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                                                                    EXHIBIT 4.1
                              CV THERAPEUTICS, INC.

                        2000 NONSTATUTORY INCENTIVE PLAN

                              ADOPTED JULY 19, 2000

1.        PURPOSES.

          (a)       ELIGIBLE STOCK AWARD RECIPIENTS. Only Eligible Participants
may receive Stock Awards under this Plan.

          (b)       AVAILABLE STOCK AWARDS. The purpose of the Plan is to
provide a means by which Eligible Participants may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Nonstatutory Stock Options, (ii) stock bonuses and
(iii) rights to acquire restricted stock.

          (c)       GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards, to
secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

2.        DEFINITIONS.

          (a)       "AFFILIATE" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.

          (b)       "BOARD" means the Board of Directors of the Company.

          (c)       "CODE" means the Internal Revenue Code of 1986, as amended.

          (d)       "COMMITTEE" means a committee of one or more members of the
Board appointed by the Board in accordance with subsection 3(c).

          (e)       "COMMON STOCK" means the common stock of the Company.

          (f)       "COMPANY" means CV Therapeutics, Inc., a Delaware
corporation.

          (g)       "CONSULTANT" means any person, including an advisor, (i)
engaged by the Company or an Affiliate to render consulting or advisory services
and who is compensated for such services or (ii) who is a member of the Board of
Directors of an Affiliate. However, the term "Consultant" shall not include
Directors.

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          (h)       "CONTINUOUS SERVICE" means that the Holder's service with
the Company or an Affiliate, whether as an Employee or Consultant, is not
interrupted or terminated. The Holder's Continuous Service shall not be deemed
to have terminated merely because of a change in the capacity in which the
Holder renders service to the Company or an Affiliate as an Employee or
Consultant or a change in the entity for which the Holder renders such service,
provided that there is no interruption or termination of the Holder's service to
the Company or an Affiliate. For example, a change in status without
interruption from an Employee of the Company to a Consultant of an Affiliate
will not constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.

          (i)       "DIRECTOR" means a member of the Board of Directors of the
Company.

          (j)       "DISABILITY" means the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.

          (k)       "ELIGIBLE PARTICIPANT" means any Employee or Consultant;
provided, however, that except as provided in the following sentence, no
Employee or Consultant may be granted Stock Awards under this Plan who is a
Director or an Officer. Notwithstanding the preceding sentence, an Officer may
be an Eligible Participant if he or she is granted a Stock Award in connection
with his or her initial commencement of employment with the Company and such
grant is an essential inducement to his or her entering into a contract of
employment with the Company.

          (l)       "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

          (m)       "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

          (n)       "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock determined as follows:

                    (i)       If the Common Stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in the Common Stock) on the last market trading day prior to
the day of determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable.

                    (ii)      In the absence of such markets for the Common
Stock, the Fair Market Value shall be determined in good faith by the Board.

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          (o)       "HOLDER" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

          (p)       "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder. Incentive Stock Options may not be
granted under the Plan.

          (q)       "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is
not a current Employee or Officer of the Company or its parent or a subsidiary,
does not receive compensation (directly or indirectly) from the Company or its
parent or a subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

          (r)       "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

          (s)       "OFFICER" means a person who is either (i) an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder or (ii) an officer of the Company within the
meaning of Section 4310(c)(25)(G)(i) of the NASD Manual and Notices to Members
(the "NASD Manual"), or any successor provision thereto.

          (t)       "OPTION" means a Nonstatutory Stock Option granted pursuant
to the Plan.

          (u)       "OPTION AGREEMENT" means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan.

          (v)       "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

          (w)       "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

          (x)       "PLAN" means this CV Therapeutics, Inc. 2000 Nonstatutory
Incentive Plan.

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          (y)       "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor to Rule 16b-3, as in effect from time to time.

          (z)       "SECURITIES ACT" means the Securities Act of 1933, as
amended.

          (aa)      "STOCK AWARD" means any right granted under the Plan,
including an Option, a stock bonus and a right to acquire restricted stock.

          (bb)      "STOCK AWARD AGREEMENT" means a written agreement between
the Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject to
the terms and conditions of the Plan.

3.        ADMINISTRATION.

          (a)       ADMINISTRATION BY BOARD. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in subsection 3(c).

          (b)       POWERS OF BOARD. The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:

                    (i)       To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; what type or combination of types of Stock Award
shall be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

                    (ii)      To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

                    (iii)     To amend the Plan or a Stock Award as provided in
Section 12.

                    (iv)      To terminate or suspend the Plan as provided in
Section 13.

                    (v)       Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.

          (c)       DELEGATION TO COMMITTEE. The Board may delegate
administration of the Plan to a Committee or Committees of one (1) or more
members of the Board (who may or may not be Outside Directors or Non-Employee
Directors, at the Board's discretion), and the term "Committee" shall apply to
any person or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to

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delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.

          (d)       EFFECT OF BOARD'S DECISION. All determinations,
interpretations and constructions made by the Board in good faith shall not be
subject to review by any person and shall be final, binding and conclusive on
all persons.

4.        SHARES SUBJECT TO THE PLAN.

          (a)       SHARE RESERVE. Subject to the provisions of Section 11
relating to adjustments upon changes in Common Stock, the Common Stock that may
be issued pursuant to Stock Awards shall not exceed in the aggregate two-hundred
fifty thousand (250,000) shares of Common Stock.

          (b)       REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.

          (c)       SOURCE OF SHARES. The shares of Common Stock subject to the
Plan may be unissued shares or reacquired shares, bought on the market or
otherwise.

5.        ELIGIBILITY.

          (a)       ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Stock Awards may be
granted only to Eligible Participants.

          (b)       CONSULTANTS. A Consultant shall not be eligible for the
grant of a Stock Award if, at the time of grant, a Form S-8 Registration
Statement under the Securities Act ("Form S-8") is not available to register
either the offer or the sale of the Company's securities to such Consultant
because of the nature of the services that the Consultant is providing to the
Company, or because the Consultant is not a natural person, or as otherwise
provided by the rules governing the use of Form S-8, unless the Company
determines both (i) that such grant (A) shall be registered in another manner
under the Securities Act (E.G., on a Form S-3 Registration Statement) or (B)
does not require registration under the Securities Act in order to comply with
the requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.

6.       OPTION PROVISIONS.

         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each

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Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:

          (a) OPTION EXERCISE PRICE. The exercise price of each Nonstatutory
Stock Option shall be not less than one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

          (b) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is exercised
or (ii) at the discretion of the Board at the time of the grant of the Option
(or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to
the Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

          In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

          (c) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

          (d) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may

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vary. The provisions of this subsection 6(d) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which an
Option may be exercised.

          (e) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.

          (f) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

          (g) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

          (h) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

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         (i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.

7.       PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

         (a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

                    (i)       CONSIDERATION. A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.

                    (ii)      VESTING. Shares of Common Stock awarded under the
stock bonus agreement may, but need not, be subject to a share repurchase option
in favor of the Company in accordance with a vesting schedule to be determined
by the Board.

                    (iii)     TERMINATION OF HOLDER'S CONTINUOUS SERVICE. In the
event a Holder's Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Holder which have not vested as of
the date of termination under the terms of the stock bonus agreement.

                    (iv)      TRANSFERABILITY. Rights to acquire shares of
Common Stock under the stock bonus agreement shall be transferable by the Holder
only upon such terms and conditions as are set forth in the stock bonus
agreement, as the Board shall determine in its discretion, so long as Common
Stock awarded under the stock bonus agreement remains subject to the terms of
the stock bonus agreement.

          (b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

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                    (i)       PURCHASE PRICE. The purchase price under each
restricted stock purchase agreement shall be such amount as the Board shall
determine and designate in such restricted stock purchase agreement. The
purchase price shall not be less than one hundred percent (100%) of the Common
Stock's Fair Market Value on the date such award is made or at the time the
purchase is consummated.

                    (ii)      CONSIDERATION. The purchase price of Common Stock
acquired pursuant to the restricted stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Holder; or (iii) in any other form of legal consideration that may be acceptable
to the Board in its discretion; provided, however, that at any time that the
Company is incorporated in Delaware, then payment of the Common Stock's "par
value," as defined in the Delaware General Corporation Law, shall not be made by
deferred payment.

                    (iii)     VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement shall be subject to a share repurchase
option in favor of the Company pursuant to a vesting schedule to be determined
by the Board in accordance with the following guidelines: (A) the vesting period
for shares of Common Stock acquired under restricted stock purchase agreements
shall be no less than three (3) years unless based upon performance milestones,
in which event the vesting period shall be no less than one (1) year; and (B)
notwithstanding the provisions of Section 10(a), the Board may not accelerate
such vesting except under extraordinary circumstances, such as the death,
disability or divorce of the Holder, or a change in corporate structure of the
Company.

                    (iv)      TERMINATION OF HOLDER'S CONTINUOUS SERVICE. In the
event a Holder's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the Holder
which have not vested as of the date of termination under the terms of the
restricted stock purchase agreement.

                    (v)       TRANSFERABILITY. Rights to acquire shares of
Common Stock under the restricted stock purchase agreement shall be transferable
by the Holder only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.

8.        COVENANTS OF THE COMPANY.

          (a)       AVAILABILITY OF SHARES. During the terms of the Stock
Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Stock Awards.

         (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or

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issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such Stock
Awards unless and until such authority is obtained.

9.        USE OF PROCEEDS FROM STOCK.

          Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

10.       MISCELLANEOUS.

          (a)       ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall
have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will vest
in accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

          (b)       STOCKHOLDER RIGHTS. No Holder shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to such Stock Award unless and until such Holder has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

          (c)       NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan
or any instrument executed or Stock Award granted pursuant thereto shall confer
upon any Holder any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause or (ii) the service of
a Consultant pursuant to the terms of such Consultant's agreement with the
Company or an Affiliate.

          (d)       INVESTMENT ASSURANCES. The Company may require a Holder, as
a condition of exercising or acquiring Common Stock under any Stock Award, (i)
to give written assurances satisfactory to the Company as to the Holder's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Holder is
acquiring Common Stock subject to the Stock Award for the Holder's own account
and not with any present intention of selling or otherwise distributing the
Common Stock. The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need

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not be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.

          (e)       WITHHOLDING OBLIGATIONS. To the extent provided by the terms
of a Stock Award Agreement, the Holder may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Holder by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Holder as a result of the exercise or
acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.

