  commission,  that may be
         committed  or suffered by  Licensee or any of its  servants,  agents or
         employees in connection with Licensee's  performance under the terms of
         this  Agreement  or arising out of the use of any part of the  Products
         manufactured  by or on behalf of or sold by Licensee.  Licensee  and/or
         its sub-contractors and allowed sub-licensees shall assume all warranty
         obligations  to  their  customers  in  respect  of such  Products,  and
         Licensor  shall  have no  liability  either to  Licensee,  any  allowed
         sub-licensee or their respective  customers in respect of such warranty
         obligations.

SECTION XIV - ARBITRATION

14.1     Any dispute arising out of the present  agreement shall be submitted to
         the  determination of a single arbitrator to be appointed in accordance
         with  provisions  of  the  Quebec  Code  of  Civil  Procedure  and  his
         determination of such matter shall be final and binding on both parties
         and shall not be  subject  to  appeal  by  either  party.  The fees and
         expenses of the arbitrator, shall be borne equally by the parties.

SECTION XV - NOTICES

15.1     Any  notice,  demand,  consent  or other  communication  to be given in
         connection  with this  Agreement  (collectively  and  individually  the
         "Notice")  shall be in writing and  addressed  to its  addressee at the
         address stated above or such addresses as a party may specify from time
         to time by Notice.

15.2     Notices may be  delivered by hand,  overnight  courier  service  (e.g.,
         FEDEX,  DHL) registered or certified mail or fax and shall be deemed to
         have been received as follows:

15.2.1   If delivered by hand:             at the time of  delivery  to a person
                                           who  appears   reasonably  to  be  in
                                           charge.

<PAGE>
DWDM/POF Licence Agreement                                               Page 12
--------------------------------------------------------------------------------

15.2.2                                      If  sent  by  fax:  at the  time  of
                                            confirmed  transmission  provided  a
                                            confirmation copy is sent by airmail
                                            or  registered  or  certified   mail
                                            within  twenty-four (24) hours after
                                            the transmission.

15.2.3 If sent by registered or certified mail or by overnight courier service:
                                            at  the  time  of   delivery  or  of
                                            attempted   delivery   in  the  case
                                            delivery  cannot be completed due to
                                            no fault of the sender.

15.3     If the time of such deemed receipt as provided in paragraph 15.2 hereof
         is not during the  customary  hours of  business,  the Notice  shall be
         deemed to have been  received at 10:00 a.m. at the place of delivery on
         the first customary day of business thereafter.

SECTION XVI - GENERAL PROVISIONS

16.1     Interpretation.  The parties  hereto  hereby  declare  that it is their
         intention that the provisions of the Agreement apply fairly and without
         detriment to the interest of any of them. [ ] Any  inconsistency  which
         may exist between any terms and conditions of this document and that of
         any  related  agreement  shall be  resolved  in favour of the terms and
         conditions of this document,  unless such related agreement  contains a
         specific mention that such terms and conditions are not applicable.

16.2     Preamble. The preamble to this Agreement forms an integral part hereof.

16.3     Headings.  Headings  are for  reference  purposes and do not in any way
         affect interpretation of this Agreement.

16.4     Entire  Agreement.  This  Agreement and the  memorandum  referred to in
         section 10.1 set forth the entire Agreement and  understanding  between
         the parties with respect to the subject  matter of this  Agreement  and
         merges, supersedes and cancels all prior discussions,  representations,
         inducements,  promises,  undertakings,  understandings,  agreements  or
         otherwise,  whether oral, in writing or otherwise,  between the parties
         with respect to such subject matter. Without limiting the generality of
         the foregoing,  no oral explanation or oral information provided by the
         parties   hereto,   or  any  of  them,   shall  alter  the  meaning  or
         interpretation  of this  Agreement.  There  are no  statements,  terms,
         conditions,  undertakings,  representation,  warranties  or  collateral
         agreements  still in force or effect  which have not been  embodied  in
         this Agreement. This Agreement may be altered, modified or amended only
         by a written document signed by all the parties.

16.5     Further  Agreements  and Actions.  The parties agree to cooperate  with
         each other and execute and deliver such further or other  documents and
         assurances and do such other acts as may, from time to time, reasonably
         be required or deemed useful by the other party to protect the

<PAGE>
DWDM/POF Licence Agreement                                               Page 13
--------------------------------------------------------------------------------

         Patents or to effectively  carry out or better  evidence or perfect the
         full intent and meaning of this  Agreement or to otherwise  give effect
         to the provisions of this  Agreement the party  requesting any such act
         shall  reimburse  the other party  complying  with such request for the
         full cost of perform such act. Licensee agrees to assume all reasonable
         costs relating thereto.

