Document:

exv10wii

 

Exhibit 10(ii)

RESOLUTION OF THE BOARD OF DIRECTORS

OF

POTASH CORPORATION OF SASKATCHEWAN INC.

(the “Corporation”)

        WHEREAS the Canada Business Corporation Act authorizes the Corporation to
indemnify its directors and officers and persons who, at the Corporation’s
request, act as directors or officers of, or in a similar capacity to, other
entities (each, an “Eligible Indemnitee”);

        AND WHEREAS the by-laws of the Corporation require the Corporation to
indemnify its Eligible Indemnitees whenever required or permitted by law;

        NOW THEREFORE BE IT RESOLVED THAT:

	1.	 	the form of Agreement of Indemnification attached hereto as Schedule “A”
(the “Agreement of Indemnification”) be and it is hereby approved;
	 
	2.	 	any director or officer of the Corporation is hereby authorized from time
to time to execute and deliver Agreements of Indemnification for and in
the name of and on behalf of the Corporation with each person who is, or
who becomes, an Eligible Indemnitee, substantially in the form and on the
terms and subject to the conditions of the Agreement of Indemnification;
	 
	3.	 	any one officer or director of the Corporation is hereby authorized and
directed to do all such other acts and to execute, whether under the
corporate seal of the Corporation or otherwise, and deliver, for, on
behalf of, and in the name of the Corporation, all such other documents,
instruments or agreements and to take all such actions from time to time
as such officer or director may in his or her sole and absolute discretion
determine to be necessary or advisable to give and effect and carry out
the foregoing provisions of this resolution and the terms of the Agreement
of Indemnification, the doing of all such acts and things and the
execution and delivery of such documents, instruments and agreements being
conclusive evidence of such determination.

 

 

Schedule “A”

AGREEMENT OF INDEMNIFICATION

THIS AGREEMENT made the                      day of 2004.

BETWEEN:

	 	 	 	POTASH CORPORATION OF SASKATCHEWAN INC. (a corporation continued under
the Canada Business Corporations Act,

(the “Corporation”);

– and –

	 	 	 	•

(the “Indemnitee”).

	 	 	 	WHEREAS it is essential to the Corporation to retain and attract as
directors and officers of the Corporation or other bodies corporate with
which the Corporation has a relationship and other individuals to act in
a similar capacity of other entities with which the Corporation has a
relationship (collectively the “Included Entities”) the most capable
persons available;
	 
	 	 	 	AND WHEREAS, for that purpose, it is the policy of the Corporation to
indemnify its directors and officers and the persons who, at the
Corporation’s request, act as directors or officers of or in a similar
capacity for Included Entities (collectively the “Eligible Indemnitees”)
as permitted by law;
	 
	 	 	 	AND WHEREAS, the bylaws of the Corporation require the Corporation to
indemnify its Eligible Indemnities whenever required or permitted by law;
	 
	 	 	 	AND WHEREAS the Corporation has requested the Indemnitee to act or to
continue to act as a director or officer of, or to act in a similar
capacity for, one or more Included Entities;
	 
	 	 	 	AND WHEREAS the Indemnitee has agreed to act or to continue to act as a
director or officer, or both, or to act in a similar capacity, of one or
more of the Included Entities upon the condition that the Corporation
executes and delivers this agreement of indemnification;
	 
	 	 	 	NOW, THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the
premises and the mutual covenants herein contained and for good and
valuable consideration, the receipt of which is hereby acknowledged by
both parties, the Corporation and Indemnitee agree as follows:

 

 

	 	1.	 	Agreement to Serve: The Indemnitee agrees to act or to
continue to act as a director and/or officer of or in a similar
capacity for Included Entities for so long as [he or she] is duly
elected or appointed or until such time as he or she ceases to so
act, whether by resignation in writing or otherwise.
	 
	 	2.	 	Indemnity Right: To the extent permitted under applicable
law, and subject to the further terms and conditions of this
agreement, the Corporation hereby agrees to indemnify the Indemnitee
and [his/her] personal representatives against all costs, charges
and expenses, including, without limitation, any amount paid to
settle an action or satisfy a judgment, reasonably incurred by the
Indemnitee in respect of any civil, criminal, administrative,
investigative or other proceeding to which the Indemnitee by reason
of being or having been a director and/or officer or acting or
having acted in a similar capacity, is involved because of that
association with one or more Included Entities.
	 
	 	3.	 	Scope: The agreement extends to all acts, omissions,
circumstances and events, whether occurring before or after the date
of this agreement.
	 
	 	4.	 	Conditions Precedent:

	 	(a)	 	Notice: The Indemnitee shall, as soon as
reasonably practicable after becoming aware of any claim,
demand, action or proceeding which may give rise to
indemnification hereunder, give written notice to the
Corporation, directed to its corporate secretary, provided
however, that failure to give notice in a timely fashion shall
not disentitle the Indemnitee to the right to indemnity
hereunder except to the extent the Corporation suffers actual
prejudice by reason of the delay.
	 