11.       ADJUSTMENTS UPON CHANGES IN STOCK.

          (a)       CAPITALIZATION ADJUSTMENTS. If any change is made in the
Common Stock subject to the Plan, or subject to any Stock Award, without the
receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the class(es) and maximum number of securities subject
to the Plan pursuant to subsection 4(a) and the maximum number of securities
subject to award to any person pursuant to subsection 5(c), and the outstanding
Stock Awards will be appropriately adjusted in the class(es) and number of
securities and price per share of Common Stock subject to such outstanding Stock
Awards. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. The conversion of any convertible securities of
the Company shall not be treated as a transaction "without receipt of
consideration" by the Company.

          (b)       DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.

          (c)       CHANGE OF CONTROL. (i) Subject to clause (ii) below, in the
event of a Change of Control, to the extent permitted by law, any surviving
corporation or acquiring corporation may assume any Stock Awards outstanding
under the Plan or substitute similar stock awards (including awards to acquire
the same consideration paid to the stockholders in the Change of Control) for
those outstanding under the Plan. In the event any surviving corporation or
acquiring corporation does not assume such Stock Awards or substitute similar
stock awards for those outstanding under the Plan, then with respect to Stock
Awards held by Holders whose Continuous Service has not terminated, the vesting
of such Stock Awards (and, if applicable, the time during which such Stock
Awards may be exercised) shall be accelerated in full, and the Stock Awards
shall terminate if not exercised (if applicable) at or prior to such event. With

<PAGE>

respect to any other Stock Awards outstanding under the Plan, such Stock Awards
shall terminate if not exercised (if applicable) prior to such event.

          (ii) In the event of a Change of Control not approved by the Board,
each outstanding Stock Award under the Plan shall become fully vested, and the
Company's right of repurchase shall lapse with respect to shares received upon
exercise of a Stock Award prior to full vesting, notwithstanding the terms of
the Stock Award or any early exercise stock purchase agreement, immediately
prior to the consummation of such Change of Control.

          For purposes of this Plan, "Change of Control" means: (i) a sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, equal or
greater stock voting power); (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a reverse
merger in which stockholders immediately before the merger have, immediately
after the merger, greater stock voting power); or (iv) any transaction or series
of related transactions in which in excess of 50% of the Company's voting power
is transferred.

12.       AMENDMENT OF THE PLAN AND STOCK AWARDS.

          (a)       AMENDMENT OF PLAN. The Board at any time, and from time to
time, may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

          (b)       CONTEMPLATED AMENDMENTS. It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees with the maximum benefits provided or to
be provided under the provisions of the Code.

          (c)       NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award
granted before amendment of the Plan shall not be impaired by any amendment of
the Plan unless (i) the Company requests the consent of the Holder and (ii) the
Holder consents in writing.

          (d)       AMENDMENT OF STOCK AWARDS. The Board at any time, and from
time to time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Holder and (ii) the
Holder consents in writing.

13.       TERMINATION OR SUSPENSION OF THE PLAN.

          (a)       PLAN TERM. The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate on the day before
the tenth (10th) anniversary of the

<PAGE>

date the Plan is adopted by the Board. No Stock Awards may be granted under the
Plan while the Plan is suspended or after it is terminated.

          (b)       NO IMPAIRMENT OF RIGHTS. Suspension or termination of the
Plan shall not impair rights and obligations under any Stock Award granted while
the Plan is in effect except with the written consent of the Holder.

14.       EFFECTIVE DATE OF PLAN.

          The Plan shall become effective upon its adoption by the Board.

15.       CHOICE OF LAW/INTERPRETATION.

          The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules. Notwithstanding the foregoing, it is
expressly intended that approval of the Company's stockholders not be required
as a condition of the effectiveness of the Plan, and the Plan's provisions shall
be interpreted in a manner consistent with such intent for all purposes
(including without limitation, for purposes of determining whether stockholder
approval of the Plan is necessary pursuant to the NASD Manual or any successor
provisions thereto).<PAGE>

                              SUREBEAM CORPORATION

                      2000 STOCK OPTION AND INCENTIVE PLAN

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
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1.       PURPOSE..................................................................................................1

2.       DEFINITIONS..............................................................................................1

3.       ADMINISTRATION OF THE PLAN...............................................................................4

         3.1      Board...........................................................................................4

         3.2      Committee.......................................................................................5

         3.3      Awards..........................................................................................5

         3.4      No Liability....................................................................................5

4.       STOCK SUBJECT TO THE PLAN................................................................................5

5.       EFFECTIVE DATE AND TERM OF THE PLAN......................................................................6

         5.1      Effective Date..................................................................................6

         5.2      Term............................................................................................6

6.       OPTION GRANTS............................................................................................6

         6.1      Company or Subsidiary Employees; Service Providers; Other Persons...............................6

         6.2      Successive Awards...............................................................................6

         6.3      Reload Options..................................................................................6

7.       LIMITATIONS ON GRANTS....................................................................................7

         7.1      Limitation on Shares of Stock Subject to Awards and Cash Awards.................................7

         7.2      Limitations on Incentive Stock Options..........................................................7

8.       AWARD AGREEMENT..........................................................................................7

9.       OPTION PRICE.............................................................................................7

10.      VESTING, TERM AND EXERCISE OF OPTIONS....................................................................8

         10.1     Vesting and Option Period.......................................................................8

         10.2     Term............................................................................................8

         10.3     Acceleration....................................................................................8

         10.4     Termination of Employment or Other Relationship.................................................8

         10.5     Rights in the Event of Death....................................................................9

         10.6     Rights in the Event of Disability...............................................................9

         10.7     Limitations on Exercise of Option...............................................................9

         10.8     Method of Exercise..............................................................................9

         10.9     Delivery of Stock Certificates.................................................................10

                                       i.

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                                  (CONTINUED)

<CAPTION>

                                                                                                               PAGE
<S>      <C>                                                                                                   <C>
11.      STOCK APPRECIATION RIGHTS...............................................................................10

         11.1     Right to Payment...............................................................................10

         11.2     Other Terms....................................................................................11

12.      TRANSFERABILITY OF OPTIONS..............................................................................11

         12.1     Transferability of Options.....................................................................11

         12.2     Family Transfers...............................................................................11

13.      RESTRICTED STOCK........................................................................................11

         13.1     Grant of Restricted Stock or Restricted Stock Units............................................11

         13.2     Restrictions...................................................................................12

         13.3     Restricted Stock Certificates..................................................................12

         13.4     Rights of Holders of Restricted Stock..........................................................12

         13.5     Rights of Holders of Restricted Stock Units....................................................12

         13.6     Termination of Employment or Other Relationship................................................13

         13.7     Rights in the Event of Death...................................................................13

         13.8     Rights in the Event of Disability..............................................................13

         13.9     Delivery of Stock and Payment Therefor.........................................................13

14.      DEFERRED STOCK AWARDS...................................................................................14

         14.1     Nature of Deferred Stock Awards................................................................14

         14.2     Election to Receive Deferred Stock Awards in Lieu of Compensation..............................14

         14.3     Rights as a Stockholder........................................................................14

         14.4     Restrictions...................................................................................14

         14.5     Termination....................................................................................14

15.      UNRESTRICTED STOCK AWARDS...............................................................................15

         15.1     Grant or Sale of Unrestricted Stock............................................................15

16.      PERFORMANCE STOCK AWARDS................................................................................15

         16.1     Nature of Performance Stock Awards.............................................................15

         16.2     Rights as a Stockholder........................................................................15

         16.3     Termination....................................................................................15

         16.4     Acceleration, Waiver, Etc......................................................................15

17.      DIVIDEND EQUIVALENT RIGHTS..............................................................................16

                                      ii.

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                                TABLE OF CONTENTS
                                  (CONTINUED)

<CAPTION>
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<S>      <C>                                                                                                   <C>
         17.1     Dividend Equivalent Rights.....................................................................16

         17.2     Interest Equivalents...........................................................................16

         17.3     Termination....................................................................................16

18.      CERTAIN PROVISIONS APPLICABLE TO AWARDS.................................................................16

         18.1     Stand-Alone, Additional, Tandem, and Substitute Awards.........................................16

         18.2     Term of Awards.................................................................................17

         18.3     Form and Timing of Payment Under Awards; Deferrals.............................................17

         18.4     Performance and Annual Incentive Awards........................................................17

                  18.4.1   Performance Conditions................................................................17

                  18.4.2   Performance Awards Granted to Designated Covered Employees............................17

                  18.4.3   Annual Incentive Awards Granted to Designated Covered Employees.......................19

                  18.4.4   Written Determinations................................................................20

                  18.4.5   Status of Section 18.4.3 and Section 18.4.2 Awards Under Code Section 162(m)..........20

19.      PARACHUTE LIMITATIONS...................................................................................20

20.      REQUIREMENTS OF LAW.....................................................................................21

         20.1     General........................................................................................21

         20.2     Rule 16b-3.....................................................................................22

         20.3     Limitation Following a Hardship Distribution...................................................22

21.      AMENDMENT AND TERMINATION OF THE PLAN...................................................................22

22.      EFFECT OF CHANGES IN CAPITALIZATION.....................................................................22

         22.1     Changes in Stock...............................................................................22

         22.2     Reorganization in Which the Company Is the Surviving Entity and in Which No Change in
                  Control Occurs.................................................................................23

         22.3     Reorganization, Sale of Assets or Sale of Stock Which Involves a Change in Control.............23

         22.4     Adjustments....................................................................................24

         22.5     No Limitations on Company......................................................................24

23.      POOLING.................................................................................................24

24.      DISCLAIMER OF RIGHTS....................................................................................24

                                      iii.

