Document:

SEPARATION AGREEMENT

     THIS SEPARATION AGREEMENT ("Agreement") is entered into effective as of the
8th day of  January,  2001 (the  "Effective  Date"),  between  and among  KLEVER
MARKETING,  INC.  (the  "Company"),  a  Delaware  corporation,   PAUL  G.  BEGUM
("Begum"),  an individual,  PSF, INC. ("PSF"),  a Utah corporation,  and TREE OF
STARS, INC. ("Tree of Stars"), a Nevada corporation. The Company, Begum, PSF and
Tree of Stars shall  sometimes  hereinafter be referred to  collectively  as the
"Parties" and individually as a "Party."

     WHEREAS, Begum is presently an officer and director of the Company; and

     WHEREAS,  the Company and Begum  entered  into a certain  Agreement  (which
Begum and the  Company's  Board of Directors  agree was always  intended to be a
consulting  agreement calling for initial annual base compensation in the amount
of $200,004.00) dated effective July 4, 1998 (the "Consulting Agreement"); and

     WHEREAS, PSF made a promissory note (the "PSF Note") payable to the Company
dated  February  1,  2000,  in the  original  principal  amount of  $191,776.46,
accruing  interest at 8%, with a 36 month term, and which has a balance owing of
approximately $106,000.00 as of the Effective Date; and

     WHEREAS, Begum has decided to retire from his officer responsibilities with
the Company  effective as of the date hereof,  upon the terms and conditions set
forth herein; and

     WHEREAS,  the  Parties  desire to  release  each  other from all claims and
potential  claims  relating  to  Begum's  service to the  Company,  prior to the
Effective Date, upon the terms and conditions set forth herein,

     NOW,  THEREFORE,  in  consideration  of this  Agreement  and other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the Parties agree as follows:

     1. Resignation of Begum;  Termination of Consulting  Agreement Begum hereby
resigns his  positions  as an officer of the  Company,  and the  Company  hereby
accepts  Begum's  resignation,  as of the Effective  Date.  The Parties  further
terminate the Consulting Agreement in its entirety as of the Effective Date. The
Parties  acknowledge  that this  Agreement  is not an  admission of any fault or
wrongdoing by any Party, but rather is intended to resolve and settle the issues
contained herein.  The parties hereto  acknowledge that Begum is not an employee
of the Company and, with the exception of the  consulting  services set forth in
Section 2.E. below, there now exists no agreement between the Company and Begum,
PSF, Tree of Stars or any other entity  affiliated  with Begum that provides for
services to be rendered to the Company.

     2. Terms and Conditions of Resignation and Termination In  consideration of
the provisions contained herein, the parties hereby act and agree as follows:

     A. The Company shall pay the business  expenses  charged to Begum's Advanta
credit card up to $26,000.00 (any personal  expenses on such Advanta credit card
shall be paid by Begum). Payment to be made at the minimal extent possible until
such time as the  Company  has funds in excess of its  foreseeable  needs to pay
additional amounts.  Any, debt or equity funds received by the Company after the
Effective Date as a direct result of Begum's fund raising activities and debt or
equity  funds  received by the  Company  after the  Effective  Date in excess of
$250,000  from all sources  other than the Olsen group to the extent the Company
is not  restricted  from using such funds for this purpose,  shall be treated as
"funds in excess of its foreseeable  needs" for purposes of the payment provided
in this subsection and in subsection B, below.

     B. The Company  shall pay Begum for  services  rendered  as an  independent
contractor to the Company  $20,000.00 as soon as the Company has funds in excess
of its foreseeable  needs and shall reduce the principal  amount owing under the
PSF Note by $13,900.00.

     C. The Company shall  continue to make all lease  payments due on the Lexus
vehicle  that Begum is  currently  using  through the end of the tease term,  at
which time, Begum will be responsible to either purchase the vehicle  personally
or return the vehicle pursuant to the lease. To the extent such lease.  payments
exceed  $500 per month  (such  amount is subject to  verification),  the Company
shall receive a credit towards its payment  obligations  under Sections 2.A, 2.B
or 2.E of this  Agreement  Begum shall pay all  charges or payments  required to
purchase or turn-in the vehicle at the end of the lease term.

     D. The Company shall  continue to make all lease payments due on the laptop
computer  that Begum is currently  using  through the end of the lease term,  at
which time, Begum shall comply with the lease with respect to disposition of the
laptop computer.

     E. The Company hereby engages Begum as an independent  consultant,  and not
as an employee,  for a period of seven months  following the Effective Date; and
shall pay Begum  $6,500.00  per month for seven months as a consulting  fee with
the first payment due on January 31, 2001 and the  remaining  payments due on or
before the last day of each month thereafter until paid in full (i.e.,  February
28,  March 31,  April 30, May 31, June 30, and July 31,  2001).  The Company and
Begum shall mutually agree on the nature and scope of the  consulting.  services
(which shall  primarily be  comprised of fund  raising)  that Begum will provide
during  said  seven-month  period.  The  Company  hereby  agrees  to  reasonably
cooperate with Begum's fund raising  activities.  Such  cooperation will include
providing promotional materials and having a Company  representative attend fund
raising meetings that Begum has arranged.