16.6     Independent  Contractors.  Each party is an independent  contractor and
         does not have any power  (nor will it  represent  itself as having  any
         power)  to in any way  enter  into  commitments  or  contracts,  assume
         obligations,  give any  warranties,  make any  representation  or incur
         liability  of any kind in the name of the  other  party or on behalf of
         the other party or to otherwise bind or obligate the other or to assume
         or create any  expressed or implied  obligation  or  responsibility  on
         behalf of the other or in the other's name.  Nothing in this  Agreement
         shall construed to create a relationship of partners,  joint venturers,
         fiduciaries,  master-servant,  agency  or  other  similar  relationship
         between the parties.

16.7     Waiver in  Writing.  No waiver of any  breach of any term or  provision
         hereof shall be effective or binding  unless made in writing and signed
         by the  party  purporting  to give  the same  and,  unless  other  wise
         provided, shall be limited to the specific breach waived.

16.8     Use of name.  Licensee  undertakes  not to use the  name of  Polyvalor,
         Ecole Polytechnique,  McGill or any of their faculties or affiliates in
         any brochure, catalogue, advertisement,  notice, memorandum, prospectus
         or  other   communications   unless   required  by  law  or  regulatory
         authorities having jurisdiction  without having previously obtained the
         written  consent  of such  person(s)  which  shall not be  unreasonably
         withheld.

16.9     Successors  & Assigns.  Subject to the  provisions  of section IX, this
         Agreement  shall enure to the benefit of and be binding upon the heirs,
         executors,  administrators,  successors  and  permitted  assigns of the
         parties.

16.10    Applicable  Law.  This  Agreement  shall  be  governed,  construed  and
         enforced in accordance with the laws in force in the Province of Quebec
         and those of Canada applicable  therein except for Patent matters which
         shall be governed by the laws of the  relevant  country.  Any  disputes
         arising  under  this  Agreement,  shall  be  subject  to the  exclusive
         jurisdiction  of the Courts of the  Province of Quebec and both parties
         hereby  irrevocably  attorn to the  jurisdiction  of the Courts of such
         province.

16.11    Language.  This  Agreement has been drafted in the English  language at
         the request of the parties. A la demande des parties,  cette convention
         a ete redigee en langue anglaise.

<PAGE>
DWDM/POF Licence Agreement                                               Page 14
--------------------------------------------------------------------------------

         IN WITNESS WHEREOF, the parties have signed.

         EXECUTED AT MONTREAL, QUEBEC, this __ day of __, 1998.

                                       POLYVALOR INC.

                                   Per: /s/ Dennis A. Beaudry
                                        ----------------------------------------
                                        Name:  Denis A. Beaudry
                                        Title: President Directeul-General

                                       MCGILL UNIVERSITY

                                   Per: /s/ Alex Nauarre
                                        ----------------------------------------
                                        Name:    Alex Nauarre
                                        Title:   Director

                                       LUMENON INNOVATIVE LIGHTWAVE
                                       TECHNOLOGIES INC.

                                   Per: /s/ Najafi              /s/ M. Andrews
                                        ----------------------------------------
                                        Name:    Najafi         M. Andrews
                                        Title:   President      Vice President<PAGE>

                                                                    Exhibit 10.1

                        MAINSPRING COMMUNICATIONS, INC.

                            1996 OMNIBUS STOCK PLAN

     1.  Purpose.  This Mainspring Communications, Inc. 1996 Omnibus Stock Plan
         -------
(tile "Plan") is intended to provide incentives (a) to the officers and other
employees of Mainspring Communications, Inc. (the "Company"), its parent (if
any) and any present or future subsidiaries of the Company (collectively,
"Related Corporations") by providing them with opportunities to purchase stock
in the Company pursuant options which qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
granted hereunder ("ISO" or "ISOs"); (b) to directors, officers, employees and
consultants of the Company and Related Corporations by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options"); and (c) to directors, officers, employees and consultants of the
Company and Related Corporations by providing them with opportunities to make
direct purchases of restricted stock in the Company ("Restricted Stock").  Both
ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation" as those
terms are defined in Section 424 of the Code.

