Document:

<PAGE>

                                EXHIBIT (10)(b)

                         OPINION AND CONSENT OF ACTUARY
<PAGE>

                    [PFL Life Insurance Company Letterhead]

June 1, 2000

PFL Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, Iowa  52499-0001

Re:    Privilege Select Variable Annuity
       PFL Life Variable Annuity Account E
       Registration on Form N-4; SEC File No. 333-32110

Dear Sir/Madam:

With regard to the above registration statement, I have examined such documents
and made such inquiries as I have deemed necessary and appropriate, and on the
basis of such examination, have the following opinions:

Fees and charges deducted under the Privilege Select Variable Annuity policies
are those deemed necessary to appropriately reflect:

(1)    the expenses incurred in the acquisition and distribution of the
       policies,

(2)    the expenses associated with the development and servicing of the
       policies,

(3)    the assumption of certain risks arising from the operation and management
       of the policies and/or riders to the policy and that provides for a
       reasonable margin of  profit.

Fees and charges assessed against the policy values in the variable account
include:

(i)    Service Charge and Administrative Charge

(ii)   Mortality and Expense Risk Fee (M&E)

(iii)  Taxes (including premium and other taxes if applicable)

The magnitude of each of the individual charges listed above in (i) through
(iii) is established in the pricing of the Privilege Select Variable Annuity, to
achieve a reasonable Return on Investment (ROI), which is within the range of
industry practice with respect to comparable variable annuity products.
<PAGE>

Except by coincidence, it is not expected that actual charges assessed in a
given year would exactly offset actual expenses incurred.  Acquisition expenses
(as well as major product and/or systems development expenses) are incurred "up
front" and recovered, with a reasonable profit margin, through future years'
charges.  In addition, the company cannot increase certain charges under the
policies in the pricing process.

Therefore, in my opinion, the fees and charges deducted under the policies, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the company.

I hereby consent to the use of this opinion, which is included as an Exhibit to
the registration statement.

/s/ Calvin R. Birkey
-----------------------------
Calvin R. Birkey, FSA, MAAA
Managing Actuary
PFL Life Insurance Company<PAGE>

                                                                     EXHIBIT 4.2

                          CERTIFICATE OF AMENDMENT OF

                             AMENDED AND RESTATED

                        CERTIFICATE OF INCORPORATION OF

                              CLARUS CORPORATION

          The undersigned, being the Chairman, Chief Executive Officer and
President of CLARUS CORPORATION, a Delaware corporation, hereby certifies that:

                                      1.

          (a)  The name of the Corporation is CLARUS CORPORATION (the
"Corporation").

          (b)  The date of filing the original Certificate of Incorporation of
the Corporation with the Secretary of State of Delaware was November 20, 1991.

                                      2.

          The following amendment to the Corporation's Certificate of
Incorporation was duly adopted by stockholders of the Corporation at the 2000
annual meeting of the Corporation in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware (the "Code"), and
written notice of such meeting was given to all stockholders in accordance with
Section 222 of the Code.

                                      3.

          Article 4 of the Amended and Restated Certificate of Incorporation of
the Corporation shall be amended by striking paragraph (a) of Article 4 in its
entirety and replacing said paragraph with the following:

     This Corporation is authorized to issue two classes of stock to be
     designated, respectively, "Common Stock" and "Preferred Stock." The
     total number of shares which the Corporation is authorized to issue
     is 105,000,000 shares, of which 100,000,000 shares are Common Stock,
     $.0001 par value per share, and 5,000,000 shares are Preferred Stock,
     $.0001 par value per share. The rights and preferences of all
     outstanding shares of Common Stock shall be identical. The holders of
     outstanding shares of Common Stock shall have the right to vote on
     all matters submitted to a vote of the stockholders of the
     Corporation, on the basis of one vote per share of Common Stock
     owned.
<PAGE>

          IN WITNESS WHEREOF, CLARUS CORPORATION, has caused this Certificate to
be signed and attested by its duly authorized officers, this 13th day of June,
2000.

                                         CLARUS CORPORATION

                                         By: /s/ Stephen P. Jeffery
                                             -----------------------------------
                                             Stephen P. Jeffery, Chairman, Chief
                                             Executive Officer and President
ATTEST:

/s/ Mark Gagne
--------------------------------
Mark Gagne, Secretary

[CORPORATE SEAL]

                                       2<PAGE>

                                                                     EXHIBIT 4.5

                  AMENDED AND RESTATED AETHERWORKS CORPORATION

                             1997 STOCK OPTION PLAN

                                   SECTION 1.

                                   DEFINITIONS

As used herein, the following terms shall have the meanings indicated below.

(a)  The  "Board"  or the "Board of Directors" shall mean the Board of Directors
of Netrix Corporation, a Delaware corporation.

(b)  "Committee"  shall mean a Committee of two or more  directors  who shall be
appointed  by and serve at the pleasure of the Board.  As long as the  Company's
securities are registered  pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended,  then, to the extent  necessary  for  compliance  with Rule
16b-3, or any successor provision, each of the members of the Committee shall be
a  "Non-Employee  Director."  For purposes of this  Section  1(a)  "Non-Employee
Director"  shall  have the same  meaning  as set  forth  in Rule  16b-3,  or any
successor  provision,  as then in effect,  of the General Rules and  Regulations
under the Securities Exchange Act of 1934, as amended.

