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                                                                    EXHIBIT 10.7

                               ANIMAS CORPORATION

                            1996 INCENTIVE STOCK PLAN

1.       PURPOSE

         The purpose of the Animas Corporation 1996 Incentive Stock Plan (the
"Plan") is to promote the interests of Animas Corporation (the "Company") by
attracting and retaining outstanding individuals as directors, officers and
other key employees and consultants, by encouraging and enabling such persons to
acquire financial interests in the Company through the acquisition of shares of
the Company's Common Stock, and by providing performance incentives to such
persons.

2.       INCENTIVES

         Under the Plan, the Company may grant (i) stock options that qualify as
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) nonqualified stock
options that do not constitute ISOs ("NSOs") (ISOs and NSOs are together the
"Options"), (iii) stock appreciation rights ("Rights") and (iv) stock awards
("Stock Awards").

3.       TERM

         The Plan shall be effective as of December 1, 1996, and it shall remain
in effect until, and shall terminate on, November 30, 2006. After termination of
the Plan, no grants may be effected hereunder, but previously made grants shall
remain outstanding in accordance with their terms and conditions and the terms
and conditions of the Plan.

4.       ADMINISTRATION

         (a)      The Committee. The Plan shall be administered by the
"Committee", which shall consist of the Board of Directors of the Company or by
a committee of the Board intended to comply with Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule or regulation ("Rule 16b-3"). No person, other than members of
the Committee, shall have any discretion as to decisions regarding the Plan. The
Committee shall determine the directors, officers and key employees and
consultants of the Company and its "Affiliates" (as defined in Section 6 hereof)
to whom, and the time or times at which, Options, Rights and Stock Awards will
be granted, the number of shares to be subject to each Option or Stock Award,
the duration of each Option or Right, the time or times during which an Option
or Right may be exercised, and other terms and conditions of the grant of
Options, Rights and Stock Awards under the Plan. The terms and conditions of
Options, Rights and Stock Awards need not be the same for all recipients thereof

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under the Plan ("Recipients") nor for all Options, Rights and Stock Awards
granted under the Plan.

         (b)      Rules and Regulations. The Committee may, subject to the
provisions of the Pian, establish such rules and regulations as it deems
necessary or advisable for the proper administration of the Plan, and may make
determinations and take such other action in connection with or in relation to
the Plan as it deems necessary or advisable. Each determination or other action
made or taken by the Committee in regard to the Plan, including, but not limited
to, interpretation of the Plan and the specific conditions and provisions of the
Options, Rights and Stock Awards granted hereunder, shall be final and
conclusive for all purposes and upon all persons including, but not limited to,
the Company, its Affiliates, the Committee, the Board of Directors of the
Company (the "Board of Directors") and the affected Recipients, and their
respective successors in interest.

         (c)      No Liability. No member of the Board of Directors or the
Committee shall be personally liable for any action or determination made in
good faith with respect to the Plan or any Option, Right or Stock Award granted
hereunder. No member of the Committee shall be liable for any act or omission of
any other member of the Committee or for any act or omission on his own part,
including, but not limited to, the exercise of any power and discretion given to
him under the Plan, except those resulting from (i) any breach of such member's
duty of loyalty to the Company or its shareholders, (ii) acts or omissions not
in good faith or involving intentional misconduct or a knowing violation of law
or (iii) any transaction from which the member derived an improper personal
benefit.

         (d)      Indemnification. In addition to such other rights of
indemnification as he may have as a member of the Board of Directors or the
Committee, and with respect to the administration of the Plan and the granting
of Options, Rights or Stock Awards under it, each member of the Board of
Directors and of the Committee shall be entitled without further action on his
part to be indemnified by the Company for all expenses (including but not
limited to reasonable attorneys' fees and expenses, the amount of judgment and
the amount of approved settlements made with a view to the curtailment of costs
of litigation, other than amounts paid to the Company itself) reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Options, Rights or Stock Awards under it in which he may be involved by reason
of his being or having been a member of the Board of Directors or the Committee,
whether or not he continues to be such member of the Board of Directors or the
Committee at the time of the incurring of such expenses; provided, however, that
such indemnity shall not include any expenses incurred by such member of the
Board of Directors or Committee: (i) in respect of matters as to which he shall
be finally adjudged in such action, suit or proceeding to have been guilty of
gross negligence or willful misconduct in the performance of his duties as a
member of the Board of Directors or the Committee; or (ii) in respect of any
matter in which any settlement is effected in an amount in excess of the amount
approved by the Company on the advice of its legal counsel; and provided further
that no right of indemnification under the provisions set forth herein shall be
available to or accessible by any such member of the Board

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of Directors or the Committee unless ten (10) days after institution of any such
action, suit or proceeding he shall have offered the Company in writing the
opportunity to handle and defend such action, suit or proceeding at its own
expense. The foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the Board of
Directors or the Committee and shall be in addition to all other rights to which
such member of the Board of Directors or the Committee would be entitled to as a
matter of law, contract or otherwise.

5.       STOCK SUBJECT TO THE PLAN

         (a)      Number. A maximum of 300,000 shares of the Company's $.01 par
value Common Stock (the "Shares") shall be issuable or transferable by the
Company under the Plan. The Shares issued or transferred pursuant to the Plan
shall be made available from authorized and unissued Common Stock of the Company
or from the Company's treasury Shares. Such maximum number of Shares shall be
subject to adjustment in accordance with Section 11 hereof.