	 	(b)	 	General Conditions: Notwithstanding anything
herein contained, and for greater certainty, the indemnity
provided by Section 2 is only available to the Indemnitee if:

	 	(i)	 	the Indemnitee acted honestly and
in good faith with a view to the best interests of the
Included Entity;
	 
	 	(ii)	 	in the case of a criminal or
administrative action or proceeding that is enforced by
a monetary penalty, the Indemnitee had reasonable
grounds for believing that the conduct in question was
lawful; and
	 
	 	(iii)	 	in respect of an action by or on
behalf of an Included Entity to procure a judgment in
its favour, to which the Indemnitee is made a party by
reason of the Indemnitee’s association with the
Included Entity, if a court of competent jurisdiction
gives its approval to the Corporation to indemnify the
Indemnitee.

	 	(c)	 	Defence Costs: The Corporation shall not be
liable for any defence costs (including without limitation,
any costs, charges and expenses to

 

 

	 	 	 	investigate, defend, or monitor any action or proceeding)
incurred without its prior express consent, which consent
shall not be unreasonably withheld. In considering the
reasonableness of any request by the Indemnitee that the
Corporation consent to the incurring of defence costs, the
Corporation may consider, without limitation, the proposed
choice of defence counsel, the terms of engagement or
proposed counsel and the extent to which the defence costs
may be controlled or limited through common efforts,
including the employment of common counsel, with other
directors and officers of the Included Entity, without the
creation of actual or perceived conflicts of interest.

	 	(d)	 	Settlements: The Corporation shall not be liable
for any costs, charges, or expenses incurred in connection
with any settlement in respect of any claim, demand, action or
proceeding against the Indemnitee which has been entered into
without the prior express consent of the Corporation. For
greater clarity, and without limiting in any way the
generality of the foregoing, in the event that the Indemnitee
enters into any such settlement without the prior express
consent of the Corporation, the Corporation shall not be
responsible for indemnifying the Indemnitee for any
compensation or other payment to be made under the settlement
or for costs of negotiating or implementing the settlement and
the Indemnitee shall not seek indemnity from the Corporation
in respect of any other costs, charges or expenses in
association with such settlement.

	 	5.	 	Further Exceptions: Nothwithstanding anything herein
contained, the indemnity proved by Section 2 shall not be applicable
to or in respect of any claim arising from:

	 	(a)	 	any act, omission, circumstance or event, in
respect of which it is proven that the Indemnitee has
improperly profited by the conduct which is the subject of the
claim, demand, action or proceeding, whether by trading
activities contrary to securities laws or otherwise;
	 
	 	(b)	 	failure of the Indemnitee to act in accordance
with specific and lawful instructions or directions of the
board of directors of the Corporation, or an officer of the
Corporation who is authorized to provide instruction or
directions to the Indemnitee.

	 	6.	 	Approvals: Where any indemnification sought pursuant to
Section 2 hereof is, under applicable law, subject to or conditional
upon the approval or consent of any court or of any governmental
body or regulatory authority, the Corporation agrees to make or
cause to be made all necessary applications and to use its
reasonable best efforts to obtain or assist in obtaining or
facilitating the obtaining of such approval or consent.
	 
	 	7.	 	Right to Resign and Survival: Nothing in this agreement
shall prevent the Indemnitee from resigning as a director or
officer, or both, of the Corporation or

 

 

	 	 	 	any other body corporate at any time. This agreement shall survive
any such resignation or any other circumstance by reason of which
the Indemnitee shall cease to be a director or officer of the
Corporation or any other body corporate.

	 	8.	 	Settlement for Corporation: Subject to the consent of the
Indemnitee, the Corporation may enter into a settlement or other
agreement to compromise a claim, demand, action or proceeding which
has given rise to a notice of claim for indemnity hereunder.
	 
	 	 	 	If the Indemnitee refuses to give consent to the terms of a
proposed settlement or compromise which is otherwise acceptable to
the Corporation, any amount awarded against the Indemnitee in
excess of the amount for which settlement or compromise could have
been made by the Corporation shall not be recoverable under this
agreement, it being further agreed by the parties that in such
event the Corporation shall only be responsible for costs, charges
and expenses up to the time at which settlement could have been
made.
	 
	 	9.	 	Advance Payment of Defence Costs: Except as otherwise
expressly provided herein, in the event the Indemnitee is not in
fact receiving indemnification on a current basis from any other
source with respect to any matter for which indemnity is available
pursuant to this agreement except for the indemnities provided for
in Section 14 and in Section 15 hereof, the Corporation will advance
and pay all costs, charges and expenses reasonably incurred by the
Indemnitee in respect of any civil, criminal, administrative,
investigative, or other proceeding in which the Indemnitee, by
reason of being or having been a director and/or officer or acting
or having acted in any similar capacity, is involved because of that
association with one or more Included Entities, as such costs,
charges and expenses are incurred, provided however:

	 	(a)	 	that no such advancement shall be made unless and
until the Indemnitee has provided to the Corporation a written
affirmation of [his/her] good faith belief that [he/she] has
met the standard of conduct necessary for indemnification by the
Corporation as provided for in Section 4(b) hereof;
	 
	 	(b)	 	that no such advancement shall be made unless and
until the Indemnitee has provided to the Corporation a written
undertaking by or on behalf of the Indemnitee to repay all
amounts so advanced forthwith if it shall be determined that
the Indemnitee has not met the standard of conduct necessary
for indemnification by the Corporation as provided for in
Section 4(b) hereof;
	 
	 	(c)	 	that if the Indemnitee subsequently receives
indemnification or reimbursement for all or part of any costs,
charges or expenses from a source or sources other than the
Corporation, the amounts so advanced and paid by the
Corporation shall be repaid by the Indemnitee to the
Corporation forthwith upon request, to the extent that the
Indemnitee
receives indemnification or reimbursement from such other
source or sources.