<PAGE>
                               TABLE OF CONTENTS
                                 (CONTINUED)

<CAPTION>
                                                                                                               PAGE
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25.      NONEXCLUSIVITY OF THE PLAN..............................................................................25

26.      WITHHOLDING TAXES.......................................................................................25

27.      CAPTIONS................................................................................................25

28.      OTHER PROVISIONS........................................................................................25

29.      CALIFORNIA PROVISIONS...................................................................................26

         29.1     Definitions....................................................................................26

         29.2     Fair Market Value..............................................................................27

         29.3     Share Reserve Limitation.......................................................................27

         29.4     Ten Percent Shareholders.......................................................................28

         29.5     Nonstatutory Stock Options.....................................................................28

                           (a)      Exercise Price...............................................................28

                           (b)      Transferability..............................................................28

         29.6     Minimum Vesting Prior to the Listing Date......................................................28

         29.7     Awards Other Than Options......................................................................29

                           (a)      Purchase Price...............................................................29

                           (b)      Transferability..............................................................29

         29.8     Information Obligation.........................................................................29

         29.9     Repurchase Limitation..........................................................................29

                           (a)      Fair Market Value............................................................29

                           (b)      Original Purchase Price......................................................29

         29.10    Voting Rights..................................................................................30

         29.11    Plan Termination Date..........................................................................30

30.      NUMBER AND GENDER.......................................................................................30

31.      SEVERABILITY............................................................................................30

32.      GOVERNING LAW...........................................................................................30
</TABLE>

                                      iv.
<PAGE>

                              SUREBEAM CORPORATION

                      2000 STOCK OPTION AND INCENTIVE PLAN

         SUREBEAM CORPORATION, a Delaware corporation (the "COMPANY"), sets
forth herein the terms of the Company's 2000 Stock Option and Incentive Plan
(the "PLAN") as follows:

1.       PURPOSE

         The purpose of the Plan is to enhance the Company's ability to attract,
retain, and compensate highly qualified officers, key employees, and other
persons, and to motivate such officers, key employees, and other persons to
serve the Company and its affiliates (as defined herein) and to expend maximum
effort to improve the business results and earnings of the Company, by providing
to such officers, key employees and other persons an opportunity to acquire or
increase a direct proprietary interest in the operations and future success of
the Company and with other financial incentives. To this end, the Plan provides
for the grant of stock options, stock appreciation rights, restricted stock,
restricted stock units, deferred stock awards, unrestricted stock awards,
performance stock awards, dividend equivalent rights, performance awards and
annual incentive awards in accordance with the terms hereof. Stock options
granted under the Plan may be non-qualified stock options or incentive stock
options, as provided herein.

2.       DEFINITIONS

         For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:

         2.1 "AFFILIATE" of, or person "AFFILIATED" with, a person means any
company or other trade or business that controls, is controlled by or is under
common control with such person within the meaning of Rule 405 of Regulation C
under the Securities Act.

         2.2 "ANNUAL INCENTIVE AWARD" means a conditional right granted to a
Grantee under Section 18.4.3 hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.

         2.3 "AWARD" means a grant of an Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Deferred Stock, Unrestricted Stock,
Performance Stock, Dividend Equivalent Rights, Performance or Annual Incentive
Awards under the Plan.

         2.4 "AWARD AGREEMENT" means the stock option agreement, stock
appreciation rights agreement, restricted stock agreement, restricted stock unit
agreement, deferred stock award agreement, unrestricted stock award agreement,
performance stock award agreement, dividend equivalent rights agreement,
performance award agreement, annual incentive award agreement or other written
agreement between the Company and a Grantee that evidences and sets out the
terms and conditions of an Award.

         2.5 "BENEFIT ARRANGEMENT" shall have the meaning set forth in Section
19 hereof.

<PAGE>

         2.6 "BOARD" means the Board of Directors of the Company.

         2.7 "CHANGE IN CONTROL" means a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, a sale of substantially all of the assets
of the Company to another entity, or any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
entity) approved by the Board that results in any person or entity (or person or
entities acting as a group or otherwise in concert), owning fifty percent (50%)
or more of the combined voting power of all classes of securities of the
Company).

         2.8 "CODE" means the Internal Revenue Code of 1986, as now in effect or
as hereafter amended.

         2.9 "COMMITTEE" means a committee of, and designated from time to time
by resolution of, the Board, which shall consist of no fewer than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any affiliate of the Company.

         2.10 "COMPANY" means SureBeam Corporation.

         2.11 "COVERED EMPLOYEE" means a Grantee who is a Covered Employee
within the meaning of Section 162(m)(3) of the Code.

         2.12 "DEFERRED STOCK" means a right, granted to a Grantee under Section
14 hereof, to receive Stock, cash or a combination thereof at the end of a
specified deferral period.

         2.13 "DIVIDEND EQUIVALENT" means a right, granted to a Grantee under
Section 17 hereof, to receive cash, Stock, other Awards or other property equal
in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.

         2.14 "EFFECTIVE DATE" means August 4, 2000, the date on which the Plan
was adopted by the Board.

         2.15 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended.

         2.16 "FAMILY MEMBER" means a person who is a spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, of the Grantee, any person
sharing the Grantee's household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the beneficial interest, a
foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more
than fifty percent of the voting interests.

         2.17 "FAIR MARKET VALUE" means the value of a share of Stock,
determined as follows: if on the Grant Date or other determination date the
Stock is listed on an established national or regional stock exchange, is
admitted to quotation on The Nasdaq Stock Market, Inc., or is publicly traded on
an established securities market, the Fair Market Value of a share of Stock

                                       2.

<PAGE>

shall be the closing price of the Stock on such exchange or in such market (the
highest such closing price if there is more than one such exchange or market) on
the Grant Date or such other determination date (or if there is no such reported
closing price, the Fair Market Value shall be the mean between the highest bid
and lowest asked prices or between the high and low sale prices on such trading
day) or, if no sale of Stock is reported for such trading day, on the next
preceding day on which any sale shall have been reported. If the Stock is not
listed on such an exchange, quoted on such system or traded on such a market,
Fair Market Value shall be the value of the Stock as determined by the Board in
good faith.

         2.18 "GRANT DATE" means, as determined by the Board or authorized
Committee, (i) the date as of which the Board or such Committee approves an
Award, (ii) the date on which the recipient of such Award first became an
employee of or otherwise entered into a relationship with the Company or an
affiliate of the Company or (iii) such other date as may be specified by the
Board or such Committee.

         2.19 "GRANTEE" means a person who receives or holds a grant of an
Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit,
Deferred Stock, Unrestricted Stock, Performance Stock, Performance or Annual
Incentive Awards, or Dividend Equivalent Rights under the Plan.

         2.20 "INCENTIVE STOCK OPTION" means an "incentive stock option" within
the meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.

         2.21 "OPTION" means an option to purchase one or more shares of Stock
pursuant to the Plan.

         2.22 "OPTION PERIOD" means the period during which Options may be
exercised as set forth in Section 10 hereof.

         2.23 "OPTION PRICE" means the purchase price for each share of Stock
subject to an Option.

         2.24 "OTHER AGREEMENT" shall have the meaning set forth in Section 19
hereof.

         2.25 "OUTSIDE DIRECTOR" means a member of the Board who is not an
officer or employee of the Company.

         2.26 "PERFORMANCE STOCK AWARD" means Awards granted pursuant to Section
16.

         2.27 "PLAN" means this SureBeam Corporation 2000 Stock Option and
Incentive Plan.

         2.28 "REPORTING PERSON" means a person who is required to file reports
under Section 16(a) of the Exchange Act.

         2.29 "RESTRICTED PERIOD" means the period during which Restricted Stock
or Restricted Stock Units are subject to restrictions or conditions pursuant to
Section 13.2 hereof.

                                       3.

<PAGE>

         2.30 "RESTRICTED STOCK" means shares of Stock, awarded to a Grantee
pursuant to Section 13 hereof, that are subject to restrictions and to a risk of
forfeiture.

         2.31 "RESTRICTED STOCK UNIT" means a unit awarded to a Grantee pursuant
to Section 13 hereof, which represents a conditional right to receive a share of
Stock in the future, and which is subject to restrictions and to a risk of
forfeiture.

         2.32 "SECURITIES ACT" means the Securities Act of 1933, as now in
effect or as hereafter amended.

         2.33 "SERVICE PROVIDER" means a consultant or adviser to the Company, a
manager of the Company's properties or affairs, or other similar service
provider or affiliate of the Company, and employees of any of the foregoing, as
such persons may be designated from time to time by the Board pursuant to
Section 6 hereof.

         2.34 "STOCK" means the Class A common stock, par value $.001 per share,
of the Company.

         2.35 "STOCK APPRECIATION RIGHTS" or "SAR" means a right granted to a
Grantee under Section 11 hereof.

         2.36 "SUBSIDIARY" means any "subsidiary corporation" of the Company
within the meaning of Section 424(f) of the Code.

         2.37 "TERMINATION DATE" means the date upon which an Option shall
terminate or expire, as set forth in Section 10.2 hereof.

         2.38 "UNRESTRICTED STOCK AWARD" means any Award granted pursuant to
Section 15.

3.       ADMINISTRATION OF THE PLAN

         3.1      BOARD.

         The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's certificate of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's certificate of incorporation and
by-laws and applicable law. The interpretation and construction by the Board of
any provision of the Plan, any Award or any Award Agreement shall be final and
conclusive. To the extent permitted by law, the Board may delegate its authority
under the Plan to a member of the Board of Directors or to an executive officer
of the Company who is a member of the Board of Directors.

                                       4.

<PAGE>

         3.2      COMMITTEE.

         The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 above and in other applicable provisions, as the Board
shall determine, consistent with the certificate of incorporation and by-laws of
the Company and applicable law. In the event that the Plan, any Award or any
Award Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive. To the
extent permitted by law, the Committee may delegate its authority under the Plan
to a member of the Board of Directors or an executive officer of the Company who
is a member of the Board of Directors.

         3.3      AWARDS.

         Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority (i) to designate Grantees, (ii) to determine the
type or types of Awards to be made to a Grantee, (iii) to determine the number
of shares of Stock to be subject to an Award, (iv) to establish the terms and
conditions of each Award (including, but not limited to, the exercise price of
any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer, or
forfeiture of an Award or the shares of Stock subject thereto, and any terms or
conditions that may be necessary to qualify Options as Incentive Stock Options),
(v) to prescribe the form of each Award Agreement evidencing an Award, and (vi)
to amend, modify, or supplement the terms of any outstanding Award. Such
authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Awards to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy, or
custom. As a condition to any subsequent Award, the Board shall have the right,
at its discretion, to require Grantees to return to the Company Awards
previously made under the Plan. Subject to the terms and conditions of the Plan,
any such new Award shall be upon such terms and conditions as are specified by
the Board at the time the new Award is made.

         3.4      NO LIABILITY.

         No member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any Award
or Award Agreement.