         (b)      Reacquired Shares. Shares subject to an unexercised portion of
any Option or Right that expires or is cancelled, terminated, or, except as
provided in the following sentence, surrendered for any reason may again become
subject to Options, Rights or Stock Awards granted under the Plan. Upon
surrender, in connection with the exercise of a Right, of an Option (or a stock
option granted under any other plan hereafter adopted by the Company), the
number of Shares subject to the surrendered Option (or other stock option) shall
be charged against the maximum number of Shares issuable or transferable under
the Plan (or such other stock option plan), and such number of Shares shall not
be issuable or transferable under the Plan (or such other plan) thereafter. The
surrender, in connection with the exercise of a Right, of any stock option
issued other than pursuant to a stock option plan shall not result in a charge
against the maximum number of Shares issuable or transferable under the Plan or
any other stock option plan. Shares issued pursuant to a Stock Award that are
subsequently reacquired by the Company pursuant to rights reserved upon the
grant of such Stock Award may again become subject to new Options, Rights or
Stock Awards.

6.       ELIGIBILITY

         NSOs, Rights and Stock Awards may be granted to the directors,
officers, employees and consultants of the Company and its Affiliates. The term
"Affiliates" shall mean any corporation or other business organization in which
the Company owns, directly or indirectly, 50 percent or more of the voting stock
or capital at the time of the granting of the Option, Right or Stock Award. ISOs
may be granted to the employees of the Company and the employees of its
Affiliates. Any ISO held by a Recipient who is an employee of an Affiliate that
ceases to be 50 percent owed by the Company will become an NSO three months
after the date that the Company's ownership of the Affiliate falls below 50
percent.

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7.       GRANTS OF OPTIONS

         Except as otherwise expressly provided herein, Options granted pursuant
to the Plan shall be subject to the following terms and conditions:

         (a)      Option Price. The price of a Share purchased upon the exercise
of a particular ISO (the "Option Price") shall be 100 percent of the Fair Market
Value (as defined in Section 10 hereof) of a Share on the date of grant of such
ISO. The Committee, in its discretion, shall determine the Option Prices of
NSOs.

         (b)      Payment. Unless otherwise determined by the Committee in its
sole discretion, the Option Price shall be paid in full at the time of exercise.
Payment may be in cash or, with the prior approval of and upon conditions
established by the Committee, by delivery of Shares owned by the Recipient. If
payment is made by the delivery of Shares, the value of the Shares delivered
shall be the Fair Market Value of such Shares on the date of exercise of the
respective Option.

         (c)      Exercise Period. The Committee shall determine the period
during which an Option may be exercised; provided, however, that for any Option,
such period shall not exceed ten years from the date of grant of such Option. An
Option granted to a Recipient who is subject to Section 16 of the Exchange Act,
may be exercised only after six months from the date of its grant, unless
otherwise permitted under Rule 16b-3.

         (d)      Effects of Termination of Employment, Retirement, Disability
and Death. The effects of the termination of employment or the retirement,
"Disability" (as defined below) or death of a Recipient on the exercisability of
ISOs held by such Recipient shall be determined by the Committee in accordance
with Section 7(h)(iv) hereof. Except as otherwise determined by the Committee in
its discretion:

                  (i)      If a Recipient's employment (or service as an
officer, director, or consultant) is terminated due to retirement or Disability,
or if the Recipient should die while employed (or while serving as an officer,
director, or consultant), the right of the Recipient or his or her successor in
interest to exercise any NSO then held by such Recipient (to the extent
exercisable at such time) shall terminate upon the earlier of the end of the
original term of the NSO or one year after the date of such retirement,
Disability or death.

                  (ii)     If the Recipient should die within one year after
termination of employment (or service as an officer, director, or consultant)
due to retirement or Disability, the right of his or her successor in interest
to exercise any NSO held by the Recipient at the time of his or her death (to
the extent exercisable at such time) shall terminate upon the later of one year
after the date of such retirement or Disability or six months after the date of
such Recipient's death, but not later than the end of the original term of the
NSO.

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                  (iii)    If any Recipient's employment (or service as an
officer, director, or consultant) is terminated for any reason other than
retirement, Disability or death, the right of such Recipient to exercise any NSO
then held by such Recipient (to the extent exercisable at the time of
termination of employment) shall terminate upon the earlier of the end of the
original term of such NSO or three months after the Recipient's last day of
employment (or service as an officer, director, or consultant) for the Company
and its Affiliates.

                  (iv)     If such Recipient should die within three months
after termination of employment for any reason other than retirement or
Disability, the right of his or her successor in interest to exercise any NSO
held by the Recipient at the time of his or her death (to the extent exercisable
at such time) shall terminate upon the earlier of the end of the original term
of such NSO or three months after the date of such Recipient's death.

Notwithstanding the foregoing, no Option held by any employee, officer,
director, or consultant shall be exercisable after termination of such employee,
officer, director, or consultant for "cause," as such term is defined by the
Committee in its discretion. The term "Disability" shall mean "permanent and
total disability," as such is defined in Section 22(e)(3) of the Code. Whether
military, governmental or eleemosynary service or other leave of absence will
constitute termination of employment (or services as an officer, director, or
consultant) for the purposes of this Section 7(d) shall be determined in each
case by the Committee in its sole discretion.

         (e)      Termination of Options. Notwithstanding the exercise period of
an Option, no Option shall be exercisable after the first to occur of the
following:

                  (i)      In the case of an ISO, five years from the date of
grant if on such date the Recipient owns, directly or by attribution under
Section 424(d) of the Code, shares representing more than 10% of the total
combined voting power of all classes of stock of the Company;

                  (ii)     The date set by the Board of Directors to be an
accelerated expiration date after a finding by the Board of Directors that a
change in the financial accounting treatment for Options from that in effect on
the date the Plan was adopted materially adversely affects or, in the
determination of the Board of Directors, may materially adversely affect in the
foreseeable future, the Company, provided the Board of Directors may take
whatever other action, including acceleration of any exercise provision, it
deems necessary should it make the determination referred to above; or

                  (iii)    The Committee can accelerate the expiration date if
there is a "change in control" (as defined below), provided a Recipient who
holds an Option is given written notice at least thirty days before the date so
fixed.

