Document:

EXHIBIT 4.1
                                                                     -----------

                  1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                                       OF
                        CORRECTIONAL SERVICES CORPORATION

1.         PURPOSE OF PLAN.
           ---------------

                     The purpose of this Non-Employee Director Stock Option Plan
("Plan") is to provide additional incentives to Non-Employee Directors (as
defined below) of Correctional Services Corporation ("Company") to promote the
financial success and progress of the Company by granting such persons options
to purchase shares of the Company's Common Stock ("Common Stock"). The options
to purchase shares of Common Stock under this Plan shall not qualify under
Section 422 of the Internal Revenue Code of 1986, as amended.

2.         DEFINITION OF "NON-EMPLOYEE DIRECTOR".
           ------------------------------------

                     As defined by Regulation 240.16b-3 under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), a "Non-Employee Director" is
a person not currently an officer of the Company or a parent or subsidiary, who
does not receive compensation either directly or indirectly as a consultant of
the Company (except for an amount not required to be disclosed under Item 404(a)
of Regulation S-K, e.g., not more than $60,000), does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship which would require disclosure under Item
404(b) of Regulation S-K (e.g., where the director has a ten percent or more
equity interest in an entity which makes or receives payments in excess of five
percent of the Company's or that entity's consolidated gross revenues).

3.         ADOPTION OF PLAN.
           ----------------

                     This Plan shall be effective on the date that it is adopted
by the Board of Directors of the Company ("Board").
The Board shall have and may exercise any and all of the powers relating to the
administration of this Plan and the grant of options hereunder as are set forth
herein.

4.         ADMINISTRATION.
           --------------

                     (a)       This Plan shall be administered by the Board.

                     (b)       The Board shall have the authority to (i)
                               exercise all of the powers granted to it under
                               this Plan, (ii) construe, interpret and implement
                               this Plan and any Stock Option Agreements
                               executed pursuant to Section 8 hereof, (iii)
                               prescribe, amend and rescind rules and
                               regulations relating to this Plan, (iv) make all
                               determinations necessary or advisable in
                               administering this Plan and (v) correct any
                               defect, supply any omission and reconcile any
                               inconsistency in this Plan.

<PAGE>

                     (c)       The determination of the Board on all matters
                               relating to this Plan or any Stock Option
                               Agreement shall be final, binding and conclusive.

                     (d)       No member of the Board shall be liable for any
                               action or determination made in good faith with
                               respect to this Plan or any award thereunder.

5.         ELIGIBILITY.
           -----------

                     Individuals who are Non-Employee Directors of the Company
shall be eligible to participate in this Plan. Each Non-Employee Director to
whom an option is granted hereunder is referred to as an "Optionee."

6.         SHARES SUBJECT TO THIS PLAN.
           ---------------------------

                     The maximum number of shares of Common Stock that may be
issued pursuant to options granted under this Plan to all
Optionees is 300,000 shares, which shares may, at the discretion of the Board,
be either authorized but unissued shares or shares previously issued and
reacquired by the Company. Such number of shares shall be subject to adjustment
as provided in this Plan. If any option is terminated or unpurchased in whole or
in part for any reason without being exercised in whole or in part, the shares
thereby released from such option shall be available for purchase under other
options subsequently granted under this Plan. At all times during the term of
this Plan, the Company shall reserve and keep available such number of shares of
Common Stock as shall be required to satisfy the requirements of outstanding
options under this Plan.

7.         GRANTING OF OPTIONS; EFFECTIVE DATE.
           -----------------------------------

                     Until the expiration or sooner termination of this Plan,
the Board, at any time and from time to time, may grant
options to Non-Employee Directors for such number of shares, at such option
price, and subject to the terms and provisions of this Plan. The date on which
the grant of an option is authorized by the Board shall be the effective date of
grant for all purposes, notwithstanding the fact that written acceptance by the
Optionee of such grant may take place thereafter.