 

 

	 	10.	 	Subrogation: To the extent permitted by law, the Corporation
shall be subrogated to all rights which the Indemnitee may have
under all policies of insurance or other contracts pursuant to which
the Indemnitee may be entitled to reimbursement of, or
indemnification in respect of, all or any part of the costs, charges
and expenses which are borne by the Corporation pursuant to this
agreement.
	 
	 	11.	 	Proper Law and Attornment: This agreement shall be construed
in accordance with and governed by the laws of the Province of
Saskatchewan and the parties hereto attorn to the jurisdiction of
the courts of Saskatchewan in respect of any proceedings arising out
of this agreement.
	 
	 	12.	 	Severability: Each section, and each provision within each
section, of this agreement is severable, the one from the other, and
if for any reason any section or provision of this agreement is not
enforceable or is otherwise invalid at law, or would render invalid
or unenforceable any policy of insurance purchased by the
Corporation on behalf of or for the benefit of either the
Corporation or the Indemnitee, the same shall be severed from the
remainder of the agreement and the remainder of this agreement shall
nonetheless be given full force and effect in accordance with its
terms.
	 
	 	13.	 	Further Responsibilities and Assurances: The Indemnitee:

	 	(a)	 	shall attend diligently to, and assist in the
conduct of, the defence of any claim, demand, action or
proceeding, shall assist in enforcing any right of
contribution or indemnity against any person or organization
and shall attend hearings and trials and assist in securing
and giving and obtaining the attendance of witnesses;
	 
	 	(b)	 	shall not voluntarily make any payment, assume
any obligation or admit any liability in respect of any claim,
demand, action or proceeding without the prior express consent
of the Corporation; and
	 
	 	(c)	 	shall execute such further assurances and
document, give such consents and perform such further acts as
the Corporation may reasonable request in order that the
Corporation may enjoy the full benefits of this agreement in
accordance with its terms and for that purpose shall enter
into such assignments, powers of attorney and other documents
as may be reasonably required in the circumstances.

	 	14.	 	Further Indemnity: In addition to the other indemnities
provided for herein, the Corporation shall defend, indemnify and
hold Indemnitee harmless from any loss, liability, damage, or
expense, including reasonable attorney’s fees, arising in connection
with or resulting from any breach or non-fulfillment or any agreement
on the part of the Corporation under this agreement.

 

 

	 	15.	 	Payment: Any indemnification or advancement of expenses
required hereunder shall be made promptly upon, and in any event
within thirty (30) days after, a written request from the Indemnitee
to the Corporation. If the Corporation denies a written request for
indemnity or advancement of expenses, in whole or in part, or if
payment in full pursuant to such request is not made within thirty
(30) days of the date such request is received by the Corporation,
the Indemnitee may at any time bring suit against the Corporation in
any court of competent jurisdiction to establish the Indemnitee’s
right to indemnity or advancement of expenses. Indemnitee’s costs
and expenses incurred in connection with successfully establishing
his or her right to indemnification in any such action or proceeding
shall also be indemnified by the Corporation.
	 
	 	16.	 	Initiation of Claims: Notwithstanding anything in this
agreement to the contrary, except with respect to proceedings
initiated by Indemnitee to enforce rights of indemnification to
which Indemnitee is entitled under this agreement, the
Corporation shall indemnify Indemnitee in connection with a
proceeding (or part thereof) initiated by Indemnitee only if the
Initiation of such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation.
	 
	 	17.	 	Enurement and Successors: This agreement is irrevocable and
enures to, and is binding upon, the parties hereto and their
respective heirs, successors, representatives and assigns.

	 	 	 	IN WITNESS WHEREOF the Corporation and the Indemnitee have executed this
Agreement as of the day and year first written above.

	 	 	 
	 
	 	 
	 
	 	 
	

	 	POTASH CORPORATION OF

SASKATCHEWAN INC.
 
	 
	 	 
	

	 	By:
	

	 	

	 
	 	 
	

	 	Name:
	

	 	

	SIGNED, SEALED and DELIVERED

by                                in the presence of
	 	 
	 
	 	 
	

Witness

	 	

NameSPECTRASCIENCE, INC.
                             AMENDED 2001 STOCK PLAN

                 SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS

         The name of this plan is the  SPECTRAScience,  Inc.  Amended 2001 Stock
Plan (the  "Plan").  The purpose of the Plan is to enable  SPECTRAScience,  Inc.
(the  "Company")  and its  Subsidiaries  to retain and attract  executives,  key
employees  (whether full or part-time),  consultants and non-employee  directors
who  contribute  to the  Company's  success  by  their  ability,  ingenuity  and
industry, and to enable such individuals to participate in the long-term success
and growth of the Company by giving them a proprietary interest in the Company.

         For purposes of the Plan,  the following  terms shall be defined as set
forth below:

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

         (b)      "CAUSE"  means a felony  conviction  of a  participant  or the
                  failure of a participant to contest  prosecution for a felony,
                  or a participant's  willful  misconduct or dishonesty,  any of
                  which is directly  and  materially  harmful to the business or
                  reputation of the Company.