4.       STOCK SUBJECT TO THE PLAN

         Subject to adjustment as provided in Section 22 hereof, the number of
shares of Stock available for issuance under the Plan shall be two million one
hundred seventy thousand eight hundred (2,170,800), no more than five hundred
thousand (500,000) of which may be issued pursuant to awards of other than
Options. Stock issued or to be issued under the Plan shall be authorized but
unissued shares. If any shares covered by an Award are not purchased or are
forfeited, or if an Award otherwise terminates without delivery of any Stock
subject thereto, then

                                       5.

<PAGE>

the number of shares of Stock counted against the aggregate number of shares
available under the Plan with respect to such Award shall, to the extent of
any such forfeiture or termination, again be available for making Awards
under the Plan.

5.       EFFECTIVE DATE AND TERM OF THE PLAN

         5.1      EFFECTIVE DATE.

         The Plan shall be effective as of the Effective Date, subject to
approval of the Plan within one year of the Effective Date, by a majority of the
votes cast on the proposal at a meeting of shareholders, provided that the total
votes cast represent a majority of all shares entitled to vote. Upon approval of
the Plan by the shareholders of the Company as set forth above, all Awards made
under the Plan on or after the Effective Date shall be fully effective as if the
shareholders of the Company had approved the Plan on the Effective Date. If the
shareholders fail to approve the Plan within one year after the Effective Date,
any Awards made hereunder shall be null and void and of no effect.

         5.2      TERM.

         The Plan has no termination date; however, no Incentive Stock Option
may be granted under the Plan on or after the tenth anniversary of the Effective
Date.

6.       OPTION GRANTS

         6.1      COMPANY OR SUBSIDIARY EMPLOYEES; SERVICE PROVIDERS; OTHER
                  PERSONS.

         Subject to Section 7, Awards may be made under the Plan to: (i) any
employee of, or a Service Provider to, the Company or of any affiliate,
including any such employee who is an officer or director of the Company or of
any affiliate, as the Board shall determine and designate from time to time, and
(ii) any other individual whose participation in the Plan is determined to be in
the best interests of the Company by the Board.

         6.2      SUCCESSIVE AWARDS.

         An eligible person may receive more than one Award, subject to such
restrictions as are provided herein.

         6.3      RELOAD OPTIONS.

         At the discretion of the Board and subject to such restrictions, terms
and conditions as the Board may establish, Options granted under the Plan may
include a "reload" feature pursuant to which a Grantee exercising an Option by
the delivery of a number of shares of Stock in accordance with Section 10.8
hereof would automatically be granted an additional Option (with an exercise
price equal to the Fair Market Value of the Stock on the date the additional
Option is granted and with such other terms as the Board may provide) to
purchase that number of shares of Stock equal to the number delivered to
exercise the original Option with an Option term equal to the remainder of the
original Option term unless the Board otherwise determines in the Option Award
Agreement for the original grant.

                                       6.

<PAGE>

7.       LIMITATIONS ON GRANTS

         7.1      LIMITATION ON SHARES OF STOCK SUBJECT TO AWARDS AND CASH
                  AWARDS.

         During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, the maximum number of shares of
Stock subject to Options that can be awarded under the Plan to any person
eligible for an Award under Section 6 hereof is one million (1,000,000) per
year. During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, the maximum number of shares that can be
awarded under the Plan, other than pursuant to an Option to any person eligible
for an Award under Section 6 hereof is five hundred thousand (500,000) per year.
The maximum amount that may be earned as an Annual Incentive Award or other cash
Award in any fiscal year by any one Grantee shall be $4,000,000 and the maximum
amount that may be earned as a Performance Award or other cash Award in respect
of a performance period by any one Grantee shall be $4,000,000.

         7.2      LIMITATIONS ON INCENTIVE STOCK OPTIONS.

         An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee's employer and its affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

8.       AWARD AGREEMENT

         Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, to be executed by the Company and by the Grantee, in such form or
forms as the Board shall from time to time determine. Award Agreements granted
from time to time or at the same time need not contain similar provisions but
shall be consistent with the terms of the Plan. Each Award Agreement evidencing
an Award of Options shall specify whether such Options are intended to be
non-qualified stock options or Incentive Stock Options, and in the absence of
such specification such options shall be deemed non-qualified stock options.

9.       OPTION PRICE

         The Option Price of each Option shall be fixed by the Board and stated
in the Award Agreement evidencing such Option. The Option Price shall be the
aggregate Fair Market Value on the Grant Date of the shares of Stock subject to
the Option; PROVIDED, HOWEVER, that in the event that a Grantee would otherwise
be ineligible to receive an Incentive Stock Option by reason of the provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent of the Company's outstanding Stock), the Option Price of an Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
be not less than the greater of the par value of a share of Stock or 110 percent
of the Fair Market Value of a share of

                                       7.

<PAGE>

Stock on the Grant Date. In no case shall the Option Price of any Option be
less than the par value of a share of Stock.

10.      VESTING, TERM AND EXERCISE OF OPTIONS

         10.1     VESTING AND OPTION PERIOD.

         Subject to Sections 10.2 and 22.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Award Agreement. For purposes of
this Section 10.1, fractional numbers of shares of Stock subject to an Option
shall be rounded down to the next nearest whole number. The period during which
any Option shall be exercisable shall constitute the "Option Period" with
respect to such Option.

         10.2     TERM.

         Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option (the
"TERMINATION DATE"); PROVIDED, HOWEVER, that in the event that the Grantee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership
of more than ten percent of the outstanding Stock), an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its Grant Date.

         10.3     ACCELERATION.

         Any limitation on the exercise of an Option contained in any Award
Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option shall be exercisable
in whole or in part prior to the date the Plan is approved by the shareholders
of the Company as provided in Section 5.1 hereof.

         10.4     TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.

         Upon the termination of a Grantee's employment or other relationship
with the Company or any affiliate other than by reason of death or "permanent
and total disability" (within the meaning of Section 22(e)(3) of the Code), any
Option or portion thereof held by such Grantee that has not vested in accordance
with the provisions of Section 10.1 hereof shall terminate immediately, and any
Option or portion thereof that has vested in accordance with the provisions of
Section 10.1 hereof but has not been exercised shall terminate at the close of
business on the 90th day following the Grantee's termination of employment or
other relationship (or, if such 90th day is a Saturday, Sunday or holiday, at
the close of business on the next preceding day that is not a Saturday, Sunday
or holiday), unless the Board, in its discretion, extends the period during
which the Option may be exercised (which period may not be extended beyond the
original term of the Option). Upon termination of an Option or portion thereof,
the Grantee shall

                                       8.

<PAGE>

have no further right to purchase shares of Stock pursuant to such Option or
portion thereof. Whether a termination of employment or other relationship
shall have occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final and conclusive. For purposes of the
Plan, a termination of employment, service or other relationship shall not be
deemed to occur if the Grantee is immediately thereafter a director of the
Company or an affiliate.

         10.5     RIGHTS IN THE EVENT OF DEATH.

         Unless otherwise provided by the Board in the applicable Award
Agreement, if a Grantee dies while employed by or providing services to the
Company, all Options granted to such Grantee that have not vested as of the date
of such termination shall terminate and the executors or Boards or legatees or
distributees of such Grantee's estate shall have the right, at any time within
one year after the date of such Grantee's death (or such longer period as the
Board, in its discretion, may determine prior to the expiration of such one-year
period) and prior to termination of the Option pursuant to Section 10.2 above,
to exercise any Option that was vested as of the date of such Grantee's death.

         10.6     RIGHTS IN THE EVENT OF DISABILITY.

         Unless otherwise stated in the applicable Award Agreement, if a Grantee
terminates employment or other relationship with the Company by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Grantee, such Grantee's Options shall terminate to the extent the
Options are not vested, and shall be exercisable to the extent that they were
vested as of the date of the Optionee's termination of employment or other
relationship, for a period of one year after such termination of employment or
other relationship (or such longer period as the Board, in its discretion, may
determine prior to the expiration of such one-year period), subject to earlier
termination of the Option as provided in Section 10.2 above. Whether a
termination of employment or service is to be considered by reason of "permanent
and total disability" for purposes of the Plan shall be determined by the Board,
which determination shall be final and conclusive.

         10.7     LIMITATIONS ON EXERCISE OF OPTION.

         Notwithstanding any other provision of the Plan, in no event may any
Option be exercised, in whole or in part, prior to the date the Plan is approved
by the shareholders of the Company as provided herein, or after ten years
following the date upon which the Option is granted, or after the occurrence of
an event referred to in Section 22 hereof which results in termination of the
Option.

         10.8     METHOD OF EXERCISE.

         An Option that is exercisable may be exercised by the Grantee's
delivery to the Company of written notice of exercise on any business day, at
the Company's principal office, addressed to the attention of the Board. Such
notice shall specify the number of shares of Stock with respect to which the
Option is being exercised and shall be accompanied by payment in full of the
Option Price of the shares for which the Option is being exercised. The minimum
number of shares of Stock with respect to which an Option may be exercised, in
whole or in part, at any

                                       9.

<PAGE>

time shall be the lesser of (i) 100 shares or such lesser number set forth in
the applicable Award Agreement and (ii) the maximum number of shares
available for purchase under the Option at the time of exercise. Payment of
the Option Price for the shares purchased pursuant to the exercise of an
Option shall be made (i) in cash or in cash equivalents acceptable to the
Company; (ii) through the tender to the Company of shares of Stock, which
shares, if acquired from the Company, shall have been held for at least six
months and which shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their Fair Market Value on
the date of exercise; or (iii) by a combination of the methods described in
(i) and (ii). Unless the Board provides otherwise in the Award Agreement,
payment in full of the Option Price need not accompany the written notice of
exercise provided that the notice of exercise directs that the certificate or
certificates for the shares of Stock for which the Option is exercised be
delivered to a licensed broker acceptable to the Company as the agent for the
individual exercising the Option and, at the time such certificate or
certificates are delivered, the broker tenders to the Company cash (or cash
equivalents acceptable to the Company) equal to the Option Price for the
shares of Stock purchased pursuant to the exercise of the Option plus the
amount (if any) of federal and/or other taxes which the Company may in its
judgment, be required to withhold with respect to the exercise of the Option.
An attempt to exercise any Option granted hereunder other than as set forth
above shall be invalid and of no force and effect. Unless otherwise stated in
the applicable Award Agreement, an individual holding or exercising an Option
shall have none of the rights of a shareholder (for example, the right to
receive cash or dividend payments or distributions attributable to the
subject shares of Stock or to direct the voting of the subject shares of
Stock ) until the shares of Stock covered thereby are fully paid and issued
to him. Except as provided in Section 22 hereof, no adjustment shall be made
for dividends, distributions or other rights for which the record date is
prior to the date of such issuance.