     F. Begum will be personally  responsible for his medical insurance premiums
effective  January 1, 2001.  The Company  shall  cooperate'  fully with Begum in
making any COBRA insurance coverage that Begum may elect and have available.

     G. Begum shall transfer the cellular  telephone that he is currently  using
into his personal name and shall be responsible  to pay all charges  relating to
such telephone from and after January4, 2001.

     H. The Company shall reimburse Begum for attorneys' fees and legal expenses
that he has  personally  incurred with Brian Lloyd through  January 15, 2001 but
only up to a  maximum  of  $3,000.00.  Such  reimbursement  shall be made by the
Company  upon Begum's  submission  to the Company of copies of invoices for such
fees and expenses.

     I. The Company shall continue to reimburse Begum for all travel and related
expenses  (e.g.,  travel,  lodging,  food,  etc.)  incurred in  connection  with
fundraising  activities  for the Company so long as such  expenses are expressly
authorized  and  approved in writing by the  President  or CFO of the Company in
advance.

     J.  Begum  shall have the right,  at any time  prior to July 31,  2001,  to
surrender to the Company and redeem 100,000 shares of the Company's common stock
owned by PSF in full satisfaction of all amounts owing under the PSF Note.

     3. Effect on Stock  Ownership.  This Agreement  shall not be deemed to have
any effect on the Company stock owned by Begum,  PSF and Tree of Stars as of the
Effective Date. The Company acknowledges that immediately prior to the execution
hereof that Begum has been issued stock options  pursuant to the Company's Stock
Incentive Plan providing for the purchase of the following shares of
stock in the  Company:  225,000  shares (C) $2.75 and  12,000  shares (C) $2.75,
respectively. Said stock options are subject to the terms and conditions of said
Stock Incentive Plan. Begum  acknowledges that he has no other rights or options
under said Stock Incentive Plan.

     4.  Acknowledgment  of Return of Company  Records and  'Removal of Personal
Property. The Company and Begum acknowledge and agree that Begum has returned to
the Company certain Company's records.  In the 'event Begum discovers or has any
additional  company  records in his  possession  or under his control,  he shall
promptly  return such  records to the  Company.  The  Company and Begum  further
acknowledge and agree that Begum has removed,  with permission from the Company,
a small couch, a large couch,  a coffee table, a lamp, 3 prints,  a file cabinet
and a chair from Begum's Company office.

     5. Mutual  Releases;  Reservation  of Rights as to Certain Claims Except as
expressly reserved in this Agreement, the Company, Begum, PSF and Tree of Stars,
as well as their respective officers,  directors and employees;  hereby mutually
waive,  discharge,  acquit and  release any and all  claims,  demands,  damages,
losses, expenses, reimbursements, debts, payments, liabilities, costs and causes
of action of every kind, nature and character, that they now have or may have in
the future, whether now known or unknown, contingent or liquidated, against each
other and all of their respective employees, officers, shareholders,  directors,
agents,  representatives,  attorneys,  and all  other  related  individuals  and
entities, in any way resulting from any fact,  circumstance,  event,  happening,
omission,  or occurrence  connected with,  related directly or indirectly to, or
arising from stock ownership in the Company, the Consulting Agreement, all other
agreements providing for services to be provided to the Company,  Begum's, PSF's
or Tree of Stars'  services,  if any,  as an  officer,  director,  employee  and
consultant of the Company, and any loan,  indebtedness,  note or open account of
the Company up to and including the Effective Date. The Parties  acknowledge and
agree that this  Section 5 is  intended to be, and should be  interpreted  as, a
 .broad and general release with respect to the subject matter described  herein.
Notwithstanding  anything  contained herein to the contrary,  the Company is not
releasing  Begum,  PSF  and/or  Tree of  Stars  or  their  respective  officers,
directors and employees  from any right of  contribution,  cross claim,  claims,
demands,   damages,   losses,   expenses,   reimbursements,   debts,   payments,
liabilities,  costs  and  causes of  action  that  arise as a result of a claim,
demand,  damage,  loses,  expense,  payments,  liabilities,  costs and causes of
action by a third party  against  the Company  relating to a sale or transfer of
the  Company's  stock or a  securities  filing or failure  to file a  securities
filing.  In the event Begum,  PSF and/or Tree of Stars  prevails on such a cross
claim or similar  claim by the Company,  then the Company shall  reimburse  such
prevailing  party  for  all of its  costs,  including  but  not  limited  to its
reasonable attorney fees.