8.         TERMS AND CONDITIONS OF OPTIONS.
           -------------------------------

                     All options granted under this Plan shall be evidenced by a
written Stock Option Agreement (which may incorporate
the provisions of this Plan by reference and which shall be in such form as the
Board shall approve) signed by the President of the Company and the Optionee.
All options shall be granted subject to the following terms and conditions:

                     (a)       EXERCISE PRICE. The exercise price per share with
                               respect to each option shall not be less than the
                               Fair Market Value of a share of Common Stock on
                               the date of grant.

                     (b)       FAIR MARKET VALUE. The term "Fair Market Value"
                               as used herein as of any date and in respect of
                               any share of Common Stock means the closing sale
                               price for a share of Common Stock on the
                               immediately preceding

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                               trading date as reported on The Nasdaq National
                               Market or, if no closing sale price shall have
                               been made on such relevant date, on the next
                               preceding day on which there was a closing sale
                               price; provided, however, that if no closing sale
                               price shall have been made within the ten
                               business days preceding such relevant date, or if
                               deemed appropriate by the Board for any other
                               reason, the Fair Market Value of such shares of
                               Common Stock shall be as determined by the Board.
                               In no event shall the Fair Market Value of any
                               share of Common Stock be less than its par value.

                     (c)       OPTION TERM. Each option shall be granted for a
                               term determined from time to time by the Board,
                               but in no event shall an option be granted for a
                               term of more than ten years and each option is
                               subject to earlier termination in the event of
                               the death or the voluntary or involuntary
                               termination of the Optionee as set forth herein.

                     (d)       EXERCISE OF OPTIONS. Options shall be exercisable
                               within the times or upon the events determined by
                               the Board as set forth in the grant of options;
                               provided, however, that no option shall be
                               exercisable after the expiration of five years
                               from the date the option is granted. Upon
                               exercise no fractional shares of Common Stock
                               shall be issued or transferred and no payments
                               shall be made in lieu of fractional shares. No
                               shares of Common Stock shall be issued or
                               delivered until full payment therefor has been
                               made. No option may be exercised for fewer than
                               the lesser of (i) 500 shares of Common Stock or
                               (ii) all remaining shares of Common Stock subject
                               to the option.

                     (e)       NOTICE OF EXERCISE. Options may be exercised only
                               by delivery to the Company of a written notice
                               and exercise agreement in a form approved by the
                               Board, stating the number of shares of Common
                               Stock being purchased, the restrictions imposed
                               on the shares of Common Stock and such
                               representations and agreements regarding the
                               Optionee's investment intent and access to
                               information as may be required by the Company to
                               comply with applicable securities laws, together
                               with payment in full of the exercise price for
                               the number of shares of Common Stock being
                               purchased.

                     (f)       PAYMENT. Payment for the shares of Common Stock
                               may be made (i) in cash, (ii) by surrender of
                               shares of Common Stock having a Fair Market Value
                               equal to the exercise price of the option or
                               (iii) by any combination of the foregoing where
                               approved by the Board in its sole discretion;
                               provided, however, in the event of payment for
                               the shares of Common Stock by method (ii) above,
                               the shares of Common Stock so surrendered, if
                               originally issued to the Optionee upon exercise
                               of an option(s) granted by the Company, shall
                               have been held by the Optionee for more than six
                               months.

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<PAGE>
                     (g)       PURCHASE FOR INVESTMENT. If the shares of Common
                               Stock subject to an option have not been
                               registered under the Securities Act of 1933, as
                               amended ("Securities Act"), the Board shall have
                               the right to require, as a condition to any
                               exercise of the option, such representations or
                               agreements as counsel for the Company may
                               consider appropriate to avoid violation of such
                               Act, including but not limited to the
                               representation that any and all shares of Common
                               Stock purchased upon exercise of the option will
                               be purchased for investment and not with a view
                               to the distribution or resale thereof and to
                               agree that such shares will not be sold except in
                               accordance with such restrictions or limitations
                               as may be set forth in the Stock Option Agreement
                               or as may be imposed by law.