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

         (d)      "COMMITTEE"  means the  Committee  referred to in Section 2 of
                  the Plan. If at any time no Committee shall be in office, then
                  the functions of the Committee  specified in the Plan shall be
                  exercised by the Board.

         (e)      "COMPANY" means, SPECTRAScience, Inc., a corporation organized
                  under the laws of the  State of  Minnesota  (or any  successor
                  corporation).

         (f)      "DISABILITY"   means   permanent   and  total   disability  as
                  determined by the Committee.

         (g)      "EARLY  RETIREMENT"  means  retirement,  with  consent  of the
                  Committee at the time of  retirement,  from active  employment
                  with the Company and any  Subsidiary or Parent  Corporation of
                  the Company.

         (h)      "FAIR  MARKET  VALUE"  means the value of the Stock on a given
                  date as determined  by the  Committee in  accordance  with the
                  applicable Treasury  Department  regulations under Section 422
                  of the Code with respect to "incentive stock options."

         (i)      "INCENTIVE STOCK OPTION" means any Stock Option intended to be
                  and  designated  as an  "Incentive  Stock  Option"  within the
                  meaning of Section 422 of the Code.

<PAGE>

         (j)      "NON-QUALIFIED  STOCK  OPTION"  means any Stock Option that is
                  not an Incentive Stock Option.

         (k)      "NON-EMPLOYEE  DIRECTOR"  shall have the  meaning set forth in
                  Rule 16b-3 under the  Securities  Exchange Act of 1934, or any
                  successor  definition  adopted by the  Securities and Exchange
                  Commission.

         (1)      "NORMAL  RETIREMENT"  means retirement from active  employment
                  with the Company,  any Subsidiary or Parent Corporation of the
                  Company on or after age 65.

         (m)      "PARENT  CORPORATION"  means any  corporation  (other than the
                  Company) in an unbroken chain of corporations  ending with the
                  Company if each of the  corporations  (other than the Company)
                  owns stock possessing 50% or more of the total combined voting
                  power of all classes of stock in one of the other corporations
                  in the chain.

         (n)      "RETIREMENT" means Normal Retirement or Early Retirement.

         (o)      "STOCK" means the Common Stock,  $.01 par value per share,  of
                  the Company.

         (p)      "STOCK  APPRECIATION  RIGHT"  means the right  pursuant  to an
                  award  granted  under  Section  6 below  to  surrender  to the
                  Company all or a portion of a Stock  Option in exchange for an
                  amount  equal to the  difference  between  (i) the Fair Market
                  Value,  as of the  date  such  Stock  Option  or such  portion
                  thereof is surrendered, of the shares of Stock covered by such
                  Stock Option or such portion  thereof,  and (ii) the aggregate
                  exercise price of such Stock Option or such portion thereof.

         (q)      "STOCK  OPTION"  means any option to purchase  shares of Stock
                  granted pursuant to Section 5 below.

         (r)      "SUBSIDIARY" means any corporation (other than the Company) in
                  an unbroken chain of  corporations  beginning with the Company
                  if each of the  corporations  (other than the last corporation
                  in the unbroken  chain) owns stock  possessing  50% or more of
                  the total combined voting power of all classes of stock in one
                  of the other corporations in the chain.

                            SECTION 2. ADMINISTRATION

         The Plan  shall be  administered  by the  Board  of  Directors  or by a
Committee of not less than two directors,  the majority of whom are Non-Employee
Directors,  who shall be  appointed by the Board of Directors of the Company and
who shall serve at the pleasure of the Board.

         The  Committee  shall have the power and authority to grant to eligible
persons,  pursuant  to the terms of the Plan:  (A)  Stock  Options  or (B) Stock
Appreciation Rights.

         In particular, the Committee shall have the authority:

                                       2
<PAGE>

                  (i) to select  the  officers  and other key  employees  of the
         Company or its Subsidiaries, and consultants and other persons having a
         contractual relationship with the Company or its Subsidiaries,  to whom
         Stock Options and/or Stock Appreciation Rights may from time to time be
         granted hereunder;

                  (ii) to determine  whether and to what extent  Incentive Stock
         Options, Non-Qualified Stock Options or Stock Appreciation Rights, or a
         combination of the foregoing, are to be granted hereunder;

                  (iii) to determine  the number of shares to be covered by each
         such award granted hereunder;

                  (iv) to determine the terms and conditions,  not  inconsistent
         with the terms of the Plan, of any award granted hereunder  (including,
         but not limited to, any  restriction on any Stock Option or other award
         and/or the shares of Stock  relating  thereto)  and to amend such terms
         and  conditions  (including,  but not limited to, any  amendment  which
         accelerates the vesting of any award); and

                  (v)to  determine  whether,  to what  extent,  and  under  what
         circumstances,  Stock Options may be exercised following termination of
         employment.

         The Committee shall have the authority to adopt,  alter and repeal such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable;  to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements  relating thereto);
and to otherwise  supervise the  administration  of the Plan.  The Committee may
delegate its authority to the President  and/or the Chief  Executive  Officer of
the Company for the purpose of selecting  employees  who are not officers of the
Company for purposes of (i) above.

         All decisions  made by the Committee  pursuant to the provisions of the
Plan shall be final and bi ding on all persons,  including  the Company and Plan
participants.