     Notwithstanding the foregoing,  the Company shall be permitted to conduct a
due diligence  inspection  during the period from the Effective Date to February
8, 2001 (the "Inspection Period") for the purpose of identifying any claims that
the Company may have against Begum.  Begum expressly denies that any such claims
exist.  The Company shall then notify Begum in writing  within 5 days  following
the expiration of the Inspection  Period of any such claims  (collectively,  the
"Excepted  Claims").  All such Excepted Claims, to the extent they exceed $5,000
in the aggregate and are timely disclosed in writing as provided  herein,  shall
be excluded  from the mutual  releases of the Parties  provided  above,  and the
Parties  shall  reserve all of their  respective  rights,  interests,  causes of
action, remedies and defenses relating to such Excepted Claims.

     6.  Representations  and Warranties.  Each Party represents and warrants to
the other  Parties  that such Party has full power and  authority  to enter into
this  Agreement  and perform  such  Party's  duties and  obligations  under this
Agreement,  and that this Agreement is binding upon and enforceable against such
Party in accordance with its terms and conditions. Each Party further represents
and warrants to the other Parties that the execution,  delivery and  performance
of this  Agreement  will not  violate  any  document,  agreement,  law,  rule or
regulation  applicable to or governing such Party. Each Party finally represents
and warrants to the other Parties that such Party has had the opportunity to
obtain  independent  accounting,   financial  and  legal  advice  regarding  the
advisability  of  executing,  delivering  and  performing  this  Agreement.  All
representations  and  warranties  made by the  Parties in this  Agreement  shall
survive the execution, delivery and performance hereof.

     7. No Broker;  Costs. No broker,  finder,  or other  independent  agent has
acted,  nor will act, for or on behalf of any of the Parties in connection  with
this Agreement. Except as expressly set forth in Section 2.H. above, the Parties
shall  each  pay  their  own  costs  and  attorneys'  fees  associated  with the
negotiation, drafting and execution of this Agreement.

     8.  Indemnification.  Each  Party  agrees to  indemnify,  defend,  and hold
harmless  the other  Parties  from and against any and all loss,  liability,  or
damage, of any nature,  arising out of or due to a breach of any representation,
warranty,  duty,  obligation  or  undertaking  of such Party  contained  in this
Agreement.

     9. Default;  Remedies.  In the event of a breach or default by any Party of
any  of its  representations,  warranties,  duties,  obligations,  or  covenants
hereunder,  any affected  non-breaching  Party shall send written notice of such
breach or default to the breaching  Party,  who shall then have ten (30) days in
which to cure such  breach or  default.  In the event that the  breaching  Party
fails to cure the applicable  breach or default within such ten (10) day period,
the  affected  non-breaching  Party shall be entitled to exercise  all  remedies
available to it, whether by contract at law, or in equity.

     10. Confidentiality,  Nondisclosure and Nondispargement. The Company agrees
to maintain, and to instruct its officers,  directors and employees to maintain,
the existence and terms of this Agreement  confidential  and that they shall not
disclose its existence or terms to any other person or entity  without the prior
written  consent  of Begum,  PSF or Tree of  Stars,  which  request  will not be
unreasonably  withheld.  Notwithstanding  the  forgoing,  the  Company  shall be
entitled  to  disclose  the  existence  and  terms  of  this  Agreement  to  its
professional advisors,  such as lawyers and accountants,  and 'potential debt or
equity  investors  on a need to know  basis,  as well as those  various  taxing,
security and other governmental authorities as the Company reasonably determines
shall be necessary pursuant to regulations,  administrative  rule or other legal
requirements  of disclosure.  The Company shall  instruct its current  officers,
directors and employees that when they, or any of them, receive an inquiry about
or in any way relating to Begum's present status with, or his resignation  from,
the Company,  they shall respond to such inquiry by indicating  that,  Begum has
resigned as an officer with the Company,  but  continues,  if  applicable in the
future, to serve as a member of the Company's Board Of Directors.

11. General Provisions.

     A. Notices.  All notices consents,  waivers, and other communications under
this  Agreement  must be in  writing  and will be deemed to have been duly given
when: (i) delivered by hand (with written confirmation of receipt), (ii) sent by
telecopier  (with  written  confirmation  of receipt),  provided  that a copy is
mailed by registered or certified mail, return receipt requested,  or (iii) when
received by the addressee, if sent by a nationally recognized overnight delivery
service  (receipt  requested),  in each case to the  appropriate  addresses  and
telecopier  numbers set forth below (or to such other  addresses and  telecopier
numbers as a Party may designate by notice to the other Parties):

            (i) If to the Company, to:        Klever Marketing. Inc.
                                              350 West Broadway, Suite 201
                                              Salt Lake City, Utah 84101
                                              Attention:  Cory Hamilton
                                             Telephone:
                                                       (801) 322-1221
                                             Facsimile:(801) 322-1230
  (ii)      If to Begum, PSF or Tree of Stars, to:
                                             c/o Paul G. Begum
                                             P.O. Box 58045
                                             Salt Lake City, Utah 84158

                                             Telephone:
                                                       (801) 355-6444
                                             Facsimile:(801) 355-0447

or to such other  address or  addresses or  telecopier  numbers as any Party may
from time to time designate by notice to the other Parties.