                     (h)       DEATH OR VOLUNTARY OR INVOLUNTARY TERMINATION. In
                               the event of death of the Optionee or voluntary
                               or involuntary termination of directorship with
                               the Company of the Optionee, such option may,
                               subject to the provisions of this Plan and any
                               restrictions or limitations as are determined by
                               the Board, be exercised as to those optioned
                               shares in respect of which such option has not
                               previously been exercised, but only to the extent
                               that such option could be exercised by the
                               Optionee on the date of such death or voluntary
                               or involuntary termination of directorship with
                               the Company (whichever is the applicable case):

                               i)       in the event of the death of the
                                        Optionee, then by his or her executor or
                                        administrator, or by the person or
                                        persons to whom the option is
                                        transferred by will or the applicable
                                        laws of descent and distribution, within
                                        twelve months from the date of death,
                                        but in no event subsequent to the
                                        expiration date of the option; or

                               ii)      in the event of the Optionee's voluntary
                                        or involuntary termination of
                                        directorship with the Company, then by
                                        the Optionee within six months from the
                                        date of termination, but in no event
                                        subsequent to the expiration date of the
                                        option.

9.         PRIVILEGES OF STOCK OWNERSHIP.
           -----------------------------

                     No Optionee shall have any of the rights of a shareholder
with respect to any shares of Common Stock subject to an
option until the option has been validly exercised. No adjustment shall be made
for dividends or distributions or other rights for which the record date is
prior to the date of exercise, except as provided in this Plan.

10.        ADJUSTMENT OF OPTION SHARES.
           ---------------------------

                     In the event that the number of outstanding shares of
Common Stock is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of the
Company without consideration, the number of shares of

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<PAGE>

Common Stock available under this Plan and the number of shares of Common Stock
subject to outstanding options and the exercise price per share of such options
shall be proportionately adjusted, subject to any required action by the Board
or shareholders of the Company and compliance with applicable securities laws;
provided, however, that no certificate or scrip representing fractional shares
shall be issued upon exercise of any option and any resulting fractions of a
share of Common Stock shall be ignored.

11.        COMPLIANCE WITH LAWS.
           --------------------

                     The grant of options and the issuance of shares upon
exercise of any options shall be subject to and conditioned upon compliance with
all applicable requirements of law, including without limitation compliance with
the Securities Act, compliance with all applicable state securities laws and
compliance with the requirements of any stock exchange on which the shares may
be listed. The Company shall be under no obligation to register the shares with
the Securities and Exchange Commission or to effect compliance with the
Securities Act or with the registration or qualification requirement of any
state securities laws or stock exchange.

12.        CHANGE OF CONTROL.
           -----------------

                     In the event the Company is merged into or consolidated
with another corporation under circumstances where the
Company is not the surviving corporation, or if the Company is liquidated or
sells or otherwise disposes of all or substantially all of its assets to another
corporation while unexercised options remain outstanding under the plan:

            (i)      subject to the provisions of clauses(iii), (iv) and (v)
                     below, after the effective date of such merger,
                     consolidation or sale, as the case may be, each holder of
                     an outstanding option shall be entitled, upon exercise of
                     such option, to receive in lieu of shares of CSC Common
                     Stock, shares of such stock or other securities as the
                     holders of the shares of Common Stock received pursuant to
                     the terms of the merger, consolidation or sale; or

           (ii)      the Committee may waive any discretionary limitations
                     imposed with respect to the exercise of the option so that
                     all options from and after a date prior to the effective
                     date of such merger, consolidation, liquidation or sale, as
                     the case may be, specified by the Committee, shall be
                     exercisable in full; or

          (iii)      all outstanding options may be cancelled, by the Committee
                     as of the effective date of any such merger, consolidation,
                     liquidation or sale, provided that notice of such
                     cancellation shall be given to each holder of an option,
                     and each older thereof shall have the right to exercise
                     such option in full (without regard to any discretionary
                     limitations imposed with respect to the option) during a
                     30-day period preceding t he effective date of such merger,
                     consolidation, liquidation or sale; or