                     SECTION 3. SHARES AVAILABLE FOR OPTIONS

         (a) It is the  intention  of the Company to reserve and have  available
for the Plan a number of shares of Stock equal to 15% of the number of shares of
Stock issued and  outstanding at any time. This 15% amount is referred to as the
"Reserved  Shares" and shall  include  shares  which are subject to  outstanding
Stock  Options  and those  which are  available  for  future  grant.  Subject to
adjustment as provided in Section 3(e), the number of Reserved  Shares under the
Plan at any given  time  shall  equal 15% of the  number of shares of Stock then
issued and outstanding.

         (b)  If  any  Stock  that  is  subject  to  a  Stock  Option  or  Stock
Appreciation  Right is  forfeited,  settled in cash,  expires,  or is  otherwise
terminated  without  issuance of Stock,  such Stock shall again be available for
grant under the Plan.

         (c)  In  the  event  of  any  merger,  reorganization,   consolidation,
recapitalization,  stock dividend, stock split, reverse stock split, spin-off or
similar  transaction or other change in corporate structure affecting the Stock,
such  adjustments  and  other  substitutions  shall  be made to

                                       3
<PAGE>

the Plan and to outstanding awards as the Committee in its sole discretion deems
equitable or  appropriate,  including  without  limitation,  adjustments  in the
aggregate number,  class and kind of securities or other consideration which may
be delivered under the Plan, in the aggregate or to any one participant;  in the
number,  class,  or kind of  securities  and the  option  or  exercise  price of
securities   subject  to  outstanding  Stock  Options  granted  under  the  Plan
(including,  if the Committee  deems  appropriate,  the  substitution of similar
options to purchase the shares of, or other awards denominated in the shares of,
another company);  provided,  however,  that the number of securities subject to
any individual Stock Option or Stock  Appreciation Right shall always be a whole
number and the Committee may adopt rules for rounding and other  adjustments  as
it deems appropriate.

         (d) The  Company,  during  the  term of this  Plan,  will at all  times
reserve and keep  available,  and will seek or obtain from any  regulatory  body
having  jurisdiction any requisite authority necessary to issue and to sell, the
number of shares that shall be  sufficient  to satisfy the  requirements  of the
Plan.  The  inability of the Company to obtain from any  regulatory  body having
jurisdiction  the authority  deemed necessary by counsel for the Company for the
lawful  issuance and sale of Stock  hereunder  shall  relieve the Company of any
liability  in  respect  of the  failure  to issue or sell  Stock as to which the
requisite authority has not been obtained.

                             SECTION 4. ELIGIBILITY

         Officers,   other  employees  of  the  Company  or  its   subsidiaries,
Non-Employee  Directors and  consultants  and other persons having a contractual
relationship  with the Company or its  Subsidiaries  who are  responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and its  Subsidiaries  are eligible to be granted Stock Option and Stock
Appreciation  Right awards under the Plan. Subject to the power of the Committee
to  delegate  powers as provided in Section 2, the  optionees  and  participants
under the Plan shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall determine, in its
sole discretion, the number of shares covered by each award.

                            SECTION 5. STOCK OPTIONS

         Any Stock  Option  granted  under the Plan shall be in such form as the
Committee may from time to time approve.

         The  Stock  Options  granted  under the Plan may be of two  types:  (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after January 30, 2011.

         The Committee shall have the authority to grant any optionee  Incentive
Stock Options,  Non-Qualified  Stock options,  or both types of options (in each
case with or without Stock Appreciation  Rights).  To the extent that any option
does not qualify as an Incentive  Stock Option,  it shall  constitute a separate
Non-Qualified Stock Option.

         Anything in the Plan to the contrary  notwithstanding,  no term of this
Plan  relating to  Incentive  Stock  Options  shall be  interpreted,  amended or
altered,  nor shall any  discretion  or authority  granted  under the Plan be so
exercised,  so as to disqualify  either the Plan or any

                                       4
<PAGE>

Incentive  Stock Option under Section 422 of the Code.  The  preceding  sentence
shall not preclude any  modification  or amendment to an  outstanding  Incentive
Stock  Option,  whether  or  not  such  modification  or  amendment  results  in
disqualification  of such option as an  Incentive  Stock  Option,  provided  the
optionee consents in writing to the modification or amendment.

         Options  granted under the Plan shall be subject to the following terms
and  conditions  and shall contain such  additional  terms and  conditions,  not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

         (a) OPTION PRICE. The option price per share of Stock purchasable under
a Stock  Option  shall be  determined  by the  Committee  at the time of  grant;
provided,  however,  that in no event shall the option  price per share of Stock
purchasable under an Incentive Stock Option be less than 100% of the Fair Market
Value of the Stock on the date of the grant of the option.  If an employee  owns
or is deemed to own (by reason of the attribution rules applicable under Section
425(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Parent  Corporation  or subsidiary  and an Incentive
Stock Option is granted to such employee, the option price shall be no less than
110% of the Fair Market Value of the Stock on the date the option is granted.

         (b) OPTION  TERM.  The term of each Stock  Option shall be fixed by the
Committee,  but no Incentive  Stock Option  shall be  exercisable  more than ten
years after the date the option is granted.  If an employee owns or is deemed to
own (by reason of the attribution rules of Section 425(d) of the Code) more than
10% of the  combined  voting power of all classes of stock of the Company or any
Parent  Corporation  or Subsidiary  and an Incentive  Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.