         (f)      Change in Control. If there is a Change in Control (as defined
below), the Committee may take whatever action with respect to the Options
outstanding under the Plan it

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deems necessary or desirable, including, without limitation, accelerating the
expiration or termination date of the respective Option to a date no earlier
than thirty (30) days after notice of such acceleration is given to Recipient of
the Option. In the event of a Change in Control, Options granted pursuant to the
Plan shall become immediately exercisable in full. A "Change in Control" shall
be deemed to have occurred upon the earliest to occur of the following events:

                  (i)      the date the shareholders of the Company (or the
Board of Directors, if shareholder action is not required) approve a plan or
other arrangement pursuant to which the Company will be dissolved or liquidated;

                  (ii)     the date the shareholders of the Company (or the
Board of Directors, if shareholder action is not required) approve a definitive
agreement to sell or otherwise dispose of all or substantially all of the assets
of the Company;

                  (iii)    the date the shareholders of the Company (or the
Board of Directors, if shareholder action is not required) and the shareholders
of the other constituent corporation (or its board of directors if shareholder
action is not required) have approved a definitive agreement to merge or
consolidate the Company with or into such other corporation, other than, in
either case, a merger or consolidation of the Company in which holders of shares
of the common stock immediately prior to the merger or consolidation will hold
at least a majority of the ownership of common stock of the surviving
corporation (and, if one class of common stock is not the only class of voting
securities entitled to vote on the election of directors of the surviving
corporation, a majority of the voting power of the surviving corporation's
voting securities) immediately after the merger or consolidation, which common
stock (and, if applicable, voting securities) is to be held in the same
proportion as such holders' ownership of common stock immediately before the
merger or consolidation;

                  (iv)     the date any entity, person or group, (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than
(A) the Company or any of its subsidiaries or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its affiliates
or (B) any person who, on the date the plan is approved by the shareholders,
shall have been the beneficial owner of at least twenty percent (20%) of the
outstanding common stock, shall have become the beneficial owner of, or shall
have obtained voting control over, more than fifty percent (50%) of the
outstanding shares of the common stock; or

                  (v)      the first day after the date this Plan is approved by
the shareholders when directors are elected so that a majority of the Board of
Directors shall have been members of the Board of Directors for less than
twenty-four (24) months, unless the nomination for election of each new director
who was not a director at the beginning of such twenty-four (24) month period
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.

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         (g)      Other Terms and Conditions. Options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time.

         (h)      Grant of ISOs.

                  (i)      The Committee, with respect to each grant of an
Option, shall determine whether such Option shall be an ISO, and, upon
determining that an Option shall be an ISO, shall designate it as such in the
written instrument evidencing such Option. If the written instrument evidencing
an Option does not contain a designation that it is an ISO, it shall not be an
ISO.

                  (ii)     The aggregate Fair Market Value (determined in each
instance on the date on which an ISO is granted) of the Shares with respect to
which ISOs are first exercisable by any Recipient in any calendar year shall not
exceed $100,000. Should any Affiliate of the Company adopt a stock option plan
under which options constituting incentive stock options (as defined in Section
422 of the Code) are granted to any Recipient, then the Fair Market Value of the
Shares for which, and the times at which, such incentive stock options will be
exercisable shall be taken into account in determining the value of the Shares
for which such Recipient's ISOs granted under the Plan are first exercisable in
any year.

                  (iii)    If an ISO is granted to a Recipient who then owns,
directly or by attribution under Section 424(d) of the Code, shares possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, then the Option Price shall be at least 110% of the Fair Market Value
of a Share on the date the Option is granted.

                  (iv)     The Committee will determine, at the time of granting
an ISO, the terms and conditions to which such ISO shall be subject for the
purpose of compliance with the requirements of the Code, and such terms and
conditions shall be set forth in the agreement provided for in Section 16 hereof
evidencing the grant of such ISO.

8.       GRANTS OF RIGHTS

         (a)      Value of Rights. The Committee may, at any time and in its
discretion, grant to any holder of an Option outstanding under the Plan or any
other outstanding stock option granted by the Company the right to surrender
such Option or other stock option (to the extent such Option or other stock
option is otherwise exercisable) and to receive from the Company an amount equal
to the excess, if any, of the Fair Market Value of the Shares with respect to
which such Option or other stock option is surrendered on the date of such
surrender over the Option Price of the Option or other stock option surrendered.
No ISO may be surrendered in connection with the exercise of a Right unless the
Fair Market Value of a Share at the time of such surrender is greater than the
Option Price for such ISO.

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         (b)      Payment. Payment by the Company of the amount payable upon the
exercise of a Right may be made by the delivery of Shares or cash or any
combination of Shares and cash, as determined in the sole discretion of the
Committee from time to time. No fractional Shares shall be issued as payment in
respect of a Right. The Committee may provide for the elimination of fractional
Shares without adjustment, or for the payment of the value of such fractional
Shares in cash. Shares delivered to a Recipient upon the exercise of a Right
shall be valued at their Fair Market Value on the date the Right is exercised.

         (c)      Terms and Conditions. The Committee may limit the period or
periods during which Rights may be exercised and may provide such other terms
and conditions (which need not be the same with respect to all Recipients or
Rights) under which Rights may he granted or exercised, A Right may be exercised
only as long as the Option or other stock option to which it relates is
exercisable. A Right granted to a Recipient who is subject to Section 16 of the
Exchange Act may be exercised only after six months from the date of grant,
unless otherwise permitted under Rule 16b-3.

9.       GRANTS OF STOCK AWARDS

         Stock Awards will consist of Shares transferred to Recipients, without
payment therefor, as additional compensation for their services to the Company
or its Affiliates. Stock Awards shall be subject to such terms and conditions as
the Committee determines appropriate including, without limitation, restrictions
on the sale or other disposition of such Shares, and rights of the Company to
reacquire such Shares upon termination of the Recipient's employment within
specified periods. Subject to such other restrictions as are imposed by the
Committee, the Shares covered by a Stock Award granted to a Recipient who is
subject to Section 16 of the Exchange Act may be sold or otherwise disposed of
only after six months from the date of grant of the Stock Award, unless
otherwise permitted under Rule 16b-3.