         10.9     DELIVERY OF STOCK CERTIFICATES.

         Promptly after the exercise of an Option by a Grantee and the payment
in full of the Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing his or her ownership of the shares
of Stock subject to the Option.

11.      STOCK APPRECIATION RIGHTS

         The Board each is authorized to grant SARs to Grantees on the following
terms and conditions:

         11.1     RIGHT TO PAYMENT.

         A SAR shall confer on the Grantee to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market Value of one
share of Stock on the date of exercise over (B) the grant price of the SAR as
determined by the Board. The grant price of an SAR shall not be less than the
Fair Market Value of a share of Stock on the date of grant except as provided in
Section 18.1.

                                       10.

<PAGE>

         11.2     OTHER TERMS.

         The Board shall determine at the date of grant or thereafter, the time
or times at which and the circumstances under which a SAR may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs shall cease to be
or become exercisable following termination of employment or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be delivered or
deemed to be delivered to Grantees, whether or not a SAR shall be in tandem or
in combination with any other Award, and any other terms and conditions of any
SAR. SARs may be either freestanding or in tandem with other Awards.

12.      TRANSFERABILITY OF OPTIONS

         12.1     TRANSFERABILITY OF OPTIONS.

         Except as provided in Section 12.2, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in Section 12.2, no Option shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution.

         12.2     FAMILY TRANSFERS.

         If authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of an Option which is not an Incentive
Stock Option to any Family Member. For the purpose of this Section 12.2, a "not
for value" transfer is a transfer which is (i) a gift, (ii) a transfer under a
domestic relations order in settlement of marital property rights; or (iii) a
transfer to an entity in which more than fifty percent of the voting interests
are owned by Family Members (or the Grantee) in exchange for an interest in that
entity. Following a transfer under this Section 12.2, any such Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of transferred Options are
prohibited except to Family Members of the original Grantee in accordance with
this Section 12.2 or by will or the laws of descent and distribution. The events
of termination of employment or other relationship of Section 10.4 hereof shall
continue to be applied with respect to the original Grantee, following which the
Option shall be exercisable by the transferee only to the extent, and for the
periods specified in Sections 10.4, 10.5, or 10.6.

13.      RESTRICTED STOCK

         13.1     GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS.

         The Board may from time to time grant Restricted Stock or Restricted
Stock Units to persons eligible to receive Awards under Section 6 hereof,
subject to such restrictions, conditions and other terms as the Board may
determine.

                                      11.
<PAGE>

         13.2     RESTRICTIONS.

         At the time a grant of Restricted Stock or Restricted Stock Units is
made, the Board shall establish a period of time (the "RESTRICTED PERIOD")
applicable to such Restricted Stock or Restricted Stock Units. Each Award of
Restricted Stock or Restricted Stock Units may be subject to a different
Restricted Period. The Board may, in its sole discretion, at the time a grant of
Restricted Stock or Restricted Stock Units is made, prescribe restrictions in
addition to or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which may be
applicable to all or any portion of the Restricted Stock or Restricted Stock
Units in accordance with Section 18.4.1 and 18.4.2. Neither Restricted Stock nor
Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Board with respect to
such Restricted Stock or Restricted Stock Units.

         13.3     RESTRICTED STOCK CERTIFICATES.

         The Company shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates representing the total
number of shares of Restricted Stock granted to the Grantee, as soon as
reasonably practicable after the Grant Date. The Board may provide in an
Award Agreement that either (i) the Secretary of the Company shall hold such
certificates for the Grantee's benefit until such time as the Restricted
Stock is forfeited to the Company or the restrictions lapse, or (ii) such
certificates shall be delivered to the Grantee, PROVIDED, HOWEVER, that such
certificates shall bear a legend or legends that complies with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.

         13.4     RIGHTS OF HOLDERS OF RESTRICTED STOCK.

         Unless the Board otherwise provides in an Award Agreement, holders
of Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board
may provide that any dividends paid on Restricted Stock must be reinvested in
shares of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock. All
distributions, if any, received by a Grantee with respect to Restricted Stock
as a result of any stock split, stock dividend, combination of shares, or
other similar transaction shall be subject to the restrictions applicable to
the original Grant.

         13.5     RIGHTS OF HOLDERS OF RESTRICTED STOCK UNITS.

         Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company. The
Board may provide in an Award Agreement evidencing a grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding Stock,
a cash payment for each Restricted Stock Unit held equal to the per-share
dividend paid on the Stock. Such Award Agreement may also provide that such cash
payment

                                      12.
<PAGE>

will be deemed reinvested in additional Restricted Stock Units at a price per
unit equal to the Fair Market Value of a share of Stock on the date that such
dividend is paid.

         13.6     TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.

         Upon the termination of a Grantee's employment or other relationship
with the Company other than by reason of death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code), any Restricted
Stock or Restricted Stock Units held by such Grantee that has not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited, unless the Board, in its
discretion, determines otherwise. Upon forfeiture of Restricted Stock or
Restricted Stock Units, the Grantee shall have no further rights with respect to
such Grant, including but not limited to any right to vote Restricted Stock or
any right to receive dividends with respect to shares of Restricted Stock or
Restricted Stock Units. Whether a leave of absence or leave on military or
government service shall constitute a termination of employment or other
relationship for purposes of the Plan shall be determined by the Board, which
determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to
occur if the Grantee is immediately thereafter a director of the Company.

         13.7     RIGHTS IN THE EVENT OF DEATH.

         Unless otherwise provided in the Award Agreement, if a Grantee dies
while employed by the Company, all Restricted Stock or Restricted Stock Units
granted to such Grantee shall fully vest on the date of death, and the shares of
Stock represented thereby shall be deliverable in accordance with the terms of
the Plan to the executors, administrators, legatees or distributees of the
Grantee's estate.

         13.8     RIGHTS IN THE EVENT OF DISABILITY.

         Unless otherwise provided in the Award Agreement, if a Grantee
terminates employment or other relationship with the Company by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Grantee, such Grantee's Restricted Stock or Restricted Stock Units
shall continue to vest in accordance with the applicable Award Agreement for a
period of one year after such termination of employment or service (or such
longer period as the Board, in its discretion, may determine prior to the
expiration of such one-year period), subject to the earlier forfeiture of such
Restricted Stock or Restricted Stock Units in accordance with the terms of the
applicable Award Agreement. Whether a termination of employment or service is to
be considered by reason of "permanent and total disability" for purposes of the
Plan shall be determined by the Board, which determination shall be final and
conclusive.

         13.9     DELIVERY OF STOCK AND PAYMENT THEREFOR.

         Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Restricted Stock Units shall lapse,
and, unless otherwise provided in the Award Agreement, upon payment by the
Grantee to the Company, in cash or by check, of the aggregate par value of the
shares of Stock represented by such Restricted Stock or Restricted Stock Units
(or such other

                                      13.
<PAGE>

higher purchase price determined by the Board), a stock certificate for such
shares shall be delivered, free of all such restrictions, to the Grantee or
the Grantee's beneficiary or estate, as the case may be.

14.      DEFERRED STOCK AWARDS

         14.1     NATURE OF DEFERRED STOCK AWARDS.

         A Deferred Stock Award is an Award of phantom stock units to a Grantee,
subject to restrictions and conditions as the Board may determine at the time of
grant. Conditions may be based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Deferred Stock Award is contingent on the Grantee
executing the Deferred Stock Award Agreement. The terms and conditions of each
such agreement shall be determined by the Board, and such terms and conditions
may differ among individual Awards and Grantees. At the end of the deferral
period, the Deferred Stock Award, to the extent vested, shall be paid to the
Grantee in the form of shares of Stock.

         14.2     ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN LIEU OF
COMPENSATION.

         The Board may, in its sole discretion, permit a Grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award
otherwise due to such Grantee in the form of a Deferred Stock Award. Any such
election shall be made in writing and shall be delivered to the Company no
later than the date specified by the Board and in accordance with rules and
procedures established by the Board. The Board shall have the sole right to
determine whether and under what circumstances to permit such elections and
to impose such limitations and other terms and conditions thereon as the
Board deems appropriate.

         14.3     RIGHTS AS A STOCKHOLDER.

         During the deferral period, a Grantee shall have no rights as a
Stockholder; PROVIDED, HOWEVER, that the Grantee may be credited with Dividend
Equivalent Rights with respect to the phantom Stock units underlying his
Deferred Stock Award, subject to such terms and conditions as the Board may
determine.

         14.4     RESTRICTIONS.

         A Deferred Stock Award may not be sold, assigned, transferred, pledged
or otherwise encumbered or disposed of during the deferral period.

         14.5     TERMINATION.

         Except as may otherwise be provided by the Board either in the Award
Agreement or, in writing after the Award Agreement is issued, a Grantee's right
in all Deferred Stock Awards that have not vested shall automatically terminate
upon the Grantee's termination of employment or other relationship with the
Company for any reason.

                                      14.
<PAGE>

15.      UNRESTRICTED STOCK AWARDS

         15.1     GRANT OR SALE OF UNRESTRICTED STOCK.

         The Board may, in its sole discretion, grant (or sell at par value or
such other higher purchase price determined by the Board) an Unrestricted Stock
Award to any Grantee pursuant to which such Grantee may receive shares of Stock
free of any restrictions ("UNRESTRICTED STOCK") under the Plan. Unrestricted
Stock Awards may be granted or sold as described in the preceding sentence in
respect of past services or other valid consideration, or in lieu of any cash
compensation due to such Grantee.

16.      PERFORMANCE STOCK AWARDS

         16.1     NATURE OF PERFORMANCE STOCK AWARDS.

         A Performance Stock Award is an Award entitling the recipient to
acquire shares of Stock upon the attainment of specified performance goals. The
Board may make Performance Stock Awards independent of or in connection with the
granting of any other Award under the Plan. The Board in its sole discretion
shall determine whether and to whom Performance Stock Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Stock; PROVIDED, HOWEVER, that the Board
may rely on the performance goals and other standards applicable to other
performance unit plans of the Company in setting the standards for Performance
Stock Awards under the Plan.