         (c) EXERCISABILITY.  Stock Options shall be exercisable at such time or
times as  determined  by the  Committee  at or  after  grant.  If the  Committee
provides,   in  its  discretion,   that  any  option  is  exercisable   only  in
installments,  the Committee may waive such installment  exercise  provisions at
any time. Installment exercise restrictions may be based upon the lapse of time,
the attainment of specified performance goals, or a combination of each.

         (d) METHOD OF EXERCISE.  Stock  Options may be exercised in whole or in
part at any time during the option period by giving  written  notice of exercise
to the  Company  specifying  the number of shares to be  purchased.  Such notice
shall be  accompanied  by  payment  in full of the  purchase  price,  either  by
certified  or bank  check,  or by any other form of legal  consideration  deemed
sufficient  by  the  Committee  and  consistent  with  the  Plan's  purpose  and
applicable  law,  including  promissory  notes or a properly  executed  exercise
notice  together with  irrevocable  instructions  to a broker  acceptable to the
Company to promptly  deliver to the Company the amount of sale or loan  proceeds
to pay  the  exercise  price.  As  determined  by  the  Committee,  in its  sole
discretion,  payment  in  full  or in part  may  also  be  made  in the  form of
unrestricted Stock already owned by the optionee (based on the Fair Market Value
of the  Stock  on the  date  the  option  is  exercised,  as  determined  by the
Committee);  provided  however,  that, in the case of an Incentive Stock Option,
the  right  to  make a  payment  in the  form of  already  owned  shares  may be
authorized  only at the time the option is granted.  No shares of Stock shall be
issued until full payment  therefor has been made. An optionee  shall  generally
have the rights to

                                       5
<PAGE>

dividends  and other rights of a shareholder  with respect to shares  subject to
the option when the optionee has given written  notice of exercise,  has paid in
full for such shares, and, if requested,  has given the representation described
in paragraph (a) of Section 10.

         (e)   NON-TRANSFERABILITY   OF  OPTIONS.   No  Stock  Option  shall  be
transferable  by the optionee  otherwise  than by will or by the laws of descent
and  distribution,  and all  Stock  Options  shall be  exercisable,  during  the
optionee's lifetime, only by the optionee.

         (f) TERMINATION BY DEATH. If an optionee's employment with the Company,
a Subsidiary or a Parent  Corporation  terminates by reason of death,  the Stock
Option may thereafter be immediately  exercised,  to the extent then exercisable
(or on such  accelerated  basis as the  Committee  shall  determine  at or after
grant),  by the legal  representative  of the  estate or by the  legatee  of the
optionee  under  the  will of the  optionee,  for a  period  of 90 days (or such
shorter  period as the  Committee  shall specify at grant) from the date of such
death or until the expiration of the stated term of the Stock Option,  whichever
period is shorter.

         (g)  TERMINATION BY REASON OF DISABILITY.  If an optionee's  employment
with the Company, a Subsidiary or a Parent  Corporation  terminates by reason of
Disability,  any Stock Option held by such optionee may thereafter be exercised,
to the extent it was  exercisable at the time of  termination  due to Disability
(or on such  accelerated  basis as the  Committee  shall  determine  at or after
grant),  but may not be exercised  after 90 days (or such shorter  period as the
Committee  shall  specify  at  grant)  from  the  date  of such  termination  of
employment or the  expiration of the stated term of the Stock Option,  whichever
period is the shorter.  In the event of  termination  of employment by reason of
Disability,  if an Incentive  Stock Option is exercised  after the expiration of
the exercise  periods  that apply for  purposes of Section 422 of the Code,  the
Stock Option will thereafter be treated as a Non-Qualified Stock Option.

         (h)  TERMINATION BY REASON OF RETIREMENT.  If an optionee's  employment
with the Company, a Subsidiary or a Parent  Corporation  terminates by reason of
Retirement,  any Stock Option held by such optionee may  thereafter be exercised
to the extent it was exercisable at the time of such Retirement,  but may not be
exercised  after 90 days (or such shorter  period as Committee  shall specify at
grant) from the date of such  termination of employment or the expiration of the
stated term of the Stock Option,  whichever period is the shorter.  In the event
of  termination  of employment by reason of  Retirement,  if an Incentive  Stock
Option is exercised after the expiration of the exercise  periods that apply for
purposes of Section 422 of the Code, the Stock Option will thereafter be treated
as a Non-Qualified Stock Option.

         (i) OTHER TERMINATION.  Unless otherwise determined by the Committee or
as set forth in  paragraph  (k)  below,  if an  optionee's  employment  with the
Company,  a Subsidiary or a Parent  Corporation  terminates for any reason other
than death, Disability or Retirement, any Stock Option held by such optionee may
thereafter be exercised to the extent it was  exercisable  at such  termination,
but may not be exercised  after 90 days (or such shorter period as the Committee
shall specify at grant) from the date of such  termination  of employment or the
expiration  of the stated term of the option,  whichever  period is the shorter;
provided,  however,  that if the optionee's  employment is terminated for Cause,
all  rights  under  the  Stock  Option  shall  terminate  and  expire  upon such
termination.

                                       6
<PAGE>

         (j) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.  The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive  Stock Option under this Plan or any other plan of
the Company,  any subsidiary or Parent  Corporation is exercisable for the first
time by an optionee during any calendar year shall not exceed $100,000.