           (iv)      all outstanding options may be cancelled by the Committee
                     as of the date of any such merger, consolidation,
                     liquidation or sale, provided that notice of such
                     cancellation shall be given to each holder of an option and
                     each such holder thereof shall have the right to exercise
                     such option but only to the extent

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<PAGE>

                     exercisable in accordance with any discretionary
                     limitations imposed with respect to the option prior to the
                     effective date of such merger, consolidation, liquidation
                     or sale; or

           (v)       the Committee may provide for the cancellation of all
                     outstanding options and for the payment to the holders of
                     some part or all of the amount by which the value thereof
                     exceeds the payment, if any, which the holder would have
                     been required to make to exercise such option.

13.        AMENDMENT OR TERMINATION OF PLAN.
           --------------------------------

                     The Board may at any time terminate or amend this Plan in
any respect (including, but not limited to, any form of grant, agreement or
instrument to be executed pursuant to this Plan); provided, however, that
shareholder approval shall be required to be obtained by the Company if required
to comply with the listed company requirements of The Nasdaq National Market or
of a national securities exchange on which the shares of Common Stock are
traded, or other applicable provisions of state or federal law or
self-regulatory agencies; provided, further, that no amendment of this Plan may
adversely affect any then outstanding options or any unexercised portions
thereof without the written consent of the Optionee.

14.        TERM OF PLAN.
           ------------

                     No option shall be granted pursuant to this Plan on or
after May 31, 2004, but options theretofore granted may extend beyond that date
and the terms of this Plan shall continue to apply to such options and to any
shares of Common Stock acquired upon exercise thereof.

15.        APPLICABLE LAW.
           --------------

                     The validity, interpretation and enforcement of this Plan
shall be governed in all respects by the laws of the State of Delaware and the
United States of America.

16.        ISSUANCE OF SHARES.
           ------------------

                     The shares of Common Stock, when issued and paid for
pursuant to the options granted hereunder, shall be issued as fully paid and
non-assessable shares.

17.        WITHHOLDING TAXES.
           -----------------

                     Whenever under this Plan shares are to be issued in
satisfaction of the exercise of options granted thereunder, the Company shall
have the right to require the recipient to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares.

18.        TRANSFERABILITY OF OPTIONS.
           --------------------------

                     An option may be sold, pledged, assigned, hypothecated,
transferred or disposed of as determined by the Board and as set forth in a
Stock Option Agreement with an Optionee.

                                        6EXHIBIT 4.1
                                                                     -----------

                        CORRECTIONAL SERVICES CORPORATION
                                    (F.K.A.)
                        ESMOR CORRECTIONAL SERVICES, INC.

                     AMENDED AND RESTATED STOCK OPTION PLAN
                           AS AMENDED ON MAY 25, 1999

           1. PLAN; PURPOSE; GENERAL. The purpose of this Amended and Restated
Stock Option Plan (the "Plan") is to advance the interests of Correctional
Services Corporation, (the "Company") by enhancing the ability of the Company to
attract and retain selected employees, consultants, advisors to the Board of
Directors and qualified directors (collectively the "Participants") by creating
for such Participants incentives and rewards for their contributions to the
success of the Company, and by encouraging such Participants to become owners of
shares of the Company's Common Stock, par value $0.01 per share, as the title or
par value may be amended (the "Shares"). Options granted pursuant to the Plan
may be incentive stock options ("Incentive Options") as defined in the Internal
Revenue Code of 1986, as amended (the "Code") or non-qualified options, or both.
The proceeds received from the sale of Shares pursuant to the Plan shall be used
for general corporate purposes.

           2. EFFECTIVE DATE OF PLAN. The Plan will become effective upon
approval by the Board of Directors (the "Board"), and shall be subject to the
approval by the holders of at least a majority of all Shares present in person
and by proxy and entitled to vote thereon at a meeting of stockholders of the
Company within 12 months after the Company has a class of equity securities
registered under the Securities Act of 1933, as amended (the "Act").