10.      FAIR MARKET VALUE

         "Fair Market Value" for all purposes under the Plan shall mean the
average of the high and low prices of Shares, as reported in The Wall Street
Journal, on the NASDAQ National Market System (or a similar consolidated
transactions report for the exchange or other market on which the Shares are
then trading, if not the NASDAQ National Market System) for the relevant date,
or if no sales of Shares were made on such exchange on such date, the average of
the high and low prices of Shares as reported in such composite transaction
report for the preceding day on which sales of Shares were made on such
exchange. If the Shares are not listed on a national securities exchange at the
time Fair Market Value is to be determined, then Fair Market Value shall be
determined by the Committee in good faith pursuant to such method as to the
Committee deems appropriate and equitable. Under no circumstances shall the Fair
Market Value of a Share be less than its par value.

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11.      ADJUSTMENTS

         (a)      Equitably Applied. The Committee may make such adjustments as
it deems appropriate in the event of changes that impact upon the price or
status of the Shares, provided that any such actions are consistently and
equitably applicable to all affected Recipients, and further provided, however,
that the Committee shall not change the aggregate number of Shares subject to
the Plan, except in accordance with the following paragraph.

         (b)      Recapitalization or Reorganization. In the event of any stock
dividend, stock split, combination or exchange of shares, merger, consolidation,
spin-off or other similar transaction or any other change affecting the capital
structure of the Company, such adjustments, if any, as the Committee in its
discretion may deem appropriate to reflect such change shall be made with
respect to (i) the aggregate number of Shares that may be issued under the Plan;
(ii) the number of Shares subject to Options, Rights and Stock Awards under the
Plan; and (iii) the Option Prices for Options outstanding under the Plan.

12.      RESTRICTED STOCK

         Each exercise notice shall (unless the Shares are covered by a then
current registration statement or a Notification under Regulation A under the
Securities Act of 1933, as amended (the "Securities Act")), contain the
Recipient's acknowledgment in form and substance satisfactory to the Company
that (i) such Shares are being purchased for investment and not for distribution
or resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Securities Act) and, in the case of an ISO, the Shares may not
be sold within one year of exercise or two years from the date of grant in order
to maintain the ISO status of the Option; (ii) the Recipient has been advised
and understands that (A) the Shares have not been registered under the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act and are subject to restrictions on transfer and (B) the
Company is under no obligation to register the Shares under the Securities Act
or to take any action which would make available to the Recipient any exemption
from such registration, (iii) such Shares may not be transferred without
compliance with all applicable federal and state securities laws, and (iv) an
appropriate legend referring to the foregoing restrictions on transfer and any
other restrictions imposed under the Options, Rights or Stock Awards may be
endorsed on the certificates. Notwithstanding the above, should the Company be
advised by counsel that the issuance of the Shares upon the exercise of an
Option, Right or Stock Award should be delayed pending (A) registration under
federal or state securities laws, (B) the receipt of an opinion that an
appropriate exemption therefrom is available, (C) the listing or inclusion of
the Shares on any securities exchange or in an automated quotation system or (D)
the consent or approval of any governmental regulatory body whose consent or
approval is necessary in connection with the issuance of such Shares, the
Company may defer the exercise of any Option, Right or Stock Award granted
hereunder until either such event in A, B, C or D has occurred.

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13.      AMENDMENTS, MODIFICATIONS AND TERMINATION OF THE PLAN

         The Board or the Committee may terminate, suspend or amend the Plan as
the Board or the Committee deems appropriate, in whole or in part, without the
approval of the stockholders of the Company; provided, however, that no action
shall be taken without the approval of the stockholders of the Company to
increase the aggregate number of Shares subject to the Plan, materially increase
the benefits accruing to the Recipients under the Plan, or materially modify
the requirements as to eligibility for participation in the Plan.
Notwithstanding the foregoing, the Committee may make amendments applicable or
inapplicable only to persons who are subject to Section 16 of the Exchange Act,
and the Committee may, at any time and in its sole discretion, declare any or
all Options and Rights then outstanding under the Plan to be exercisable and any
or all Stock Awards outstanding under the Plan to be vested, whether or not such
Options, Rights or Stock Awards are then otherwise exercisable or vested. No
amendment or termination of the Plan shall in any manner adversely affect any
Option, Right or Stock Award theretofore granted without the consent of the
Recipient thereof.

14.      TAX WITHHOLDING

         The Company shall have the right to deduct from any amount payable or
Shares deliverable or vested under the Plan an amount sufficient to cover
withholding required by law for any federal, state or local taxes or to take
such other action as may be necessary to satisfy any such withholding
obligations. The Committee may permit Shares to be used to satisfy required tax
withholding and such Shares shall be valued at their Fair Market Value as of the
date of the applicable payment, delivery or vesting.

15.      UNFUNDED PLAN

         Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or a separate
fund or funds. The Plan shall not establish any fiduciary relationship between
the Company and any Recipient or other person. To the extent any person holds
any right by virtue of a grant under the Plan, such right (unless otherwise
determined by the Committee) shall be no greater than the right of an unsecured
general creditor of the Company.

16.      GRANT AGREEMENTS

         Grants under the Plan shall be evidenced by agreements approved by the
Committee that set forth the terms, conditions and limitations applicable to
such grants. The Committee need not require the execution of any such agreement,
and acceptance of any grant by the Recipient thereof will constitute agreement
to the terms of such grant.