         (k) EFFECT OF CERTAIN TRANSACTIONS. In the event of (i) a consolidation
or merger in which the Company is not the surviving corporation or which results
in the acquisition of a majority of the Company's then outstanding voting common
stock by a single  person  or entity or by a group of  persons  and/or  entities
acting in  concert,  (ii) a sale or  transfer  of all or  substantially  all the
Company's  assets,  or (iii) a dissolution or liquidation of the Company (any of
the  foregoing,  a "covered  transaction"),  all  outstanding  awards  requiring
exercise  will cease to be  exercisable,  and all awards to the extent not fully
vested (including awards subject to performance  conditions not yet satisfied or
determined)  will  be  forfeited,  as of  the  effective  time  of  the  covered
transaction;  provided,  however,  that immediately prior to the consummation of
such  covered  transaction  the  vesting or  exercisability  of awards  shall be
accelerated so that they shall be exercisable and vested in full unless,  in the
case  of any  award,  the  Committee  or the  Board  provides  for  one or  more
substitute or  replacement  awards from, or the assumption of the existing award
by, the acquiring entity (if any) or its affiliates.

         The  Committee  or the Board may  provide in the case of any award that
the  provisions  of the preceding  paragraph  shall also apply to (i) mergers or
consolidations   involving  the  Company  that  do  not   constitute  a  covered
transaction, or (ii) other transactions, not constituting a covered transaction,
that involve the acquisition of the Company's outstanding Stock.

                      SECTION 6. STOCK APPRECIATION RIGHTS

         (a) GRANT AND  EXERCISE.  Stock  Appreciation  Rights may be granted in
conjunction  with all or part of any Stock Option granted under the Plan. In the
case of a  Non-Qualified  Stock Option,  such rights may be granted either at or
after the time of the grant of such Stock  Option.  In the case of an  Incentive
Stock  Option,  such rights may be granted  only at the time of the grant of the
Stock Option.

         A Stock  Appreciation  Right or applicable portion thereof granted with
respect to a given Stock Option  shall  terminate  and no longer be  exercisable
upon the  termination  or exercise of the related  Stock  Option,  except that a
Stock  Appreciation  Right  granted with respect to less than the full number of
shares covered by a related Stock Option shall not be reduced until the exercise
or  termination  of the related  Stock  Option  exceeds the number of shares not
covered by the Stock Appreciation Right.

         A  Stock  Appreciation  Right  may  be  exercised  by an  optionee,  in
accordance with paragraph (b) of this Section 6, by surrendering  the applicable
portion of the related  Stock  Option.  Upon such  exercise and  surrender,  the
optionee  shall be  entitled  to  receive  an amount  determined  in the  manner
prescribed  in paragraph (b) of this Section 6. Stock Options which have been so
surrendered,  in whole or in part,  shall no longer be exercisable to the extent
the related Stock Appreciation Rights have been exercised.

                                       7
<PAGE>

         (b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
applicable  regulations relating to the exercise of Stock Appreciation Rights by
optionees  subject  to  reporting  responsibilities  under  Section  16  of  the
Securities  and  Exchange  Act of 1934,  and to such terms and  conditions,  not
inconsistent  with the provisions of the Plan, as shall be determined  from time
to time by the Committee, including the following:

                  (i) Stock  Appreciation  Rights shall be  exercisable  only at
         such time or times and to the  extent  that the Stock  Options to which
         they relate shall be exercisable  in accordance  with the provisions of
         Section 5 and this Section 6 of the Plan.

                  (ii)  Upon the  exercise  of a Stock  Appreciation  Right,  an
         optionee  shall be  entitled  to receive  up to, but not more than,  an
         amount in cash or shares of Stock  equal in value to the  excess of the
         Fair Market Value of one share of Stock over the option price per share
         specified in the related  option  multiplied by the number of shares in
         respect  of  which  the  Stock   Appreciation  Right  shall  have  been
         exercised, with the Committee having the right to determine the form of
         payment.

                  (iii) Stock  Appreciation  Rights shall be  transferable  only
         when  and to the  extent  that the  underlying  Stock  Option  would be
         transferable under Section 5 of the Plan.

                  (iv) Upon the  exercise  of a Stock  Appreciation  Right,  the
         Stock Option or part thereof to which such Stock  Appreciation Right is
         related  shall be deemed to have been  exercised for the purpose of the
         limitation  set forth in  Section 3 of the Plan on the number of shares
         of Stock to be issued  under the  Plan,  but only to the  extent of the
         number of shares  actually  issued (if any) pursuant to exercise of the
         Stock Appreciation Right.

                  (v) A Stock  Appreciation  Right granted in connection with an
         Incentive  Stock  Option may be  exercised  only if and when the market
         price of the Stock  subject to the Incentive  Stock Option  exceeds the
         exercise price of such Stock Option.

                   SECTION 7. TRANSFER, LEAVE OF ABSENCE, ETC.

              For purposes of the Plan, the following events shall not be deemed
a termination of employment:

         (a) a transfer of an employee from the Company to a Parent  Corporation
or Subsidiary,  or from a Parent  Corporation  or Subsidiary to the Company,  or
from one Subsidiary to another;

         (b) a leave of  absence,  approved  in  writing by the  Committee,  for
military  service or sickness,  or for any other purpose approved by the Company
if the period of such leave does not  exceed  ninety  (90) days (or such  longer
period as the Committee may approve, in its sole discretion); and

         (c) a leave of  absence  in excess of ninety  (90)  days,  approved  in
writing by the Committee,  but only if the employee's  right to re-employment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence,  the employee returns to work within 30 days after the end
of such leave.