         16.2     RIGHTS AS A STOCKHOLDER.

         A Grantee receiving a Performance Stock Award shall have the rights of
a Stockholder only as to shares actually received by the Grantee under the Plan
and not with respect to shares subject to the Award but not actually received by
the Grantee. A Grantee shall be entitled to receive a Stock certificate
evidencing the acquisition of Stock under a Performance Stock Award only upon
satisfaction of all conditions specified in the written instrument evidencing
the Performance Stock Award (or in a performance plan adopted by the Board).

         16.3     TERMINATION.

         Except as may otherwise be provided by the Board either in the Award
Agreement in writing after the Award Agreement is issued, a Grantee's rights in
all Performance Stock Awards shall automatically terminate upon the Grantee's
termination of employment or other relationship with the Company and its
affiliates for any reason.

         16.4     ACCELERATION, WAIVER, ETC.

         At any time prior to the Grantee's termination of employment (or other
business relationship) by the Company and its affiliates, the Board may in its
sole discretion accelerate, waive or amend any or all of the goals, restrictions
or conditions imposed under any Performance Stock Award.

                                      15.
<PAGE>

17.      DIVIDEND EQUIVALENT RIGHTS

         17.1     DIVIDEND EQUIVALENT RIGHTS.

         A Dividend Equivalent Right is an Award entitling the recipient to
receive credits based on cash distributions that would have been paid on the
shares of Stock specified in the Dividend Equivalent Right (or other award to
which it relates) if such shares had been issued to and held by the recipient. A
Dividend Equivalent Right may be granted hereunder to any Grantee as a component
of another Award or as a freestanding award. The terms and conditions of
Dividend Equivalent Rights shall be specified in the grant. Dividend Equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Stock, which may
thereafter accrue additional equivalents. Any such reinvestment shall be at Fair
Market Value on the date of reinvestment. Dividend Equivalent Rights may be
settled in cash or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the Board. A Dividend
Equivalent Right granted as a component of another Award may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.

         17.2     INTEREST EQUIVALENTS.

         Any Award under this Plan that is settled in whole or in part in cash
on a deferred basis may provide in the grant for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
by the grant.

         17.3     TERMINATION.

         Except as may otherwise be provided by the Board either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee's rights
in all Dividend Equivalent Rights or interest equivalents shall automatically
terminate upon the Grantee's termination of employment or other relationship
with the Company and its affiliates for any reason.

18.      CERTAIN PROVISIONS APPLICABLE TO AWARDS

         18.1     STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.

         Awards granted under the Plan may, in the discretion of the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any affiliate, or any business entity to be acquired by the Company or
a affiliate, or any other right of a Grantee to receive payment from the Company
or any affiliate. Such additional, tandem, and substitute or exchange Awards may
be granted at any time. If an Award is granted in substitution or exchange for
another Award, the Board shall require the surrender of such other Award in
consideration for the grant of the new Award. In addition, Awards may be granted
in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any affiliate, in which the value of

                                      16.
<PAGE>

Stock subject to the Award is equivalent in value to the cash compensation
(for example, Deferred Stock or Restricted Stock), or in which the exercise
price, grant price or purchase price of the Award in the nature of a right
that may be exercised is equal to the Fair Market Value of the underlying
Stock minus the value of the cash compensation surrendered (for example,
Options granted with an exercise price "discounted" by the amount of the cash
compensation surrendered).

         18.2     TERM OF AWARDS.

         The term of each Award shall be for such period as may be determined by
the Board; provided that in no event shall the term of any Option or SAR exceed
a period of ten years (or such shorter term as may be required in respect of an
ISO under Section 422 of the Code).

         18.3     FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS.

         Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or an affiliate upon the exercise of an
Option or other Award or settlement of an Award may be made in such forms as the
Board shall determine, including, without limitation, cash, Stock, other Awards
or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Board or upon occurrence of one or more specified
events. Installment or deferred payments may be required by the Board or
permitted at the election of the Grantee on terms and conditions established by
the Board. Payments may include, without limitation, provisions for the payment
or crediting of a reasonable interest rate on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.

         18.4     PERFORMANCE AND ANNUAL INCENTIVE AWARDS.

                  18.4.1   PERFORMANCE CONDITIONS.

         The right of a Grantee to exercise or receive a grant or settlement of
any Award, and the timing thereof, may be subject to such performance conditions
as may be specified by the Board. The Board may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 18.4.2 and 18.4.3 hereof in the case of a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m). If and to
the extent required under Code Section 162(m), any power or authority relating
to a Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.

                  18.4.2   PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES.

         If and to the extent that the Committee determines that a Performance
Award to be granted to a Grantee who is designated by the Committee as likely to
be a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the

                                      17.
<PAGE>

grant, exercise and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and other
terms set forth in this Section 18.4.2.

                           (a)      PERFORMANCE  GOALS  GENERALLY.  The
performance goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this
Section 18.4.2. Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations thereunder including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being "substantially uncertain."
The Committee may determine that such Performance Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Grantee or to different
Grantees.

                           (b)      BUSINESS  CRITERIA.  One or more of the
following business criteria for the Company, on a consolidated basis, and/or
specified subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall be used
exclusively by the Committee in establishing performance goals for such
Performance Awards: (1) total stockholder return; (2) such total stockholder
return as compared to total return (on a comparable basis) of a publicly
available index such as, but not limited to, the Standard & Poor's 500 Stock
Index; (3) net income; (4) pretax earnings; (5) earnings before interest
expense, taxes, depreciation and amortization; (6) pretax operating earnings
after interest expense and before bonuses, service fees, and extraordinary or
special items; (7) operating margin; (8) earnings per share; (9) return on
equity; (10) return on capital; (11) return on investment; (12) operating
earnings; (13) working capital; and (14) ratio of debt to stockholders' equity.
One or more of the foregoing business criteria shall also be exclusively used in
establishing performance goals for Annual Incentive Awards granted to a Covered
Employee under Section 18.4.3 hereof that are intended to qualify as
"performance-based compensation" under Code Section 162(m).

                           (c)      PERFORMANCE PERIOD; TIMING FOR ESTABLISHING
PERFORMANCE GOALS. Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of up to ten
years, as specified by the Committee. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable to
such Performance Awards, or at such other date as may be required or permitted
for "performance-based compensation" under Code Section 162(m).

                           (d)      PERFORMANCE  AWARD POOL. The Committee
may establish a Performance Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Performance
Awards. The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 18.4.2(ii) hereof during the given
performance period, as specified by the Committee in accordance with Section
18.4.2(iii) hereof. The Committee may specify the amount of the Performance
Award pool as a percentage of any of such business criteria, a percentage
thereof in excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such business criteria.

                                      18.
<PAGE>

                           (e)      SETTLEMENT OF PERFORMANCE AWARDS;  OTHER
TERMS. Settlement of such Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards. The Committee shall specify
the circumstances in which such Performance Awards shall be paid or forfeited
in the event of termination of employment by the Grantee prior to the end of
a performance period or settlement of Performance Awards.

                  18.4.3   ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES.

         If and to the extent that the Committee determines that an Annual
Incentive Award to be granted to a Grantee who is designated by the Committee as
likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Annual Incentive Award shall be contingent upon achievement
of preestablished performance goals and other terms set forth in this Section
18.4.3.

                           (a)      ANNUAL  INCENTIVE  AWARD POOL. The Committee
may establish an Annual Incentive Award pool, which shall be an unfunded pool,
for purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall be based
upon the achievement of a performance goal or goals based on one or more of the
business criteria set forth in 18.4.2(ii) hereof during the given performance
period, as specified by the Committee in accordance with 18.4.2(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool as a
percentage of any such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.

                           (b)      POTENTIAL  ANNUAL INCENTIVE  AWARDS.  Not
later than the end of the 90th day of each fiscal year, or at such other date as
may be required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the Committee shall
determine the Eligible Persons who will potentially receive Annual Incentive
Awards, and the amounts potentially payable thereunder, for that fiscal year,
either out of an Annual Incentive Award pool established by such date under
Section 18.4.3(i) hereof or as individual Annual Incentive Awards. In the case
of individual Annual Incentive Awards intended to qualify under Code Section
162(m), the amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set
forth in Section 18.4.2(ii) hereof in the given performance year, as specified
by the Committee; in other cases, such amount shall be based on such criteria as
shall be established by the Committee. In all cases, the maximum Annual
Incentive Award of any Grantee shall be subject to the limitation set forth in
Section 7.1 hereof.

                           (c)      PAYOUT OF ANNUAL  INCENTIVE  AWARDS.  After
the end of each fiscal year, the Committee shall determine the amount, if any,
of (A) the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Grantee in the Annual Incentive Award
pool, or (B) the amount of potential Annual Incentive Award otherwise payable to
each Grantee. The Committee may, in its discretion, determine that the amount
payable to any Grantee as an Annual Incentive Award shall be reduced from the
amount of his or her potential Annual Incentive Award, including a determination
to make no Award whatsoever.

                                      19.
<PAGE>

The Committee shall specify the circumstances in which an Annual Incentive
Award shall be paid or forfeited in the event of termination of employment by
the Grantee prior to the end of a fiscal year or settlement of such Annual
Incentive Award.

                  18.4.4   WRITTEN DETERMINATIONS.

         All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards under Section 18.4.2, and the amount of any
Annual Incentive Award pool or potential individual Annual Incentive Awards
and the amount of final Annual Incentive Awards under Section 18.4.3, shall
be made in writing in the case of any Award intended to qualify under Code
Section 162(m). To the extent required to comply with Code Section 162(m),
the Committee may delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards.