           3. ADMINISTRATION OF THE PLAN. The Plan will be administered by the
Board of the Company. The Board will have authority, not inconsistent with the
express provisions of the Plan, to take all action necessary or appropriate
thereunder, to interpret its provisions, and to decide all questions and resolve
all disputes which may arise in connection therewith. Such determinations of the
Board shall be conclusive and shall bind all parties.

           The Board may, in its discretion, delegate its powers with respect to
the Plan to an employee benefit plan committee or any other committee (the
"Committee"), in which event all references to the Board hereunder, including
without limitation the references in Section 9, shall be deemed to refer to the
Committee. The Committee shall consist of not fewer than three members. Each of
the members must be a "disinterested person" as that term is defined in Rule
16b-3 adopted pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"). A majority of the members of the Committee shall constitute a quorum, and
all determinations of the Committee shall be made by the majority of its members
present at a meeting. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by all of
the Committee members.

           The Board and the Committee, if any, shall have the authority to
determine eligibility, the number of options granted and the exercise price of
options.

<PAGE>

           4. ELIGIBILITY. The Participants in the Plan shall be all employees,
consultants, advisors to the Board of Directors and qualified directors of the
Company or any of its present or future subsidiaries (as defined in Section 8)
whether or not they are also officers of the Company. Members of the Committee
are eligible only if they do not exercise any discretion in selecting
Participants who receive grants of options, in determining the number of shares
to be granted to any Participant or in determining the exercise price of any
options, or if counsel to the Company may otherwise advise the Committee that
the taking of any such action does not impair the status of such eligible
Committee members as "disinterested persons" within the meaning of Exchange Act
Rule 16b-3.

           5. GRANT OF OPTIONS.

           (a) The Board shall grant options to Participants that it, in its
sole discretion, selects. Options shall be granted on such terms as the Board
shall determine except that Incentive Options shall be granted on terms that
comply with the Code and Regulations thereunder.

           (b) No options shall be granted after October 28, 2003 but options
previously granted may extend beyond that date.

           6. TERMS AND CONDITIONS OF OPTIONS

           (a) Exercise Price. Except as provided in Section 5(b) of this Plan,
the purchase price per Share for Shares issuable upon exercise of options shall
be a minimum of 100% of fair market value on the date of grant and shall be
determined by the Board. For this purpose, "fair market value" will be
determined as set forth in Section 8. Notwithstanding the foregoing, if any
person to whom an option is to be granted owns in excess of ten percent of the
outstanding capital stock of the Company, then no option may be granted to such
person for less than 110% of the fair market value on the date of grant as
determined by the Board.

           (b) Period of Options. Unless earlier terminated, options shall
terminate at a date determined by the Board of Directors, but in no event more
than ten years from the date of grant.

           (c) Payment for Delivery of Shares. Shares which are subject to
options shall be issued only upon receipt by the Company of full payment of the
purchase price for the Shares as to which the option is exercised. The purchase
price shall be payable by the Participant to the Company either (i) in cash or
by check, bank draft or money order payable to the order of the Company; or (ii)
for Incentive Options, through the delivery of Shares owned by the Participant
for a period of not less than six months and for which the Participant has good
title (free and clear of any liens and encumbrances) having a fair market value
equal to the purchase price; or (iii) for non-qualified options, by a
combination of cash and Shares as provided in (i) and (ii) above.

           The Company shall not be obligated to deliver any Shares unless and
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, nor, if the outstanding common
stock is at the time listed on any securities exchange, unless and until the
Shares to be delivered have been listed (or authorized to be added

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<PAGE>

to the list upon official notice of issuance) upon such exchange, nor unless or
until all other legal matters in connection with the issuance and delivery of
Shares have been approved by the Company's counsel. Without limiting the
generality of the foregoing, the Company may require from the person exercising
an option such investment representation or such agreement, if any, as counsel
for the Company may consider necessary in order to comply with the Act and
applicable state securities laws.

           A Participant shall have the rights of a shareholder only as to
Shares actually acquired by him under the Plan.