     2.  Administration of the Plan.
         --------------------------

         (a) The Plan shall be administered by the Board of Directors of the
Company (the "Board").  The Board may appoint a Compensation Committee of two or
more of its members to administer the Plan (the Board or the Committee
hereinafter variously referred to as the "Committee").  In the event the Company
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), each member of
the Committee shall be a "disinterested person" as defined in Rule 16b-3 under
the Exchange Act.  Subject to ratification of the grant of each Option or
Restricted Stock by the Board (if so required by applicable state law), and
subject to the terms of the Plan, the Committee, if so appointed, shall have the
authority to (i) determine the employees of the Company and Related Corporations
(from among the class of employees eligible under paragraph 3 to receive ISOs)
to whom ISOs may be granted, and to determine (from among the class of
individuals and entities eligible under paragraph 3 to receive Non-Qualified
Options and Restricted Stock) to whom Non-Qualified Options or Restricted Stock
may be granted; (ii) determine the time or times at which Options or Restricted
Stock may be granted; (iii) determine the option price of shares subject to each
Option, which price with respect to ISOs shall not be less than the minimum
specified in paragraph 6, and the purchase price of Restricted Stock; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options and to Restricted Stock, and the nature of such restrictions,
if any; and (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it.  If the Committee determines to issue a Non-
Qualified Option, it shall take whatever actions it deems necessary, under
Section 422 of the Code and the regulations
<PAGE>

                                      -2-

promulgated thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Option or authorization or agreement for Restricted Stock granted
under it shall be final unless otherwise determined by the Board. The Committee
may from time to time adopt such rules and regulations for g out the Plan as it
may deem best. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option or Restricted Stock granted under it.

         (b) The Committee may select one of its members as its chairman, and
shall hold meetings at such time and places as it may determine.  Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.  All references in the Plan to the Committee shall mean the Board if
there is no Committee so appointed.  From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause), and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.

     3.  Eligible Employees and Others.  ISOs may be granted to any officer or
         -----------------------------
other employee of the Company or any Related Corporation.  Those directors of
the Company who are not employees may not be granted ISOs under the Plan.  Non-
Qualified Options and Restricted Stock may be granted to any director (whether
or, not an employee), officer, employee or consultant of the Company or any
Related Corporation.  The Committee may take into consideration an optionee's
individual circumstances in determining whether to grant an ISO or a Non-
Qualified Option or Restricted Stock.  Granting of any Option or Restricted
Stock to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Options
or Restricted Stock.

     4.  Stock.  The stock subject to Options and Restricted Stock shall be
         -----
authorized but unissued shares of Common Stock of the Company, $.01 par value
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner.  The aggregate number of shares which may be issued
pursuant to the Plan is 3,926,908, subject to adjustment as provided in
paragraph 13.  Any such shares may be issued as ISOs, Non-Qualified Options or
Restricted Stock so long as the aggregate number of shares so issued does not
exceed such number, as adjusted.  If any Option granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part, or if any
Restricted Stock shall be reacquired by the Company by exercise of its
repurchase option, the shares subject to such expired or terminated Option and
reacquired shares of Restricted Stock shall again be available for grants of
Options or Restricted Stock under the Plan.

     5.  Grants Under the Plan.  Options or Restricted Stock may be granted
         ---------------------
under the Plan at any time on or after June 7, 1996 and prior to June 7, 2006.
Any such grants of ISOs shall be subject to the receipt, within 12 months of
June 7, 1996, of the approval of Stockholders as provided in paragraph 17.  The
date of grant of an Option under the Plan will be the date specified by the
Committee at the time it awards the Option; provided, however, that such date
shall not be prior to the date of award.  The Committee shall have the right,
with the consent of
<PAGE>

                                      -3-

the optionee, to convert an ISO granted under the Plan to a Non-Qualified Option
pursuant to paragraph 15.

     6.   Minimum Option Price.
          --------------------

          (a) The price per share specified in the agreement relating to each
ISO granted under the Plan shall not be less than the fair market value per
share of Common Stock on the date of such grant.  In the case of an ISO to be
granted to an employee owning stock possessing more dm ten percent of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to such ISO
shall not be less than 110 percent of the fair market value of Common Stock on
the date of grant.

          (b) In no event shall the aggregate fair market value (determined at
the time the option is granted) of Common Stock for which ISOs granted to any
employee are exercisable for the first time by such employee during any calendar
year (under all stock option plans of the Company and any Related Corporation)
exceed $100,000.