     B.  Waiver.  The rights and remedies of the Parties to this  Agreement  are
cumulative.  Neither the failure  nor any delay by any Party in  exercising  any
right under this Agreement will operate as a waiver of such right, and no single
or  partial  exercise  of any such  right  will  preclude  any other or  further
exercise of such right or the exercise of any other right.

     C. Entire Agreement. This Agreement supersedes all prior agreements between
the Parties  with respect to its  specific  subject  matter set forth herein and
constitutes  a complete and  exclusive  statement of the terms of the  agreement
between the Parties with respect to such subject matter.  This Agreement may not
be amended  except by a written  agreement  executed by  the'Party to be charged
with the amendment.

     D. Governing  Law;  Jurisdiction  and Venue.  The laws of the State of Utah
shall govern this  Agreement.  The courts of Salt Lake  County,  Utah shall have
exclusive  jurisdiction  and venue with respect to all litigation  arising under
this Agreement.

     E.  Severability.  If any  provision  of this  Agreement is held invalid or
unenforceable  by any court of competent  jurisdiction,  the other provisions of
this Agreement will remain in full force and effect.

     F.  Interpretation.  No provision of this  Agreement will be interpreted in
favor of, or against, any of the Parties hereto by reason of the extent to which
any such Party or its counsel  participated in the drafting thereof or by reason
of the extent to which any such provision is  inconsistent  with any prior draft
hereof or thereof.

     G. Attorneys'  Fees and Expenses in the Event of Breach.  In the event of a
breach or default by one of the Parties hereunder (the "breaching Party"),  such
breaching  Party  shall pay to the other  Party or  Parties  (collectively,  the
"non-breaching  Party") enforcement and collection costs, including . reasonable
attorneys' fees and legal  expenses,  regardless of whether breach is ultimately
cured, and regardless of whether formal legal  proceedings are commenced.  Costs
and expenses shall include, but not be limited to: (i) the non-breaching Party's
reasonable attorneys' fees and legal expenses,  whether or not such expenses are
incurred by a salaried  employee of the  non-Breaching  Party,  (ii)  reasonable
attorneys' fees and legal expenses for bankruptcy proceedings including, but not
limited to, efforts to modify or vacate any automatic stay or injunction.  (iii)
reasonable  attorneys'  fees and legal  expenses  for  appeals to higher  courts
arising out of legal  proceedings to enforce the breaching  Party's  obligations
hereunder, and (iv) any post-judgment collection services.

              (the remainder of this page is intentionally blank)

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
above first written.

                                           KLEVER MARKETING, INC.

Attest: /s/ D. Paul Smith                  By:  /s/ Cory A. Hamilton
        8 Jan 2001                         Its: President/CEO

                                           /s/ Paul G. Begum
                                           PAUL G. BEGUM

                                           P.S.F., INC.

                                           By:  /s/ Paul G. Begum
                                           Its: President

                                           TREE OF STARS, INC.

                                           By: /s/ Paul G. Begum
                                           Its:President

                                       7STOCK INCENTIVE PLAN

     Klever  Marketing,  Inc., a Delaware  corporation,  (the "Company")  hereby
adopts this Stock  Incentive  Plan (the "Plan"),  effective the 1st day of June,
1998, upon the approval of the Plan by the Stockholders of the Company.

     1.  Purpose.  The  purpose of this Plan is to enable the Company to attract
and retain the services of and provide  performance  incentives  to (1) selected
employees,  officers and  directors of the Company or of any  subsidiary  of the
Company ("Employees") and (2) selected nonemployee agents, consultants, advisors
and independent contractors of the Company or any subsidiary.

     2. Shares Subject to the Plan.  Subject to adjustment as provided below and
in paragraph  13, the shares to be offered  under the Plan shall  consist of the
common stock of the Company,  par value $.01 per share ("Common Stock"), and the
total  number of shares of Common  Stock that may be issued under the Plan shall
not exceed 3,500,000 shares, all of which may be issued pursuant to the exercise
of options granted pursuant to the Plan. The shares issued under the Plan may be
authorized and unissued  shares or reacquired  shares or shares  acquired in the
market. If any award granted under the Plan expires,  terminates or is canceled,
the unissued  shares  subject to such award shall again be  available  under the
Plan and if shares which are awarded under the Plan are forfeited to the Company
or  repurchased  by the Company,  that number of shares shall again be available
under the Plan.

     3. Effective Date and Duration of Plan.

     (a)  Effective  Date.  The Plan (as  amended  and  restated)  shall  become
effective  on the date adopted by the Board of  Directors,  upon the approval of
the Plan by the  Stockholders  of the Company.  Awards may be granted and shares
may be awarded or sold under the Plan at any time after the  effective  date and
before termination of the Plan.