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                                                                    EXHIBIT 10.8

                                                                        11/16/98

                               ANIMAS CORPORATION

                          1998 EQUITY COMPENSATION PLAN

         The purpose of the Animas Corporation 1998 Equity Compensation Plan
(the "Plan") is to provide (i) designated employees of Animas Corporation (the
"Company") and its subsidiaries, (ii) certain consultants and advisors who
perform services for the Company or its subsidiaries and (iii) non-employee
members of the Board of Directors of the Company (the "Board") with the
opportunity to receive grants of incentive stock options, nonqualified stock
options and restricted stock. The Company believes that the Plan will encourage
the participants to contribute materially to the growth of the Company, thereby
benefitting the Company's shareholders, and will align the economic interests of
the participants with those of the shareholders.

         1.       Administration

         (a)      Committee. The Plan shall be administered and interpreted by
the Board or by a committee appointed by the Board. After an initial public
offering of the Company's stock as described in Section 18(b) (a "Public
Offering"), the Plan shall be administered by a committee, which may consist of
"outside directors" as defined under section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and related Treasury regulations and "non-
employee directors" as defined under Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). However, the Board may ratify or
approve any grants as it deems appropriate. If a committee administers the Plan,
references in the Plan to the "Board," as they relate to Plan administration,
shall be deemed to refer to the committee.

         (b)      Board Authority. The Board shall have the sole authority to
(i) determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued grant, and (v) deal with any other matters
arising under the Plan.

         (c)      Board Determinations. The Board shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Board's interpretations of the Plan
and all determinations made by the Board pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons having any interest in
the Plan or in any awards granted hereunder. All powers of the Board shall be
executed in its sole discretion, in the

<PAGE>

best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.

         2.       Grants

         Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options") and restricted stock as described in Section 6 ("Restricted Stock")
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan as the Board deems appropriate and as are
specified in writing by the Board to the individual in a grant instrument or an
amendment to the grant instrument (the "Grant Instrument"). The Board shall
approve the form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.

         3.       Shares Subject to the Plan

         (a)      Shares Authorized. Subject to adjustment as described below,
the aggregate number of shares of common stock of the Company ("Company Stock")
that may be issued or transferred under the Plan is 1,650,000 shares. After a
Public Offering, the maximum aggregate number of shares of Company Stock that
shall be subject to Grants made under the Plan to any individual during any
calendar year shall be 100,000 shares, subject to adjustment as described below.
The shares may be authorized but unissued shares of Company Stock or reacquired
shares of Company Stock, including shares purchased by the Company on the open
market for purposes of the Plan. If and to the extent Options granted under the
Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered
without having been exercised or if any shares of Restricted Stock are
forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan. If shares of Company Stock are used to pay the exercise
price of an Option, only the net number of shares received by the grantee
pursuant to such exercise shall be considered to have been issued or transferred
under the Plan with respect to such Option, and the remaining number of shares
subject to the Option shall again be available for purposes of the Plan.

         (b)      Adjustments. If there is any change in the number or kind of
shares of Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that

                                       -2-

<PAGE>

any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share of such Grants may be appropriately adjusted by
the Board to reflect any increase or decrease in the number of, or change in the
kind or value of, issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under such
Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. Any adjustments determined by the Board shall be
final, binding and conclusive.

         4.       Eligibility for Participation

         (a)      Eligible Persons. All employees of the Company and its
subsidiaries ("Employees"), including Employees who are officers or members of
the Board, and members of the Board who are not Employees ("Non-Employee
Directors") shall be eligible to participate in the Plan. Consultants and
advisors who perform services for the Company or any of its subsidiaries ("Key
Advisors") shall be eligible to participate in the Plan if the Key Advisors
render bona fide services and such services are not in connection with the offer
or sale of securities in a capital-raising transaction.

         (b)      Selection of Grantees. The Board shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants and shall determine
the number of shares of Company Stock subject to a particular Grant in such
manner as the Board determines. Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to as
"Grantees".

         5.       Granting of Options

         (a)      Number of Shares. The Board shall determine the number of
shares of Company Stock that will be subject to each Grant of Options to
Employees, Non-Employee Directors and Key Advisors.

         (b)      Type of Option and Price.

                  (i)      The Board may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code or Nonqualified Stock Options that are not intended so to
qualify or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees, Non-Employee Directors and Key Advisors.

                  (ii)     The purchase price (the "Exercise Price") of Company
Stock subject to an Option shall be determined by the Board and may be equal to,
greater than, or less than the Fair Market Value (as defined below) of a share
of Company Stock on the date the Option is granted; provided, however, that (x)
the Exercise Price of an Incentive Stock Option shall be equal to, or

                                       -3-

<PAGE>

greater than, the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted and (y) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.

                  (iii)    If the Company Stock is publicly traded, then the
Fair Market Value per share shall be determined as follows: (x) if the principal
trading market for the Company Stock is a national securities exchange or the
Nasdaq National Market, the last reported sale price thereof on the relevant
date or (if there were no trades on that date) the latest preceding date upon
which a sale was reported, or (y) if the Company Stock is not principally traded
on such exchange or market, the mean between the last reported "bid" and "asked"
prices of Company Stock on the relevant date, as reported on Nasdaq or, if not
so reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Board determines. If the Company Stock is not publicly traded or, if publicly
traded, is not subject to reported transactions or "bid" or "asked" quotations
as set forth above, the Fair Market Value per share shall be as determined by
the Board.

         (c)      Option Term. The Board shall determine the term of each
Option. The term of any Option shall not exceed ten years from the date of
grant. However, an Incentive Stock Option that is granted to an Employee who, at
the time of grant, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.

         (d)      Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Board and specified in the Grant Instrument. The Board may
accelerate the exercisability of any or all outstanding Options at any time for
any reason.

         (e)      Termination of Employment, Disability or Death.

                  (i)      Except as provided below, an Option may only be
exercised while the Grantee is employed by, or providing service to, the Company
as an Employee, Key Advisor or member of the Board. In the event that a Grantee
ceases to be employed by, or provide service to, the Company for any reason
other than Disability (as defined below), death, or termination for Cause (as
defined below), any Option which is otherwise exercisable by the Grantee shall
terminate unless exercised within 90 days after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Board), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Board, any of the Grantee's Options that are not otherwise

                                       -4-

<PAGE>

exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.