          (c) Unless otherwise approved by the Board of Directors, the price per
share specified in the agreement related to each Non-Qualified Option granted
under the Plan shall not be less than eighty-five percent (85%) of the fair
market value of a share of Common Stock on the date of such grant.

          (d) If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
such stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the NASDAQ National
Market System, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National Market
System or on a national securities exchange.  However, if the Common Stock is
not publicly traded at the time an Option is granted under the Plan, "fair
market value" shall be deemed to be the fair value of the Common Stock as
determined by the Committee after taking into consideration alt factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm's length.

     7.   Option Duration.  Subject to earlier termination as provided in
          ---------------
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than ten years from the date of grant or, in the case of
ISOs granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, not more than five years from date of grant.  Subject to
earlier termination as provided in paragraphs 9 and 10, the term of each ISO
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 15.
<PAGE>

                                      -4-

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

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

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

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

          (d) The Committee shall have the right to accelerate the date of
exercise of any installment; provided that the Committee shall not accelerate
the exercise date of any installment of any Option granted to any employee as an
ISO (and not previously converted into a Non-Qualified Option pursuant to
paragraph 15) if such acceleration (i) would violate the annual vesting
limitation contained in Section 422(d) of the Code which provides generally that
the aggregate fair market value (determined at the time the option is granted)
of the stock with respect to which ISOs granted to any employee are exercisable
for the first time by such employee during any calendar year (under all plans of
the Company and any Related Corporation) shall not exceed $100,000 or (ii) would
cause an adverse tax impact to the employee or the Company pursuant to Section
280G of the Code.

     9.   Termination of Employment. If an ISO optionee ceases to be employed by
          -------------------------
the Company or any Related Corporation other than by reason of death or
disability as provided in paragraph 10, no further installments of his ISOs
shall become exercisable, and his ISOs shall terminate after the passage of 60
days from the date of termination of his employment, but in no event later than
on their specified expiration dates except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 15.  Leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the employee after the
approved period of absence.  Employment shall also be considered as continuing
uninterrupted during any other bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute.
Nothing in the Plan shall be deemed to give any grantee of any Option or
Restricted Stock the fight to be retained in employment or other service by the
Company or any Related Corporation for any period of time.  ISOs granted under
the Plan shall not be affected by any change of employment within or among the
Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation.  In granting any Non-
Qualified Option, the Committee may specify that such Non-Qualified Option shall
be subject to the restrictions set forth herein with respect to ISOs, or to such
other termination or cancellation provisions as the Committee may determine.
<PAGE>

                                      -5-

     10.  Death; Disability; Dissolution.  If an optionee ceases to be employed
          ------------------------------
by the Company and all Related Corporations by reason of his death, any Option
of his may be exercised, to the extent of the number of shares with respect to
which he could have exercised it on the date of his death, by his estate,
personal representative or beneficiary who has acquired the Option by will or by
the laws of descent and distribution, at any time prior to the earlier of the
Option's specified expiration date or one year from the date of the optionee's
death.

          If an optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any Option held by him on the date of termination of employment, to the extent
of the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the Option's specified expiration date
or one year from the date of the termination of the optionee's employment.  For
the purposes of the Plan, the term "disability" shall have the meaning assigned
to it in Section 22(e)(3) of the Code or any successor statute.

          In the case of a partnership, corporation or other entity holding a
Non-Qualified Option, if such entity is dissolved, liquidated, becomes insolvent
or enters into a merger or acquisition with respect to which such optionee is
not the surviving entity, such Option shall terminate immediately.

     11.  Assignability.  No Option shall be assignable or transferable by the
          -------------
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the Optionee each Option shall be exercisable only by him.

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

     13.  Adjustments.  Upon the happening of any of the following described
          -----------
events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided:

          (a) In the event shares of Common Stock shall be sub-divided or
combined into a greater or smaller number of shares or if, upon a merger,
consolidation, reorganization, split-up, liquidation, combination,
recapitalization or the like of the Company, the shares of Common Stock shall be
exchanged for other securities of the Company or of another corporation, each
optionee shall be entitled, subject to the conditions herein stated, to purchase
such number of shares of common stock or amount of other securities of the
Company or such other corporation as were exchangeable for the number of shares
of Common Stock which such
<PAGE>

                                      -6-

optionee would have been entitled to purchase except for such action, and
appropriate adjustments shall be made in the purchase price per share to reflect
such subdivision, combination, or exchange.