     (b)  Duration.  The Plan shall  continue in effect for a period of 10 years
from the date adopted by the Board of Directors,  subject to earlier termination
by the Board of  Directors.  The Board of Directors may suspend or terminate the
Plan at any time, except with respect to awards then outstanding under the Plan.
Termination shall not affect the terms of any outstanding awards.

     4. Administration.

     (a) Board of  Directors.  The Plan  shall be  administered  by the Board of
Directors of the Company,  which shall determine and designate from time to time
the  individuals  to whom awards shall be made, the amount of the awards and the
other terms and conditions of the awards. Subject to the provisions of the Plan,
the  Board  of  Directors  may from  time to time  adopt  and  amend  rules  and
regulations relating to the administration of the Plan, advance the lapse of any
waiting  period,  accelerate any exercise date,  waive or modify any restriction
applicable  to shares  (except those  restrictions  imposed by law) and make all
other  determinations  in the  judgment of the Board of  Directors  necessary or
desirable  for  the   administration  of  the  Plan.  The   interpretation   and
construction  of the provisions of the Plan and related  agreements by the Board
of Directors shall be final and  conclusive.  The Board of Directors may correct
any defect or supply any omission or reconcile any  inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect,  and it shall be the sole and final judge of such
expediency.

     (b)  Committee.  The Board of Directors  may delegate to a committee of the
Board of Directors (the "Committee") any or all authority for  administration of
the Plan. If authority is delegated to a Committee,  all references to the Board
of  Directors in the Plan shall mean and relate to the  Committee  except (i) as
otherwise  provided  by the Board of  Directors  and (ii) that only the Board of
Directors may amend or terminate the Plan as provided in paragraphs 3 and 14.

     (c) Officer.  The Board of Directors or the Committee,  as applicable,  may
delegate to an executive  officer of the Company  authority to administer  those
aspects  of the Plan that do not  involve  the  designation  of  individuals  to
receive  awards or decisions  concerning  the timing,  amounts or other terms of
awards. No officer to whom administrative  authority has been delegated pursuant
to this provision may waive or modify any restriction  applicable to an award to
such officer under the Plan.

     5. Types of Awards;  Eligibility.  The Board of Directors may, from time to
time, take the following actions, separately or in combination,  under the Plan:
(i) grant  Incentive  Stock  Options,  as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"),  as provided in paragraph 6; (ii)
grant options other than Incentive Stock Options ("Non-Statutory Stock Options")
as provided in  paragraph  6; (iii) award stock as provided in paragraph 7; (iv)
sell shares subject to  restrictions as provided in paragraph 8; (v) grant stock
appreciation  rights as provided in  paragraph 9; (vi) grant cash bonus rights a
provided in paragraph  10; (vii) grant  Performance-based  Rights as provided in
paragraph 11 and (viii) grant foreign  qualified awards as provided in paragraph
12.  Any such  awards  may be made to  Employees,  including  Employees  who are
officers or directors,  and to other  individuals  described in paragraph 1 whom
the Board of Directors believes have made or will make an important contribution
to the Company or any subsidiary of the Company;  provided,  however,  that only
Employees  shall be eligible to receive  Incentive Stock Options under the Plan.
The Board of Directors shall select the individuals to whom awards shall be made
and shall  specify the action taken with respect to each  individual  to whom an
award is made.  Unless  otherwise  determined  by the  Board of  Directors  with
respect to an award, each option,  stock appreciation right, cash bonus right or
performance-based  right  granted  pursuant  to the Plan by its  terms  shall be
nonassignable and  nontransferable  by the recipient,  either  voluntarily or by
operation of law,  except by will or by the laws of descent and  distribution of
the state or  country  of the  recipient's  domicile  at the time of  death.  No
fractional  shares shall be issued in connection  with any award. In lieu of any
fractional  shares,  cash may be paid in an  amount  equal  to the  value of the
fraction or, if the Board of Directors shall determine, the number of shares may
be rounded downward to the next whole share.

     6. Option Grants. With respect to each option grant, the Board of Directors
shall determine the number of shares of Common Stock subject to the option,  the
option  price,  the period of the option,  the time or times at which the option
may be  exercised  and  whether  the option is an  Incentive  Stock  Option or a
Non-Statutory  Stock Option and any other terms of the grant, all of which shall
be set forth in an option agreement between the Company and the optionee. In the
case of  Incentive  Stock  Options,  all  terms  shall  be  consistent  with the
requirements  of the Code and  applicable  regulations.  Upon the exercise of an
option,  the  number of shares  reserved  for  issuance  under the Plan shall be
reduced by the number of shares  issued  upon  exercise  of the option  less the
number of shares  surrendered or withheld in connection with the exercise of the
option and the number of shares  surrounded  or withheld to satisfy  withholding
obligations in accordance with paragraph 17.