           (d) Vesting. Except for options granted pursuant to Section 5(b) of
this Plan, the Board may impose such vesting restrictions as it sees fit at the
time of grant.

           (e) Transferability of Options. Incentive Options may only be sold,
pledged, assigned, hypothecated, transferred or disposed of by will or by the
laws of descent and distribution or otherwise to the extent permissible under
the Code and other applicable regulations. Non-qualified stock options may be
sold, pledged, assigned, hypothecated, transferred or disposed of as determined
by the Committee and as set forth in a grant agreement with an optionee.

           (f) Forfeiture of Options upon Termination of Relationship. All
previously unexercised options including options which have not vested shall
terminate and be forfeited automatically upon the termination for any reasons
whatsoever of a Participant's status as an employee, consultant or advisor to
the Board. Except as provided in Section 6(g) below, unexercised options granted
to directors shall not terminate or be forfeited in the event such person is no
longer a director of the Company.

           (g) Death. If a Participant dies at a time when he is entitled to
exercise an option, then at any time or times within one year after his death
(or such further period as the Board may allow) such options may be exercised,
as to all or any of the Shares which the Participant was entitled to purchase
immediately prior to his death, by his personal representative or the person or
persons to whom the options are transferred by the will or the applicable laws
of descent and distribution, and except as so exercised such options will expire
at the end of such period.

           (h) Loans to Exercise Option. If requested by any Participant to whom
a grant of non-qualified options has been made, the Company or any subsidiary
may loan such person the amount of money necessary to pay the federal income
taxes incurred as a result of the exercise of any options (or guarantee a bank
loan for such purpose), assuming that the Participant is in the maximum federal
income tax bracket six months from the time of exercise and assuming that the
Participant has no deductions which would reduce the amount of such tax owed.
The loan shall be made on or after April 15th of the year following the year in
which the amount of tax is determined as may be requested by the Participant and
shall be made on such terms as the Company or lending bank determines.

           (i) Withholding Taxes. To the extent that the Company is required to
withhold taxes for federal income tax purposes in connection with the exercise
of any options, the Company shall have the right to assist the Participant to
satisfy such withholding requirement by (i) the

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<PAGE>

Participant paying the amount of the required withholding tax to the Company,
(ii) the Participant delivering to the Company Shares of its common stock
previously owned by the Participant or (iii) the Participant having the Company
retain a portion of the Shares covered by the option exercise. The number of
Shares to be delivered to or withheld by the Company times the fair market value
as defined by Section 9 of this Plan shall equal the cash required to be
withheld. To the extent that the Company elects to allow the Participant either
to deliver or have withheld Shares of the Company's common stock, the Board or
the Committee may require him to make such election only during certain periods
of time as may be necessary to comply with appropriate exemptive procedures
regarding the "short-swing" profit provisions of Section 16(b) of the Exchange
Act or to meet certain Code requirements.

           7. SHARES SUBJECT TO PLAN.

           (a) Number of Shares and Stock to be Delivered. Shares delivered
pursuant to this Plan shall in the discretion of the Board be authorized but
unissued Shares of common stock or previously issued Shares acquired by the
Company. Subject to adjustments as described below, the aggregate number of
Shares which may be delivered under this Plan shall not exceed 1,500,000 Shares
of common stock of the Company.

           (b) Changes in Stock. In the event of a stock dividend, stock split
or combination of Shares, recapitalization, merger in which the Company is the
surviving corporation or other change in the Company's capital stock, the number
and kind of Shares of stock or securities of the Company to be subject to the
Plan and to options then outstanding or to be granted thereunder, the maximum
number of Shares or securities which may be delivered under the Plan, the option
price and other relevant provisions shall be appropriately adjusted by the
Board, whose determination shall be binding on all persons.

           The Board may also adjust the number of Shares subject to outstanding
options, the exercise price of outstanding options and the terms of outstanding
options to take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in the immediately
preceding paragraph), acquisitions or dispositions of stock or property or any
other event if it is determined by the Board that such adjustment is appropriate
to avoid distortion in the operation of the Plan.