          (b) In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall at
the time be subject to option hereunder, each optionee upon exercising an Option
shall be entitled to receive (for the purchase price paid upon such exercise)
the shares as to which he is exercising his Option and, in addition thereto (at
no additional cost), such number of shares of the class or classes in which such
stock dividend or dividends were declared or paid, and such amount of cash in
lieu of fractional shares, as he would have received if he had been the holder
of the shares as to which he is exercising his Option at all times between the
date of grant of such Option and the date of its exercise.

          (c) Notwithstanding the foregoing, any adjustments made pursuant to
subparagraph (a) or (b) shall be made only after the Committee, after consulting
with counsel for the Company, determines whether such adjustments with respect
to ISOs will constitute a "modification" of such ISOs as that term is defined in
Section 424 of the Code, or cause any adverse tax consequences for the holders
of such ISOs.  No adjustments shall be made for dividends paid in cash or in
property other dm securities of the Company.

          (d) No fractional shares shall actually be issued under the Plan.  Any
fractional shares which, but for this subparagraph (d), would have been issued
to an optionee pursuant to an Option, shall be deemed to have been issued and
immediately sold to the Company for their fair market value, and the optionee
shall receive from the Company cash in lieu of such fractional shares.

          (e) Upon the happening of any of the foregoing events described in
subparagraphs (a) or (b) above, the class and aggregate number of shares set
forth in paragraph 4 hereof which are subject to Options which previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events specified in such subparagraphs.  The Committee
shall determine the specific adjustments to be made under this paragraph 13, and
subject to paragraph 2, its determination shall be conclusive.

     14.  Means of Exercising, Options.  An Option (or any part or installment
          ----------------------------
thereof) shall be exercised by giving written notice to the Company at its
principal office address.  Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being exercised,
accompanied by full payment of the purchase price therefor either (i) in United
States dollars in cash or by check, or (ii) at the discretion of the Committee,
through delivery of shares of Common Stock having fair market value equal as of
the date of the exercise to the cash exercise price of the Option, or (iii) at
the discretion of the Committee, by delivery of the optionee's personal recourse
note bearing interest payable not less than annually at no less than 100% of the
lowest applicable Federal rate, as defined in Section 1274(d) of the Code, or
(iv) at the discretion of the Committee, by any combination of (i), (ii) and
(iii) above.  If the Committee exercises its discretion to permit payment of the
exercise price of an ISO by means of the methods set forth in clauses (ii) or
(iii) of the preceding sentence, such discretion
<PAGE>

                                      -7-

shall be exercised in writing at the time of the grant of the ISO in question.
The holder of an Option shall not have the rights of a shareholder with respect
to the shares covered by his Option until the date of issuance of a stock
certificate to him for such shares. Except as expressly provided above in
paragraph 13 with respect to change in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificates is issued.

     15.  Conversion of ISOs into Non-Qualified Options: Termination of ISOs.
          ------------------------------------------------------------------
The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion.  Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options.  At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with the Plan.  Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action.  The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.

     16.  Restricted Stock.  Each grant of Restricted Stock under the Plan shall
          ----------------
be evidenced by an instrument (a "Restricted Stock Agreement') in such form as
the Committee shall prescribe from time to time in accordance with the Plan and
shall comply with the following terms and conditions, and with such other terms
and conditions as the Committee, in its discretion, shall establish:

          (a) The Committee shall determine the number of shares of Common Stock
to be issued to an eligible person pursuant to the grant of Restricted Stock,
and the extent, if any, to which they shall be issued in exchange for cash,
other consideration, or both.

          (b) Shares issued pursuant to a grant of Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise disposed of, except by will or
the laws of descent and distribution, or as otherwise determined by the
Committee in the Restricted Stock Agreement, for such period as the Committee
shall determine, from the date on which the Restricted Stock is granted (the
"Restricted Period").  The Company will have the option to repurchase the Common
Stock at such price as the Committee shall have fixed in the Restricted Stock
Agreement which option will be exercisable (i) if the participant's continuous
employment or performance of services for the Company and the Related
Corporations shall terminate prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
lapse of such repurchase option, the participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such Restricted
Stock, or (iii) under such other circumstances as determined, by the Committee
in its discretion.  Such repurchase option shall be
<PAGE>