     7. Stock Awards.  The Board of Directors may award shares under the Plan as
stock bonuses or otherwise.  Shares awarded  pursuant to this paragraph shall be
subject to the terms,  conditions,  and restrictions  determined by the Board of
Directors. The Board of Directors may require the recipient to sign an agreement
as a  condition  of the award,  but may not  require  the  recipient  to pay any
monetary  consideration  other than amounts necessary to satisfy tax withholding
requirements.  The  agreement may contain any terms,  conditions,  restrictions,
representations  and  warranties  required  by  the  Board  of  Directors.   The
certificates  representing the shares awarded shall bear any legends required by
the Board of Directors. Upon the issuance of a stock award, the number of shares
available  for issuance  under the Plan shall be reduced by the number of shares
issued  less  the  number  of any  shares  surrendered  to  satisfy  withholding
obligations in accordance with paragraph 17.

     8. Purchased  Stock. The Board of Directors may issue shares under the Plan
for such consideration  (including  promissory notes and services) as determined
by the Board of Directors.  Shares issued under the Plan shall be subject to the
terms,  conditions and  restrictions  determined by the Board of Directors.  All
Common Stock issued  pursuant to this paragraph 8 shall be subject to a purchase
agreement,  which shall be executed by the Company and the prospective recipient
of the shares prior to the delivery of certificates  representing such shares to
the  recipient.  The  purchase  agreement  may  contain  any terms,  conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates  representing the shares shall bear any legends required by the
Board of Directors.  Upon the issuance of purchased  stock, the number of shares
available  for issuance  under the Plan shall be reduced by the number of shares
issued  less  the  number  of any  shares  surrendered  to  satisfy  withholding
obligations in accordance with paragraph 17.

     9. Stock Appreciation Rights.

     (a) Grant. Stock  appreciation  rights may be granted under the Plan by the
Board of Directors, subject to such rules, terms, and conditions as the Board of
Directors prescribes.

     (b) Exercise.  Each stock appreciate  right shall entitle the holder,  upon
exercise,  to receive  from the Company in exchange  therefor an amount equal in
value to the excess of the fair  market  value on the date of grant (or,  in the
case of a stock  appreciation  right granted in connection  with an option,  the
excess of the fair market value of one share of Common Stock of the Company over
the  option  price per shares  under the option to which the stock  appreciation
right  relates),  multiplied  by the  number  of  shares  covered  by the  stock
appreciation  right or the  option,  or portion  thereof,  that is  surrendered.
Payment by the Company  upon  exercise of a stock  appreciation  right may be in
Common Stock valued at fair market value, in cash, or partly in Common Stock and
partly  in cash,  all as  determined  by the  Board of  Directors.  The Board of
Directors  may withdraw any stock  appreciation  right granted under the Plan at
any time and may impose any conditions upon the exercise of a stock appreciation
right or adopt rules and  regulations  from time to time affecting the rights of
holders of stock appreciation  rights. Such rules and regulations may govern the
right  to  exercise  stock  appreciation  rights  granted  thereafter.  Upon the
exercise  of a stock  appreciation  right  for  shares,  the  number  of  shares
available  for issuance  under the Plan shall be reduced by the number of shares
issued  less the  number  of any  shares  surrendered  or  withheld  to  satisfy
withholding  obligations in accordance with paragraph 17. Cash payments of stock
appreciation  rights  shall not  reduce  the  number  of shares of Common  Stock
available for issuance under the Plan.

     10. Cash Bonus  Rights.  The Board of Directors may grant cash bonus rights
under the Plan in connection  with (i) options  granted or  previously  granted,
(ii) stock  appreciation  rights  granted or  previously  granted,  (iii)  stock
awarded or previously  awarded and (iv) shares sold or previously sold under the
Plan.  Cash bonus rights will be subject to rules,  terms and  conditions as the
Board of Directors may  prescribe.  The payment of a cash bonus shall not reduce
the number of shares of Common Stock  available  for issuance  under the Plan. A
cash bonus right granted in  connection  with an option will entitle an optionee
to a cash  bonus  when  the  related  option  is  exercised  (or  terminates  in
connection  with the  exercise  of a stock  appreciation  right  related  to the
option)  in  whole  or in part  if,  in the  sole  discretion  of the  Board  of
Directors,  the bonus right will result in a tax deduction  that the Company has
sufficient  taxable income to use. A cash bonus right granted in connection with
a stock award pursuant to paragraph 7 or purchase of stock pursuant to paragraph
8 will  entitle the  recipient  to a cash bonus  payable when the stock award is
awarded or the shares are purchased or restrictions,  if any, to which the stock
is subject  lapse.  If the stock awarded or the shares  purchased are subject to
restrictions and are repurchased by the Company or forfeited by the holder,  the
cash  bonus  right  granted  in  connection  with the  stock  awarded  or shares
purchased shall terminate and may not be exercised.