                  (ii)     In the event the Grantee ceases to be employed by, or
provide service to, the Company on account of a termination for Cause by the
Company, any Option held by the Grantee shall terminate as of the date the
Grantee ceases to be employed by, or provide service to, the Company. In
addition, notwithstanding any other provisions of this Section 5, if the Board
determines that the Grantee has engaged in conduct that constitutes Cause at any
time while the Grantee is employed by, or providing service to, the Company or
after the Grantee's termination of employment or service, any Option held by the
Grantee shall immediately terminate, and the Grantee shall automatically forfeit
all shares underlying any exercised portion of an Option for which the Company
has not yet delivered the share certificates, upon refund by the Company of the
Exercise Price paid by the Grantee for such shares. Upon any exercise of an
Option, the Company may withhold delivery of share certificates pending
resolution of an inquiry that could lead to a finding resulting in a forfeiture.

                  (iii)    In the event the Grantee ceases to be employed by, or
provide service to, the Company because the Grantee is Disabled, any Option
which is otherwise exercisable by the Grantee shall terminate unless exercised
within two years after the date on which the Grantee ceases to be employed by,
or provide service to, the Company (or within such other period of time as may
be specified by the Board), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Board, any of
the Grantee's Options which are not otherwise exercisable as of the date on
which the Grantee ceases to be employed by, or provide service to, the Company
shall terminate as of such date.

                  (iv)     If the Grantee dies while employed by, or providing
service to, the Company or within 90 days after the date on which the Grantee
ceases to be employed or provide service on account of a termination specified
in Section 5(e)(i) above (or within such other period of time as may be
specified by the Board), any Option that is otherwise exercisable by the Grantee
shall terminate unless exercised within two years after the date on which the
Grantee ceases to be employed by, or provide service to, the Company (or within
such other period of time as may be specified by the Board), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Board, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.

                  (v)      For purposes of this Section 5(e) and Section 6:

                  (A) The term "Company" shall mean the Company and its parent
         and subsidiary corporations.

                                       -5-

<PAGE>

                  (B) "Employed by, or provide service to, the Company" shall
         mean employment or service as an Employee, Key Advisor or member of the
         Board (so that, for purposes of exercising Options and satisfying
         conditions with respect to Restricted Stock, a Grantee shall not be
         considered to have terminated employment or service until the Grantee
         ceases to be an Employee, Key Advisor and member of the Board), unless
         the Board determines otherwise.

                  (C) "Disability" shall mean a Grantee's becoming disabled
         within the meaning of section 22(e)(3) of the Code.

                  (D) "Cause" shall mean, except to the extent specified
         otherwise by the Committee, a finding by the Board that the Grantee (i)
         has breached his or her employment or service contract with the
         Company, (ii) has engaged in disloyalty to the Company, including,
         without limitation, fraud, embezzlement, theft, commission of a felony
         or proven dishonesty in the course of his or her employment or service,
         (iii) has disclosed trade secrets or confidential information of the
         Company to persons not entitled to receive such information or (iv) has
         engaged in such other behavior detrimental to the interests of the
         Company as the Board determines.

         (f)      Exercise of Options. A Grantee may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Board (x) in cash, (y) with the
approval of the Board, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Board deems appropriate) and having
a Fair Market Value on the date of exercise equal to the Exercise Price or by
attestation (on a form prescribed by the Board) to ownership of shares of
Company Stock having a Fair Market Value on the date of exercise equal to the
Exercise Price, or (z) by such other method as the Board may approve, including
after a Public Offering payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board. Shares of Company Stock
used to exercise an Option shall have been held by the Grantee for the requisite
period of time to avoid adverse accounting consequences to the Company with
respect to the Option. The Grantee shall pay the Exercise Price and the amount
of any withholding tax due (pursuant to Section 7) at the time of exercise.

         (g)      Limits on Incentive Stock Options. Each Incentive Stock Option
shall provide that, if the aggregate Fair Market Value of the stock on the date
of the grant with respect to which Incentive Stock Options are exercisable for
the first time by a Grantee during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary,
exceeds $100,000 then the Option, as to the excess, shall be treated as a
Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any
person who is not an Employee of the Company or a parent or subsidiary (within
the meaning of section 424(f) of the Code).

                                       -6-

<PAGE>

         6.       Restricted Stock Grants

         The Board may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Grant of Restricted Stock, upon
such terms as the Board deems appropriate. The following provisions are
applicable to Restricted Stock:

         (a)      General Requirements. Shares of Company Stock issued or
transferred pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, and subject to restrictions or no
restrictions, as determined by the Board. The Board may establish conditions
under which restrictions on shares of Restricted Stock shall lapse over a period
of time or according to such other criteria as the Board deems appropriate. The
period of time during which the Restricted Stock will remain subject to
restrictions will be designated in the Grant Instrument as the "Restriction
Period."

         (b)      Number of Shares. The Board shall determine the number of
shares of Company Stock to be issued or transferred pursuant to a Restricted
Stock Grant and the restrictions applicable to such shares.

         (c)      Requirement of Employment or Service. If the Grantee ceases to
be employed by, or provide service to, the Company (as defined in Section 5(e))
during a period designated in the Grant Instrument as the Restriction Period, or
if other specified conditions are not met, the Restricted Stock Grant shall
terminate as to all shares covered by the Grant as to which the restrictions
have not lapsed, and those shares of Company Stock must be immediately returned
to the Company. The Board may, however, provide for complete or partial
exceptions to this requirement as it deems appropriate.

         (d)      Restrictions on Transfer and Legend on Stock Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 8(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Board may determine that the Company will not issue
certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.

         (e)      Right to Vote and to Receive Dividends. During the Restriction
Period, the Grantee shall have the right to vote shares of Restricted Stock and
to receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Board.