                                       8
<PAGE>

                      SECTION 8. AMENDMENTS AND TERMINATION

         The Board may amend,  alter, or discontinue the Plan, but no amendment,
alteration,  or discontinuation  shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option or Stock  Appreciation  Right
or other  Stock-based  award  theretofore  granted,  without the  optionee's  or
participant's consent, or (ii) which without the approval of the shareholders of
the Company would cause the Plan to no longer comply with rules  promulgated  by
the Securities and Exchange  Commission under authority granted in Section 16 of
the Securities Exchange Act of 1934, as amended,  Section 422 of the Code or any
other regulatory requirements.

         The  Committee  may amend the terms of any award or option  theretofore
granted,  prospectively  or  retroactively,  but, subject to Section 3 above, no
such amendment  shall impair the rights of any holder  without his consent.  The
Committee may also substitute new Stock Options for previously  granted options,
including previously granted options having higher option prices.

                       SECTION 9. UNFUNDED STATUS OF PLAN

         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred  compensation.  With  respect  to  any  payments  not  yet  made  to  a
participant or optionee by the Company,  nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other  arrangements to meet the obligations  created under
the Plan to  deliver  Stock or  payments  in lieu of or with  respect  to awards
hereunder,  provided,  however,  that  the  existence  of such  trusts  or other
arrangements is consistent with the unfunded status of the Plan.

                         SECTION 10. GENERAL PROVISIONS

         (a) The Committee may require each person purchasing shares pursuant to
a Stock  Option  under the Plan to  represent  to and agree with the  Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof.  The  certificates  for such shares may  include  any legend  which the
Committee deems appropriate to reflect any restrictions on transfer.

         All  certificates for shares of Stock delivered under the Plan pursuant
to any  Stock-based  awards shall be subject to such stock  transfer  orders and
other  restrictions  as the  Committee  may  deem  advisable  under  the  rules,
regulations,  and other requirements of the securities and Exchange  commission,
any stock  exchange  upon  which the Stock is then  listed,  and any  applicable
Federal  or state  securities  laws,  and the  Committee  may  cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

                                       9
<PAGE>

         (b) Subject to paragraph (d) below,  recipients of  Stock-based  awards
under the Plan (other than Stock  Options)  are not required to make any payment
or provide consideration other than the rendering of services.

         (c) Nothing contained in this Plan shall prevent the Board of Directors
from  adopting  other  or  additional  compensation  arrangements,   subject  to
shareholder approval if such approval is required;  and such arrangements may be
either  generally  applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any  subsidiary
any right to continued employment with the Company or a Subsidiary,  as the case
may be,  nor shall it  interfere  in any way with the right of the  Company or a
Subsidiary to terminate the employment of any of its employees at any time.

         (d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes  includable as  compensation in the gross
income of the participant  for Federal income tax purposes,  pay to the Company,
or make  arrangements  satisfactory to the Committee  regarding  payment of, any
Federal,  state,  or local taxes of any kind required by law to be withheld with
respect to the award.  The  obligations  of the Company  under the Plan shall be
conditional  on such payment or  arrangements  and the Company and  Subsidiaries
shall,  to the extent  permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the  participant.  With respect to
any award  under the Plan,  if the  written  terms of such  award so  permit,  a
participant may elect by written notice to the Company to satisfy part or all of
the  withholding tax  requirements  associated with the award by (i) authorizing
the Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock  already  owned by the  participant,  that  number  of  shares  having  an
aggregate  Fair  Market  Value  equal to part or all of the tax  payable  by the
participant  under this Section 10(d).  Any such election shall be in accordance
with,  and subject to,  applicable  tax and  securities  laws,  regulations  and
rulings.

         (e) At the time of grant,  the Committee may provide in connection with
any grant made under this Plan that the shares of Stock  received as a result of
such  grant  shall be  subject to a  repurchase  right in favor of the  Company,
pursuant to which the participant shall be required to offer to the Company upon
termination  of  employment  for any  reason  any  shares  that the  participant
acquired under the Plan,  with the price being the then Fair Market Value of the
Stock or, in the case of a  termination  for Cause,  an amount equal to the cash
consideration paid for the Stock,  subject to such other terms and conditions as
the Committee may specify at the time of grant.  The Committee  may, at the time
of the grant of an award under the Plan,  provide the Company  with the right to
repurchase shares of Stock acquired pursuant to the Plan by any participant who,
at any time within two years after  termination of employment  with the Company,
directly or  indirectly  competes  with,  or is employed by a competitor  of the
Company.

                       SECTION 11. EFFECTIVE DATE OF PLAN

         The Plan (the  pre-amended  version)  became  effective  on February 1,
2001.  The Plan (as amended)  shall  expire  (unless  terminated  earlier) as of
January  30,  2011.  The Plan was  amended  pursuant  to the  Company's  Plan of
Reorganization  under Chapter 11 of the Bankruptcy  Code  (confirmed on July 21,
2004 and effective on September 3, 2004).

                                       10

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