     11.  Performance-based  Awards.  The Board of  Directors  may grant  awards
intended to qualify as  performance-based  compensation  under Section 162(m) of
the  Code  and  the   regulations   thereunder   ("Performance-based   Awards").
Performance-based  Awards  shall be  denominated  at the time of grant either in
shares  of Common  Stock  ("Stock  Performance  Awards")  or in  dollar  amounts
("Dollar  Performance  Awards").  Payment under a Stock  Performance  Award or a
Dollar  Performance  Award  shall be made,  at the  discretion  of the  Board of
Directors,  subject to the  limitations  set forth in  paragraph 2, in shares of
Common Stock  ("Performance  Shares"),  or in cash or any  combination  thereof.
Performance-based Awards shall be subject to the following terms and conditions:

     (a) Award Period. The Board of Directors shall determine the period of time
for which a Performance-based Award is made (the "Award Period").

     (b) Performance  Goals and Payment.  The Board of Directors shall establish
in writing objectives  ("Performance  Goals") that must be met by the Company or
any subsidiary,  division or other unit of the Company  ("Business Unit") during
the  Award   Period  as  a   condition   to   payment   being   made  under  the
Performance-based  Award.  The Performance  Goals for each award shall be one or
more targeted levels of performance with respect to one or more of the following
objective  measures with respect to the Company or any Business Unit:  earnings,
earnings per share, stock price increases, total shareholder return (stock price
increase plus dividends), return on equity, return on assets, return on capital,
economic  value  added,  revenues,  operating  income,  cash flows or any of the
foregoing  (determined  according  to  criteria  established  by  the  Board  of
Directors).   The  Board  of  Directors  shall  also  establish  the  number  of
Performance   Shares  or  the  amount  of  cash  payment  to  be  made  under  a
Performance-based Award if the Performance Goals are met or exceeded,  including
the fixing of a maximum  payment  (subject  to  paragraph  11(d)).  The Board of
Directors may establish other restrictions to payment under a  Performance-based
Award, such as a continued employment  requirement,  in addition to satisfaction
of the Performance Goals. Some or all of the Performance Shares may be issued at
the time of the award as restricted  shares subject to forfeiture in whole or in
part  if  Performance  Goals,  or if  applicable,  other  restrictions  are  not
satisfied.

     (c)  Computation  of  Payment.   During  or  after  an  Award  Period,  the
performance of the Company or Business  Unit, as  applicable,  during the period
shall be measured  against the Performance  Goals. If the Performance  Goals are
not met,  no  payment  shall be made  under a  Performance-based  Award.  If the
Performance Goals are met or exceeded, the Board of Directors shall certify that
fact in writing  and  certify  the number of  Performance  Shares  earned or the
amount of cash  payment  to be made  under  the  terms of the  Performance-based
Award.

     (d) Effect on Shares Available. The payment of a Performance-based Award in
cash  shall not  reduce  the  number of shares  of Common  Stock  available  for
issuance  under the Plan.  The number of shares of Common  Stock  available  for
issuance  under the Plan shall be reduced  by the number of shares  issued  upon
payment  of an award,  less the  number of shares  surrendered  or  withheld  to
satisfy withholding obligations.

     12. Foreign Qualified Grants.  Awards under the Plan may be granted to such
Employees  and such other  persons  described in paragraph 1 residing in foreign
jurisdictions  as the Board of Directors  may determine  from time to time.  The
Board of Directors may adopt such supplements to the Plan as may be necessary to
comply with the  applicable  laws of such  foreign  jurisdictions  and to afford
participants  favorable treatment under such laws;  provided,  however,  that no
award  shall be  granted  under any such  supplement  with  terms  that are more
beneficial to the participants than the terms permitted by the Plan.

     13. Changes in Capital Structure.

     (a) Stock Splits;  Stock Dividends.  If the outstanding Common Stock of the
Company is hereafter  increased or decreased or changed into or exchanged  for a
different  number or kind of shares or other securities of the Company by reason
of any stock  split,  combination  of  shares or  dividend  payable  in  shares,
recapitalization or  reclassification,  appropriate  adjustment shall be made by
the Board of  Directors  in the number and kind of shares  available  for grants
under the Plan.  In  addition,  the Board of  Directors  shall make  appropriate
adjustment in the number and kind of shares as to which outstanding  options, or
portions thereof then unexercised,  shall be exercisable, so that the optionee's
proportionate  interest  before  and  after  the  occurrence  of  the  event  is
maintained.  Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any  adjustment  that would or might result in the issuance
of fractional  shares,  and any fractional  shares resulting from any adjustment
may be  disregarded  or provided  for in any manner  determined  by the Board of
Directors. Any such adjustments made by Board of Directors shall be conclusive.