           8. CHANGE IN CONTROL.

           In the event of a consolidation or merger in which the Company is not
the surviving corporation, or if the Company is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another corporation, while
unexercised options remain outstanding under the Plan, a holder's rights with
respect to outstanding and unexercised options granted to him or her will be
adjusted in accordance with any one of the following:

               (i)   subject to clauses (iii), (iv) and (v) below, in lieu of
                     shares of CSC Common Stock, shares of such stock or other

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<PAGE>

                     securities as the holders of the shares of Common Stock
                     received pursuant to the terms of the merger, consolidation
                     or sale; or

               (ii)  the Committee may provide that after a specified date prior
                     to the effective date of such merger, consolidation,
                     liquidation or sale, all options shall be exercisable in
                     full; or

               (iii) all outstanding options may be cancelled as of the
                     effective date of any such merger, consolidation,
                     liquidation or sale, and each holder thereof shall have the
                     right to exercise any or all such options in full during a
                     30-day period preceding the effective date of such merger,
                     consolidation, liquidation or sale; or

               (iv)  all outstanding options may be cancelled as of the
                     effective date of any such merger, consolidation,
                     liquidation or sale, and each such holder thereof shall
                     have the right to exercise such option but only to the
                     extent exercisable in accordance with any discretionary
                     limitations imposed with respect to the option prior to the
                     effective date of such merger, consolidation, liquidation
                     or sale; or

               (v)   the Committee may provide for the cancellation of all
                     outstanding options and for the payment to the holders of
                     some part or all of the amount by which the value thereof
                     exceeds the payment, if any, which the holder would have
                     been required to make to exercise such option.

           9. DEFINITIONS.

           (a) For purposes of the Plan, a subsidiary is any corporation (i) in
which the Company owns, directly or indirectly, stock possessing 50 percent or
more of the total combined voting power of all classes of stock or (ii) over
which the Company has effective operating control.

           (b) The fair market value of the common stock shall be deemed to be:
(i) the closing price of the Company's common stock appearing on a national
securities exchange if the Company's common stock is listed on such an exchange,
or if not listed, the average closing bid price appearing on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"); (ii) if
the Shares are not listed on NASDAQ, then the average bid price for the
Company's stock as listed in the National Quotation Bureau's pink sheets; (iii)
if there are no listed bid prices published in the pink sheets, then the market
value shall be based upon the average closing bid price as determined following
a polling of all dealers making a market in the Company's Shares.

           10. INDEMNIFICATION OF BOARD. In addition to and without affecting
such other rights of indemnification as they may have as members of the Board or
otherwise, each member of the Board shall be indemnified by the Company to the
extent legally possible against reasonable expenses, including attorney's fees,
actually and reasonably incurred in connection with any appeal therein, to which
he may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any option granted thereunder, and against all
judgments, fines and amounts paid by his in settlement thereof; provided that
such payment of amounts so indemnified is first approved by a majority of the
members of the Board who are not parties to

                                        5
<PAGE>

such action, suit or proceedings, or by independent legal counsel selected by
the Company, in either case on the basis of a determination that such member
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; and except that no indemnification
shall be made in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Board member is liable for a breach of the
duty of loyalty, bad faith or intentional misconduct in his duties; and provide,
further that the Board member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend same.

           11. AMENDMENTS. The Board may at any time discontinue granting
options under the Plan. The Board may at any time or times amend the Plan or
amend any outstanding option or options for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, provided that (except to the
extent explicitly required or permitted herein above) no such amendment will,
without the approval of the stockholders of the Company, (a) increase the
maximum number of Shares available under the Plan, (b) reduce the option price
of outstanding options or reduce the price at which options may be granted, (c)
extend the time within which options may be granted, (d) amend the provisions of
this Section 10 of the Plan, (e) extend the period of an outstanding option
beyond ten years from the date of grant, (f) adversely affect the rights of any
Participant (without his consent) under any options theretofore granted or (g)
be effective if stockholder approval is required by applicable statute, rule or
regulation.

                                        6

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