                  18.4.5   STATUS OF SECTION 18.4.3 AND SECTION 18.4.2 AWARDS
UNDER CODE SECTION 162(m).

         It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Section 18.4.2 and Section 18.4.3 hereof granted to
persons who are designated by the Committee as likely to be Covered Employees
within the meaning of Code Section 162(m) and regulations thereunder shall,
if so designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Section 18.4.2 and Section 18.4.3,
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Grantee will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the
term Covered Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of Performance Awards or an Annual
Incentive Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is
inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

19.      PARACHUTE LIMITATIONS

         Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
a Grantee with the Company or any affiliate, except an agreement, contract,
or understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "OTHER AGREEMENT"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
Grantees or beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to
or for the Grantee (a "BENEFIT ARRANGEMENT"), if the Grantee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any
Option, Restricted

                                       20.
<PAGE>

Stock or Restricted Stock Unit held by that Grantee and any right to receive
any payment or other benefit under this Plan shall not become exercisable or
vested (i) to the extent that such right to exercise, vesting, payment, or
benefit, taking into account all other rights, payments, or benefits to or
for the Grantee under this Plan, all Other Agreements, and all Benefit
Arrangements, would cause any payment or benefit to the Grantee under this
Plan to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code as then in effect (a "PARACHUTE PAYMENT") and (ii) if,
as a result of receiving a Parachute Payment, the aggregate after-tax amounts
received by the Grantee from the Company under this Plan, all Other
Agreements, and all Benefit Arrangements would be less than the maximum
after-tax amount that could be received by the Grantee without causing any
such payment or benefit to be considered a Parachute Payment. In the event
that the receipt of any such right to exercise, vesting, payment, or benefit
under this Plan, in conjunction with all other rights, payments, or benefits
to or for the Grantee under any Other Agreement or any Benefit Arrangement
would cause the Grantee to be considered to have received a Parachute Payment
under this Plan that would have the effect of decreasing the after-tax amount
received by the Grantee as described in clause (ii) of the preceding
sentence, then the Grantee shall have the right, in the Grantee's sole
discretion, to designate those rights, payments, or benefits under this Plan,
any Other Agreements, and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.

20.      REQUIREMENTS OF LAW

         20.1     GENERAL.

         The Company shall not be required to sell or issue any shares of
Stock under any Award if the sale or issuance of such shares would constitute
a violation by the Grantee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws
or regulations. If at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of any shares
subject to an Award upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares hereunder, no shares of Stock may be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Award unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company, and any delay caused thereby shall
in no way affect the date of termination of the Award. Specifically, in
connection with the Securities Act, upon the exercise of any Option or the
delivery of any shares of Stock underlying an Award, unless a registration
statement under such Act is in effect with respect to the shares of Stock
covered by such Award, the Company shall not be required to sell or issue
such shares unless the Board has received evidence satisfactory to it that
the Grantee or any other individual exercising an Option may acquire such
shares pursuant to an exemption from registration under the Securities Act.
Any determination in this connection by the Board shall be final, binding,
and conclusive. The Company may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the Securities Act. The
Company shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of shares of Stock pursuant
to the Plan to comply with any law or regulation of any governmental
authority. As to

                                       21.
<PAGE>

any jurisdiction that expressly imposes the requirement that an Option shall
not be exercisable until the shares of Stock covered by such Option are
registered or are exempt from registration, the exercise of such Option
(under circumstances in which the laws of such jurisdiction apply) shall be
deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.

         20.2     RULE 16b-3.

         During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the
Company that Awards pursuant to the Plan and the exercise of Options granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the
Board does not comply with the requirements of Rule 16b-3, it shall be deemed
inoperative to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. In the event that Rule 16b-3
is revised or replaced, the Board may exercise its discretion to modify this
Plan in any respect necessary to satisfy the requirements of, or to take
advantage of any features of, the revised exemption or its replacement.

         20.3     LIMITATION FOLLOWING A HARDSHIP DISTRIBUTION.

         To the extent required to comply with Treasury Regulation
Section 1.401(k)-1(d)(2)(iv)(B)(4), or any amendment or successor thereto, a
Grantee's "elective and employee contributions" (within the meaning of such
Treasury Regulation) under the Plan shall be suspended for a period of twelve
months following such Grantee's receipt of a hardship distribution made in
reliance on such Treasury Regulation from any plan containing a cash or
deferred arrangement under Section 401(k) of the Code maintained by the
Company or a related party within the provisions of subsections (b), (c), (m)
or (o) of Section 414 of the Code.

21.      AMENDMENT AND TERMINATION OF THE PLAN

         The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any shares of Stock as to which Awards have not been
made; PROVIDED, HOWEVER, that the Board shall not, without approval of the
Company's shareholders, amend the Plan such that it does not comply with the
Code. The Company may retain the right in an Award Agreement to cause a
forfeiture of the gain realized by a Grantee on account of the Grantee taking
actions in "competition with the Company," as defined in the applicable Award
Agreement. Furthermore, the Company may annul an Award if the Grantee is an
employee of the Company or an affiliate and is terminated "for cause" as
defined in the applicable Award Agreement. Except as permitted under this
Section 21 or Section 22 hereof, no amendment, suspension, or termination of
the Plan shall, without the consent of the Grantee, alter or impair rights or
obligations under any Award theretofore awarded under the Plan.

22.      EFFECT OF CHANGES IN CAPITALIZATION

         22.1     CHANGES IN STOCK.

         If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged for a
different number or kind of shares or other securities

                                       22.
<PAGE>

of the Company on account of any recapitalization, reclassification, stock
split, reverse split, combination of shares, exchange of shares, stock
dividend or other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration by the
Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall
be adjusted proportionately and accordingly by the Company. In addition, the
number and kind of shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent practicable, be
the same as immediately before such event. Any such adjustment in outstanding
Options shall not change the aggregate Option Price payable with respect to
shares that are subject to the unexercised portion of an Option outstanding
but shall include a corresponding proportionate adjustment in the Option
Price per share. The conversion of any convertible securities of the Company
shall not be treated as an increase in shares effected without receipt of
consideration.

         22.2     REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY
AND IN WHICH NO CHANGE IN CONTROL OCCURS.

         Subject to Section 22.3 hereof, if the Company shall be the
surviving entity in any reorganization, merger, or consolidation of the
Company with one or more other entities in which no Change in Control Occurs,
any Option theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option would have been entitled immediately following such
reorganization, merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price per share so that the aggregate Option Price
thereafter shall be the same as the aggregate Option Price of the shares
remaining subject to the Option immediately prior to such reorganization,
merger, or consolidation. Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to such Award
shall apply as well to any replacement shares received by the Grantee as a
result of the reorganization, merger or consolidation.

         22.3     REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH
INVOLVES A CHANGE IN CONTROL.

                           (a)      Subject to Section 22.3(b),  upon the
dissolution or liquidation of the Company or upon any transaction that
results in a Change in Control, (i) all outstanding shares subject to Awards
shall be deemed to have vested, and all restrictions and conditions
applicable to such shares subject to Awards shall be deemed to have lapsed,
immediately prior to the occurrence of such event, and (ii) all Options
outstanding hereunder shall become immediately exercisable for a period of
fifteen days immediately prior to the scheduled consummation of the event.
Any exercise of an Option during such fifteen-day period shall be conditioned
upon the consummation of the event and shall be effective only immediately
before the consummation of the event. Upon consummation of any such event,
the Plan and all outstanding but unexercised Options shall terminate. The
Board shall send written notice of an event that will result in such a
termination to all individuals who hold Options not later than the time at
which the Company gives notice thereof to its shareholders.

                           (b)      Section  22.3(a) shall not apply to the
extent provision is made in writing in connection with a transaction
described in Section 22.3(a) for the assumption of such

                                       23.
<PAGE>

Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares or
units and exercise prices, in which event the Plan and Options theretofore
granted shall continue in the manner and under the terms so provided.

         22.4     ADJUSTMENTS.

         Adjustments under this Section 22 related to shares of Stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share.

         22.5     NO LIMITATIONS ON COMPANY.

         The making of Awards pursuant to the Plan shall not affect or limit
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.

23.      POOLING

         In the event any provision of the Plan or the Award Agreement would
prevent the use of pooling of interests accounting in a corporate transaction
involving the Company and such transaction is contingent upon pooling of
interests accounting, then that provision shall be deemed amended or revoked
to the extent required to preserve such pooling of interests. The Company may
require in an Award Agreement that a Grantee who receives an Award under the
Plan shall, upon advice from the Company, take (or refrain from taking, as
appropriate) all actions necessary or desirable to ensure that pooling of
interests accounting is available.

24.      DISCLAIMER OF RIGHTS

         No provision in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or
to terminate any employment or other relationship between any individual and
the Company. In addition, notwithstanding anything contained in the Plan to
the contrary, unless otherwise stated in the applicable Award Agreement, no
Award granted under the Plan shall be affected by any change of duties or
position of the Grantee, so long as such Grantee continues to be a director,
officer, consultant or employee of the Company or an affiliate. The
obligation of the Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Company to transfer any amounts
to a third party trustee or otherwise hold any amounts in trust or escrow for
payment to any Grantee or beneficiary under the terms of the Plan. No Grantee
shall have any of the rights of a shareholder with respect to the shares of
Stock subject to an Option except to the

                                       24.
<PAGE>

extent the certificates for such shares of Stock shall have been issued upon
the exercise of the Option.

25.      NONEXCLUSIVITY OF THE PLAN

         Neither the adoption of the Plan nor the submission of the Plan to
the shareholders of the Company for approval shall be construed as creating
any limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting
of stock options otherwise than under the Plan.

26.      WITHHOLDING TAXES

         The Company or an affiliate, as the case may be, shall have the
right to deduct from payments of any kind otherwise due to a Grantee any
Federal, state, or local taxes of any kind required by law to be withheld
with respect to the vesting of or other lapse of restrictions applicable to
an Award or upon the issuance of any shares of Stock upon the exercise of an
Option or pursuant to an Award. At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the affiliate, as the case
may be, any amount that the Company or the affiliate may reasonably determine
to be necessary to satisfy such withholding obligation. Subject to the prior
approval of the Company or the affiliate, which may be withheld by the
Company or the affiliate, as the case may be, in its sole discretion, the
Grantee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company or the affiliate to withhold shares of Stock otherwise
issuable to the Grantee or (ii) by delivering to the Company or the affiliate
shares of Stock already owned by the Grantee. The shares of Stock so
delivered or withheld shall have an aggregate Fair Market Value equal to such
withholding obligations. The Fair Market Value of the shares of Stock used to
satisfy such withholding obligation shall be determined by the Company or the
affiliate as of the date that the amount of tax to be withheld is to be
determined. A Grantee who has made an election pursuant to this Section 26
may satisfy his or her withholding obligation only with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other
similar requirements.

27.      CAPTIONS

         The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Award Agreement.