     (b) Mergers, Reorganizations,  Etc. The Board of Directors may include such
terms and  conditions,  including  without  limitation,  provisions  relating to
acceleration  in the event of a change in control,  as it deems  appropriate  in
connection   with  any  award   under  the  Plan  with   respect  to  a  merger,
consolidation,  plan of exchange,  acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a subsidiary is a party or
a  sale  or  all  or  substantially   all  of  the  Company's  assets  (each,  a
"Transaction").  Notwithstanding  the foregoing,  in the event of a Transaction,
the Board of Directors  shall, in its sole discretion and to the extent possible
under the structure of the Transaction, select one or the following alternatives
for treating outstanding  Incentive Stock Options or Non-Statutory Stock Options
under the Plan:

     (i)  Outstanding  options shall remain in effect in  accordance  with their
terms.

     (ii) Outstanding  options shall be converted into options to purchase stock
in the company that is surviving or acquiring  company in the  Transaction.  The
amount,  type of securities  subject thereto and exercise price of the converted
options  shall be  determined  by the Board of Directors of the Company,  taking
into account the relative  values of the companies  involved in the  Transaction
and the exchange  rate,  if any,  used in  determining  shares of the  surviving
corporation to be issued to holders of shares of the Company.  Unless  otherwise
determined by the Board of Directors, the converted options shall be vested only
to the  extent  that  the  vesting  requirements  relating  to  options  granted
hereunder have been satisfied.

     (iii) The Board of  Directors  shall  provide a 30-day  period prior to the
consummation  of  the  Transaction  during  which  outstanding  options  may  be
exercised to the extent then exercisable, and upon the expiration of such 30-day
period,  all  unexercised  options  shall  immediately  terminate.  The Board of
Directors may, in its sole discretion,  accelerate the exercisability of options
so that they are exercisable in full during such 30-day period.

     (c)  Dissolution  of the Company.  In the event of the  dissolution  of the
Company, options shall be treated in accordance with paragraph 13(b)(iii).

     (d) Rights Issued by Another  Corporation.  The Board of Directors may also
grant options,  stock appreciation rights,  performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms,  conditions
and  provisions  that vary from those  specified in this Plan  provided that any
such  awards  are  granted  in  substitution  for,  or in  connection  with  the
assumption of, existing options,  stock appreciation rights, stock bonuses, cash
bonuses,  restricted stock and performance  units granted,  awarded or issued by
another  corporation  and assumed or otherwise  agreed to be provided for by the
Company pursuant to or by reason of a Transaction.

     14.  Amendment of Plan.  The Board of Directors  may at any time,  and from
time to  time,  modify  or  amend  the Plan in such  respects  as it shall  deem
advisable  because  of changes in the law while the Plan is in effect or for any
other reason.  Except as provided in paragraphs 9, 10 and 13, however, no change
in an award  already  granted  shall be made without the written  consent of the
holder of such award.

     15. Approvals. The obligations of the Company under the Plan are subject to
the approval of state and federal  authorities or agencies with  jurisdiction in
the matter.  The  Company  will use its best  efforts to take steps  required by
state or federal law or applicable regulations,  including rules and regulations
of the  Securities  and Exchange  Commission and any stock exchange on which the
Company's  shares may then be listed,  in  connection  with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to issue
or deliver  Common  Stock  under the Plan if such  issuance  or  delivery  would
violate applicable state or federal securities laws.

     16.  Employment  and  Service  Rights.  Nothing  in the  Plan or any  award
pursuant  to the Plan  shall  (i)  confer  upon  any  Employee  any  right to be
continued in the employment of the Company or any subsidiary or interfere in any
way with the right of the  Company or any  subsidiary  by whom such  Employee is
employed to terminate  such  Employee's  employment at any time, for any reason,
with or without cause, or to decrease such Employee's  compensation or benefits,
or (ii) confer  upon any person  engaged by the Company any right to be retained
or  employed  by the  Company or to the  continuation,  extension,  renewal,  or
modification  of any  compensation,  contract,  or  arrangement  with  or by the
Company.

     17. Taxes. Each participant who has received an award under the Plan shall,
upon  notification  of the  amount  due,  pay to the  Company  in  cash  amounts
necessary  to  satisfy  any  applicable  federal,  state and  local  withholding
requirements.  If the participant fails to pay the amount demanded,  the Company
may  withhold  that  amount  from other  amounts  payable by the  Company to the
participant including salary, subject to applicable law. With the consent of the
Board of Directors,  a participant may satisfy this withholding  obligation,  in
whole or in part,  by having the Company  withhold  from any shares to be issued
that number of shares that would satisfy the amount due or by delivering  Common
Stock to the Company to satisfy the withholding amount.

     18.  Rights as a  Shareholder.  The  recipient  of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock until the
date of issue to the recipient of a stock certificate for such shares. Except as
otherwise  expressly  provided  in the  Plan,  no  adjustment  shall be made for
dividends  or other  rights for which the record date  occurs  prior to the date
such stock certificate is issued.

Approved by the Board of Directors:         June 1, 1998.

Approved by the Stockholders of the Company: November 13, 1998.

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