                                      -8-

exercisable on such terms, in such manner and during such period as shall be
determined by the Committee in the Restricted Stock Agreement. Each certificate
for shares issued as Restricted Stock shall bear an appropriate legend referring
to the foregoing repurchase option and other restrictions; shall be deposited by
the stockholder with the Company, together with a stock power endorsed in blank;
or shall be evidenced in such other manner permitted by applicable law as
determined by the Committee in its discretion. Any attempt to dispose of any
such shares in contravention of the foregoing repurchase option and other
restrictions shall be null and void and without effect. If shares issued as
Restricted Stock shall be repurchased pursuant to the repurchase option
described above, the stockholder, or in the event of his death, his estate,
personal representative, or beneficiary who has acquired the Option by will or
by the laws of descent and distribution, shall forthwith deliver to the
Secretary of the Company the certificates for the shares, accompanied by such
instrument of transfer, if any, as may reasonably be required by the Secretary
of the Company. If the repurchase option described above is not exercised by the
Company, such repurchase option and the restrictions imposed pursuant to the
first sentence of this subparagraph (b) shall terminate and be of no further
force and effect.

          (c) If a person who has been in continuous employment or performance
of services for the Company or a Related Corporation since the date on which
Restricted Stock was granted to him shall, while in such employment or
performance of services, die, or terminate such employment or performance of
services by reason of disability or by reason of early, normal or deferred
retirement under an approved retirement program of the Company or a Related
Corporation (or such other plan or arrangement as may be approved by the
Committee in its discretion, for this purpose) and any of such events shall
occur after the date on which the Restricted Stock was granted to him and prior
to the end of the Restricted Period, the Committee may determine to cancel the
repurchase option (and any and all other restrictions) on any or all of the
shares of Restricted Stock; and the repurchase option shall become exercisable
at such time as to the remaining shares, if any.

     17.  Term and Amendment of Plan.  This Plan was adopted by the Board on
          --------------------------
June 7, 1996 and approved by the holders of a majority of the outstanding voting
stock of the Company on June 7, 1996.  The Plan shall expire on June 7, 2006
(except as to Options and Restricted Stock outstanding on that date).  Subject
to the provisions of paragraph 5 above, Options and Restricted Stock may be
granted under the Plan by the Committee.  The Board may terminate or amend the
Plan in any respect at any time, except that, any amendment that (a) increases
the total number of shares that may be issued under the Plan (except by
adjustment pursuant to paragraph 13), (b) changes the class of persons eligible
to participate in the Plan, or (c) materially increases the benefits to
participants under the Plan, shall be subject to approval by stockholders
obtained within 12 months before or after the Board adopts a resolution
authorizing any of the foregoing amendments, and shall be null and void if such
approval is not obtained and any amendment that increases the total number of
shares that may be issued under the Plan (except by adjustment pursuant to
paragraph 13) shall also require the unanimous approval of the Compensation
Committee of the Board of Directors.  Except as provided in the fourth sentence
of this paragraph 17, in no event may action of the Board or stockholders alter
or impair the rights of an optionee or purchaser of Restricted Stock without
his consent, under any Option or Restricted Stock previously granted to him.
<PAGE>

                                      -9-

     18.  Application of Funds.  The proceeds received by the Company from the
          --------------------
sale of shares pursuant to Options and Restricted Stock authorized under the
Plan shall be used for general corporate purposes.

     19.  Governmental Regulation.  The Company's obligation to sell and deliver
          -----------------------
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.

     20.  Withholding of Additional Income Taxes.  The Company, in accordance
          --------------------------------------
with the Code, may, upon exercise of a Non-Qualified Option or the purchase of
Common Stock for less dm its fair market value or the lapse of restrictions on
Restricted Stock or the making of a Disqualifying Disposition (as defined in
paragraph 21) require the employee to pay additional withholding taxes in
respect of the amount that is considered compensation includible in such
person's gross income.

     21.  Notice to Company of Disqualifying Disposition.  Each employee who
          ----------------------------------------------
receives ISOs shall agree to notify the Company in writing immediately after the
employee makes a disqualifying disposition of any Common Stock received pursuant
to the exercise of an ISO (a "Disqualifying Disposition").  Disqualifying
Disposition means any disposition (including any sale) of such stock before the
later of (a) two years after the employee was granted the ISO under which he
acquired such stock, or (b) one year after the employee acquired such stock by
exercising such ISO.  If the employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition will
thereafter occur.

     22.  Governing Laws: Construction.  The validity and construction of the
          ----------------------------
Plan and the instruments evidencing Options and Restricted Stock shall be
governed by the laws of The State of Delaware.  In construing this Plan, the
singular shall include the plural and the masculine gender shall include the
feminine and neuter, unless the context otherwise requires.

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