                                       -7-
<PAGE>

         (f)      Lapse of Restrictions. All restrictions imposed on Restricted
Stock shall lapse upon the expiration of the applicable Restriction Period and
the satisfaction of all conditions imposed by the Board. The Board may
determine, as to any or all Restricted Stock Grants, that the restrictions shall
lapse without regard to any Restriction Period.

         7.       Withholding of Taxes

         (a)      Required Withholding. All Grants under the Plan shall be
subject to applicable federal (including FICA), state and local tax withholding
requirements. The Company may require that the Grantee or other person receiving
or exercising Grants pay to the Company the amount of any federal, state or
local taxes that the Company is required to withhold with respect to such
Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.

         (b)      Election to Withhold Shares. If the Board so permits, a
Grantee may elect to satisfy the Company's income tax withholding obligation
with respect to a Grant by having shares withheld up to an amount that does not
exceed the Grantee's minimum applicable withholding tax rate for federal
(including FICA), state and local tax liabilities. The election must be in a
form and manner prescribed by the Board and shall be subject to the prior
approval of the Board.

         8.       Transferability of Grants

         (a)      Nontransferability of Grants. Except as provided below, only
the Grantee may exercise rights under a Grant during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Grants other than Incentive Stock Options,
if permitted in any specific case by the Board, pursuant to a domestic relations
order. When a Grantee dies, the personal representative or other person entitled
to succeed to the rights of the Grantee ("Successor Grantee") may exercise such
rights. A Successor Grantee must furnish proof satisfactory to the Company of
his or her right to receive the Grant under the Grantee's will or under the
applicable laws of descent and distribution.

         (b)      Transfer of Nonqualified Stock Options. Notwithstanding the
foregoing, the Board may provide, in a Grant Instrument, that a Grantee may
transfer Nonqualified Stock Options to family members, one or more trusts for
the benefit of family members, or one or more partnerships of which family
members are the only partners, according to such terms as the Board may
determine; provided that the Grantee receives no consideration for the transfer
of an Option and the transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option immediately before the
transfer.

                                       -8-

<PAGE>

         9.       Right of First Refusal; Repurchase Right

         (a)      Offer. Prior to a Public Offering, if at any time an
individual desires to sell, encumber, or otherwise dispose of shares of Company
Stock that were distributed to him or her under this Plan and that are
transferable, the individual may do so only pursuant to a bona fide written
offer, and the individual shall first offer the shares to the Company by giving
the Company written notice disclosing: (a) the name of the proposed transferee
of the Company Stock; (b) the certificate number and number of shares of Company
Stock proposed to be transferred or encumbered; (c) the proposed price; (d) all
other terms of the proposed transfer; and (e) a written copy of the proposed
offer. Within 60 days after receipt of such notice, the Company shall have the
option to purchase all or part of such Company Stock at the price and on the
terms set forth in the notice.

         (b)      Sale. In the event the Company (or a shareholder, as described
below) does not exercise the option to purchase Company Stock, as provided
above, the individual shall have the right to sell, encumber, or otherwise
dispose of his shares of Company Stock at the price and on the terms of the
transfer set forth in the written notice to the Company, provided such transfer
is effected within 15 days after the expiration of the option period. If the
transfer is not effected within such period, the Company must again be given an
option to purchase, as provided above.

         (c)      Purchase by the Company. Prior to a Public Offering, if a
Grantee ceases to be employed by, or provide service to, the Company, the
Company shall have the right to purchase all or part of any Company Stock
distributed to him or her under this Plan at its then current Fair Market Value
(as defined in Section 5(b)) (or at such other price as may be established in
the Grant Instrument); provided, however, that such repurchase shall be made in
accordance with applicable accounting rules to avoid adverse accounting
treatment.

         (d)      Assignment of Rights. The Board, in its sole discretion, may
waive the Company's right of first refusal and repurchase right under this
Section 9. If the Company's right of first refusal or repurchase right is so
waived, the Board may, in its sole discretion, assign such right to the
remaining shareholders of the Company in the same proportion that each
shareholder's stock ownership bears to the stock ownership of all the
shareholders of the Company, as determined by the Board. To the extent that a
shareholder has been given such right and does not purchase his or her
allotment, the other shareholders shall have the right to purchase such
allotment on the same basis.

         (e)      Public Offering. On and after a Public Offering, the Company
shall have no further right to purchase shares of Company Stock under this
Section 9.

                                       -9-

<PAGE>

         (f)      Shareholder's Agreement. Notwithstanding the provisions of
this Section 9, if the Board requires that a Grantee execute a shareholder's
agreement with respect to any Company Stock distributed pursuant to this Plan,
the provisions of this Section 9 shall not apply to such Company Stock.

         10.      Change of Control of the Company

         As used herein, a "Change of Control" shall be deemed to have occurred
if:

         (a)      Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) (other than persons who are shareholders on the effective
date of the Plan) becomes a "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the voting power of the then outstanding
securities of the Company; provided that a Change of Control shall not be deemed
to occur as a result of a change of ownership resulting from the death of a
shareholder, and a Change of Control shall not be deemed to occur as a result of
a transaction in which the Company becomes a subsidiary of another corporation
and in which the shareholders of the Company, immediately prior to the
transaction, will beneficially own, immediately after the transaction, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the parent corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote); or

         (b)      The shareholders of the Company approve (or, if shareholder
approval is not required, the Board approves) an agreement providing for (i) the
merger or consolidation of the Company with another corporation where the
shareholders of the Company, immediately prior to the merger or consolidation,
will not beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of all
or substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company.

         11.      Consequences of a Change of Control

         (a)      Assumption of Grants. Upon a Change of Control where the
Company is not the surviving corporation (or survives only as a subsidiary of
another corporation), unless the Board determines otherwise, all outstanding
Options that are not exercised shall be assumed by, or replaced with comparable
options by the surviving corporation, and outstanding Restricted Stock shall be
converted to restricted stock of the surviving corporation.