28.      OTHER PROVISIONS

         Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board,
in its sole discretion.

                                       25.
<PAGE>

29.      CALIFORNIA PROVISIONS

         Notwithstanding any other provision of the Plan to the contrary, for
Stock Awards (as defined herein) granted prior to the Listing Date (as
defined herein), and as required by California Code Section 25102(o) for any
other Awards granted prior to the Listing Date, the following provisions and
additional definitions shall apply until the Listing Date.

         29.1     DEFINITIONS.

                           (a)      "CONSULTANT"  means any  person,
including an advisor, (i) engaged by the Company or an affiliate of the
Company to render consulting or advisory services and who is compensated for
such services or (ii) who is a member of the Board of Directors of an
affiliate of the Company. However, the term "Consultant" shall not include
either Directors who are not compensated by the Company for their services as
Directors or Directors who are merely paid a director's fee by the Company
for their services as Directors.

                           (b)      "CONTINUOUS  SERVICE" means that the
Participant's service with the Company or an affiliate of the Company,
whether as an Employee, Director or Consultant, is not interrupted or
terminated. The Participant's Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the
Participant renders service to the Company or an affiliate of the Company as
an Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. For example, a change in
status from an Employee of the Company to a Consultant of an affiliate of the
Company or a Director will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

                           (c)      "DIRECTOR" means a member of the Board of
Directors of the Company.

                           (d)      "DISABILITY"  means the  inability  of a
person, in the opinion of a qualified physician acceptable to the Company, to
perform the major duties of that person's position with the Company or an
affiliate of the Company because of the sickness or injury of the person.

                           (e)      "EMPLOYEE"  means any person  employed
by the Company or an affiliate of the Company. Mere service as a Director or
payment of a director's fee by the Company or an affiliate of the Company
shall not be sufficient to constitute "employment" by the Company or an
affiliate of the Company.

                           (f)      "LISTING DATE" means the first date upon
which any security of the Company is listed (or approved for listing) upon
notice of issuance on any securities exchange or designated (or approved for
designation) upon notice of issuance as a national market security on an
interdealer quotation system if such securities exchange or interdealer
quotation system has been certified in accordance with the provisions of
Section 25100(o) of the California Corporate Securities Law of 1968.

                                       26.
<PAGE>

                           (g)      "NONSTATUTORY  STOCK  OPTION"  means an
Option not intended to qualify as an Incentive Stock Option.

                           (h)      "OFFICER" means any person designated by
the Company as an officer.

                           (i)      "PARTICIPANT" means a person to whom a
Stock Award is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Stock Award.

                           (j)      "STOCK AWARD" means any Option, stock
bonus or right to acquire restricted stock granted under the Plan.

                           (k)      "TEN PERCENT SHAREHOLDER" means a person
who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any of its affiliates.

         29.2     FAIR MARKET VALUE.

         The value of the Stock shall be determined in a manner consistent
with Section 260.140.50 of Title 10 of the California Code of Regulations.

         29.3     SHARE RESERVE LIMITATION.

         To the extent required by Section 260.140.45 of Title 10 of the
California Code of Regulations, the total number of shares of Stock issuable
upon exercise of all outstanding Options and the total number of shares of
Stock provided for under any stock bonus or similar plan of the Company shall
not exceed the applicable percentage as calculated in accordance with the
conditions and exclusions of Section 260.140.45 of Title 10 of the California
Code of Regulations, based on the shares of Stock of the Company that are
outstanding at the time the calculation is made.(1)

-----------------
(1)        Section 260.140.45 generally provides that the total number of
shares issuable upon exercise of all outstanding options (exclusive of
certain rights) and the total number of shares called for under any stock
bonus or similar plan shall not exceed a number of shares which is equal to
30% of the then outstanding shares of the issuer (convertible preferred or
convertible senior common shares counted on an as if covered basis),
exclusive of shares subject to promotional waivers under Section 260.141,
unless a percentage higher than 30% is approved by at lease two-thirds of the
outstanding shares entitled to vote.

                                       27.
<PAGE>

         29.4     TEN PERCENT SHAREHOLDERS.

                           (a)      A Ten Percent Shareholder shall not be
granted a Nonstatutory Stock Option unless the exercise price of such Option
is at least (i) one hundred ten percent (110%) of the Fair Market Value of
the Stock at the date of grant or (ii) such lower percentage of the Fair
Market Value of the Stock at the date of grant as is permitted by Section
260.140.41 of Title 10 of the California Code of Regulations at the time of
the grant of the Option.

                           (b)      Except as otherwise noted in subparagraph
29.4(a), to the extent an Award is covered by Section 260.140.42 of Title 10
of the California Code of Regulations, a Ten Percent Shareholder shall not be
granted a right to purchase Stock pursuant to such Award unless the purchase
price for Stock issued pursuant to such Award is at least (i) one hundred
percent (100%) of the Fair Market Value of the Stock at the date of grant or
(ii) such lower percentage of the Fair Market Value of the Stock at the date
of grant as is permitted by Section 260.140.42 of Title 10 of the California
Code of Regulations at the time of the grant of the Award.

         29.5     NONSTATUTORY STOCK OPTIONS.

                           (a)      EXERCISE PRICE. Subject to the provisions
of subsection 29.4 regarding Ten Percent Shareholders, the exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.

                           (b)      TRANSFERABILITY. A Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and, to the extent provided in the Option agreement, to such
further extent as permitted by Section 260.140.41(d) of Title 10 of the
California Code of Regulations at the time of the grant of the Option, and
shall be exercisable during the lifetime of the Participant only by the
Participant.

         29.6     MINIMUM VESTING PRIOR TO THE LISTING DATE.

         To the extent that the following restrictions on vesting are
required by Section 260.140.41(f) of Title 10 of the California Code of
Regulations at the time of the grant of the Option, then:

                  (i) Options granted to an Employee who is not an Officer,
Director or Consultant shall provide for vesting of the total number of
shares of Stock at a rate of at least twenty percent (20%) per year over five
(5) years from the date the Option was granted, subject to reasonable
conditions such as continued employment; and

                  (ii) Options granted to Officers, Directors or Consultants
may be made fully exercisable, subject to reasonable conditions such as
continued employment, at any time or during any period established by the
Company.

                                       28.
<PAGE>

         29.7     AWARDS OTHER THAN OPTIONS.

                           (a)      PURCHASE PRICE. Subject to the provisions
of subsection 29.4 regarding Ten Percent Shareholders, and except as
otherwise provided in subparagraph 29.5(a) herein, to the extent an Award is
covered by Sections 260.140.41 and/or 260.140.42 of Title 10 of the
California Code of Regulations, the purchase price for Stock issued pursuant
to such Award shall not be less than eighty-five percent (85%) of the Stock's
Fair Market Value on the date such Award is made or at the time the purchase
is consummated.

                           (b)      TRANSFERABILITY. To the extent an Award
is covered by Sections 260.140.41 and/or 260.140.42 of Title 10 of the
California Code of Regulations, any right to acquire Stock pursuant to such
Award shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant.

         29.8     INFORMATION OBLIGATION.

         To the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall deliver financial
statements to Participants at least annually. This subsection 10(g) shall not
apply to key Employees whose duties in connection with the Company assure
them access to equivalent information.

         29.9     REPURCHASE LIMITATION.

         To the extent required by Sections 260.140.41 and/or 260.140.42 of
Title 10 of the California Code of Regulations, the terms of any repurchase
option shall be specified in the Award and may be either at Fair Market Value
at the time of repurchase or at not less than the original purchase price. To
the extent required by Sections 260.140.41 and/or 260.140.42 of Title 10 of
the California Code of Regulations at the time an Award is made, any
repurchase option contained in an Award to a person who is not an Officer,
Director or Consultant shall be upon the terms described below:

                           (a)      FAIR MARKET VALUE. If the repurchase
option gives the Company the right to repurchase the shares of Stock upon
termination of employment at not less than the Fair Market Value of the
shares of Stock to be purchased on the date of termination of Continuous
Service, then (i) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares of Stock within
ninety (90) days of termination of Continuous Service (or in the case of
shares of Stock issued upon exercise of Awards after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant (for
example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding "qualified small business stock") and (ii) the right
terminates when the shares of Stock become publicly traded.

                           (b)      ORIGINAL PURCHASE PRICE. If the
repurchase option gives the Company the right to repurchase the shares of
Stock upon termination of Continuous Service at the original purchase price,
then (i) the right to repurchase at the original purchase price shall lapse
at the rate of at least twenty percent (20%) of the shares of Stock per year
over five (5) years from the date the Award is granted (without respect to
the date the Award was exercised or

                                       29.
<PAGE>

became exercisable) and (ii) the right to repurchase shall be exercised for
cash or cancellation of purchase money indebtedness for the shares of Stock
within ninety (90) days of termination of Continuous Service (or in the case
of shares of Stock issued upon exercise of Options after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant (for
example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding "qualified small business stock").

         29.10    VOTING RIGHTS.

         To the extent required by Section 260.140.1 of Title 10 of the
California Code of Regulations at the time a Stock Award is made, common
shares and similar equity securities should normally carry equal voting
rights on all matters where such vote is permitted by applicable law.

         29.11    PLAN TERMINATION DATE.

         Unless sooner terminated, the Plan shall terminate on the day before
the tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the shareholders of the Company, whichever is earlier. No Awards
may be granted under the Plan after it is terminated.

30.      NUMBER AND GENDER

         With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine
gender, etc., as the context requires.

31.      SEVERABILITY

         If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable
and enforceable in accordance with their terms, and all provisions shall
remain enforceable in any other jurisdiction.

32.      GOVERNING LAW

         The validity and construction of this Plan and the instruments
evidencing the Awards granted hereunder shall be governed by the laws of the
State of California (without giving effect to the choice of law provisions
thereof).

                                      * * *

                                       30.
<PAGE>

         The Plan was duly adopted and approved by the Board of Directors of
the Company as of the 4th day of August, 2000.

                                       /s/ Nicholas J. Costanza
                                       _______________________________________
                                       Nicholas J. Costanza
                                       Senior Vice President, General Counsel

         The Plan was duly adopted and approved by the stockholders of the
Company as of the __ day of _________, 2000.

                                       _______________________________________
                                       Nicholas J. Costanza
                                       Senior Vice President, General Counsel

                                       31.

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