         (b)      Other Alternatives. Notwithstanding the foregoing, subject to
subsection (c) below, in the event of a Change of Control, the Board may take
any of the following actions with respect to any or all outstanding Grants: the
Board may (i) determine that outstanding Options

                                      -10-

<PAGE>

shall automatically accelerate and become fully exercisable and that the
restrictions and conditions on outstanding Restricted Stock shall immediately
lapse, (ii) require that Grantees surrender their outstanding Options in
exchange for a payment by the Company, in cash or Company Stock as determined by
the Board, in an amount equal to the amount by which the then Fair Market Value
of the shares of Company Stock subject to the Grantee's unexercised Options
exceeds the Exercise Price of the Options or (iii) after giving Grantees an
opportunity to exercise their outstanding Options, terminate any or all
unexercised Options at such time as the Board deems appropriate. Such surrender
or termination shall take place as of the date of the Change of Control or such
other date as the Board may specify. The Board shall have no obligation to take
any of the foregoing actions, and, in the absence of any such actions,
outstanding Options and Restricted Stock shall continue in effect according to
their terms (subject to any assumption pursuant to Subsection (a)).

         (c)      Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Change of Control, the Board shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection (b) above) that would make the Change of Control
ineligible for pooling of interests accounting treatment or that would make the
Change of Control ineligible for desired tax treatment if, in the absence of
such right, the Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Change of Control.

         12.      Requirements for Issuance or Transfer of Shares

         (a)      Shareholder's Agreement. The Board may require that a Grantee
execute a shareholder's agreement, with such terms as the Board deems
appropriate, with respect to any Company Stock issued or distributed pursuant to
this Plan.

         (b)      Limitations on Issuance or Transfer of Shares. No Company
Stock shall be issued or transferred in connection with any Grant hereunder
unless and until all legal requirements applicable to the issuance or transfer
of such Company Stock have been complied with to the satisfaction of the Board.
The Board shall have the right to condition any Grant made to any Grantee
hereunder on such Grantee's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Board shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.

         (c)      Lock-Up Period. If so requested by the Company or any
representative of the underwriters (the "Managing Underwriter") in connection
with any registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), a Grantee (including
any successor or assigns) shall not sell or otherwise transfer any

                                      -11-

<PAGE>

shares or other securities of the Company during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period"). Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

         13.      Amendment and Termination of the Plan

         (a)      Amendment. The Board may amend or terminate the Plan at any
time; provided, however, that the Board shall not amend the Plan without
shareholder approval if such approval is required in order for Incentive Stock
Options granted under the Plan to meet the requirements of section 422 of the
Code or, after a Public Offering, such approval is required in order to exempt
compensation under the Plan from the deduction limit under section 162(m) of the
Code.

         (b)      Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Board or is extended by the Board with the
approval of the shareholders.

         (c)      Termination and Amendment of Outstanding Grants. A termination
or amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the Board
acts under Section 19(b). The termination of the Plan shall not impair the power
and authority of the Board with respect to an outstanding Grant. Whether or not
the Plan has terminated, an outstanding Grant may be terminated or amended under
Section 19(b) or may be amended by agreement of the Company and the Grantee
consistent with the Plan.

         (d)      Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and assigns.

         14.      Funding of the Plan

         This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.

                                      -12-

<PAGE>

         15.      Rights of Participants

         Nothing in this Plan shall entitle any Employee, Key Advisor,
Non-Employee Director or other person to any claim or right to be granted a
Grant under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ
of the Company or any other employment rights.

         16.      No Fractional Shares

         No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Board shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

         17.      Headings

         Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.

         18.      Effective Date of the Plan.

         (a)      Effective Date. Subject to approval by the Company's
shareholders, the Plan shall be effective on November 1, 1998.

         (b)      Public Offering. The provisions of the Plan that refer to a
Public Offering, or that refer to, or are applicable to persons subject to,
section 16 of the Exchange Act or section 162(m) of the Code, shall be
effective, if at all, upon the initial registration of the Company Stock under
section 12(g) of the Exchange Act, and shall remain effective thereafter for so
long as such stock is so registered.

         19.      Miscellaneous

         (a)      Grants in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the
right of the Board to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants to
employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Board may make a Grant to an employee of another corporation who
becomes an Employee by reason of a corporate merger, consolidation, acquisition
of stock or property, reorganization or liquidation involving the Company or any
of its subsidiaries in substitution for a stock option or restricted stock grant
made by such corporation. The terms and conditions of the substitute grants may
vary from the

                                      -13-

<PAGE>

terms and conditions required by the Plan and from those of the substituted
stock incentives. The Board shall prescribe the provisions of the substitute
grants.

         (b)      Compliance with Law. The Plan, the exercise of Options and the
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to section 16 of the Exchange Act, after a Public Offering it is the
intent of the Company that the Plan and all transactions under the Plan comply
with all applicable provisions of Rule 16b-3 or its successors under the
Exchange Act. In addition, it is the intent of the Company that the Plan and
applicable Grants under the Plan comply with the applicable provisions of
section 162(m) of the Code, after a Public Offering, and section 422 of the
Code. To the extent that any legal requirement of section 16 of the Exchange Act
or section 162(m) or 422 of the Code as set forth in the Plan ceases to be
required under section 16 of the Exchange Act or section 162(m) or 422 of the
Code, that Plan provision shall cease to apply. The Board may revoke any Grant
if it is contrary to law or modify a Grant to bring it into compliance with any
valid and mandatory government regulation. The Board may also adopt rules
regarding the withholding of taxes on payments to Grantees. The Board may, in
its sole discretion, agree to limit its authority under this Section.

         (c)      Governing Law. The validity, construction, interpretation and
effect of the Plan and Grant Instruments issued under the Plan shall be governed
and construed by and determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions thereof.

                                      -14-

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