(c)  The "Company" shall mean Netrix Corporation, a Delaware corporation.

(d)  "Fair  Market Value" as of any day shall mean (i) if such stock is reported
by the Nasdaq  National  Market or Nasdaq  SmallCap  Market or is listed upon an
established  stock  exchange or  exchanges,  the reported  closing price of such
stock by the Nasdaq  National  Market or Nasdaq SmallCap Market or on such stock
exchange  or  exchanges  on such date or, if no sale of such  stock  shall  have
occurred on such date,  on the next  preceding  day on which there was a sale of
stock;  (ii) if such stock is not so reported by the Nasdaq  National  Market or
Nasdaq SmallCap Market or listed upon an established stock exchange, the average
of the closing "bid" and "asked" prices quoted by the National Quotation Bureau,
Inc.  (or any  comparable  reporting  service)  on such date or, if there are no
quoted "bid" and "asked"  prices on such date,  on the next  preceding  date for
which there are such quotes; or (iii) if such stock is not publicly traded as of
such date, the per share value as determined by the Board, or the Committee,  in
its sole  discretion  by applying  principles  of valuation  with respect to the
Company's Common Stock.

(e) The "Internal Revenue Code" is the Internal Revenue Code of 1986, as amended
from time to time.

(f)  "Non-Employee  Director"  shall  mean  members  of the  Board  who  are not
employees of the Company or any Subsidiary.

(g) "Option Stock" shall mean Common Stock of the Company (subject to adjustment
as described in Section 12) reserved for options pursuant to this Plan.

<PAGE>

(h) The "Optionee" means an employee of the Company or any Subsidiary to whom an
incentive  stock option has been granted  pursuant to Section 9; or a consultant
or advisor to or director including a Non-Employee Director, employee or officer
of the Company or any  Subsidiary to whom a  nonqualified  stock option has been
granted pursuant to Section 10.

(i) "Parent" shall mean any corporation which owns, directly or indirectly in an
unbroken  chain,  fifty  percent  (50%) or more of the total voting power of the
Company's outstanding stock.

(j) The "Plan" means the Amended and Restated AetherWorks Corporation 1997 Stock
Option  Plan,  as amended  hereafter  from time to time,  including  the form of
agreements  covering  Incentive  Stock  Options and  Nonqualified  Stock Options
("Option Agreements") as they may be modified by the Board from time to time.

(k) A  "Subsidiary"  shall mean any  corporation of which fifty percent (50%) or
more of the  total  voting  power of  outstanding  stock is owned,  directly  or
indirectly in an unbroken chain, by the Company.

                                   SECTION 2.

                                     PURPOSE

         The  purpose of the Plan is to promote  the  success of the Company and
its  Subsidiaries  by facilitating  the retention of competent  personnel and by
furnishing  incentive  to  officers,  directors,  employees,   consultants,  and
advisors upon whose efforts the success of the Company and its Subsidiaries will
depend to a large degree.

         It is the  intention  of the Company to carry out the Plan  through the
granting of stock options which will qualify as "incentive  stock options" under
the  provisions  of Section 422 of the Internal  Revenue  Code, or any successor
provision,  pursuant  to Section 9 of this Plan,  and  through  the  granting of
"nonqualified  stock options"  pursuant to Section 10 of this Plan.  Adoption of
this Plan shall be and is expressly  subject to the condition of approval by the
shareholders  of the  Company  within  twelve  (12)  months  before or after the
adoption of the Plan by the Board of  Directors.  Any  incentive  stock  options
granted after adoption of the Plan by the Board of Directors shall be treated as
nonqualified  stock options if shareholder  approval is not obtained within such
twelve-rnonth period.

                                   SECTION 3.

                             EFFECTIVE DATE OF PLAN

         The Plan shall be  effective as of the date of adoption by the Board of
Directors, subject to approval by the shareholders of the Company as required in
Section 2.

<PAGE>

                                   SECTION 4.

                                 ADMINISTRATION

         The Plan shall be  administered by a Committee which shall be appointed
by the Board from time to time (hereinafter referred to as the "Administrator").
The Administrator shall have all of the powers vested in it under the provisions
of the Plan,  including but not limited to exclusive authority (where applicable
and  within  the  limitations  described  herein)  to  determine,  in  its  sole
discretion, whether an incentive stock option or nonqualified stock option shall
be granted,  the  individuals to whom,  and the time or times at which,  options
shall be  granted,  the number of shares  subject to each  Option and the option
price and terms and conditions of each option. The Administrator shall have full
power and  authority to  administer  and  interpret  the Plan, to make and amend
rules,  regulations and guidelines for  administering the Plan, to prescribe the
form and conditions of the respective  stock Option  Agreements  (which may vary
from  Optionee  to  Optionee)  evidencing  each  option  and to make  all  other
determinations  necessary  or  advisable  for the  administration  of the  Plan.
Notwithstanding  the foregoing,  the Administrator shall have no power to change
vesting and exercise provisions in the Option Agreements, except as specifically
set forth  herein.  The  Administrator's  interpretation  of the  Plan,  and all
actions taken and determinations made by the Administrator pursuant to the power
vested  in it  hereunder,  shall  be  conclusive  and  binding  on  all  parties
concerned.  No  member  of the Board or the  Committee  shall be liable  for any
action  taken  or  determination  made in good  faith  in  connection  with  the
administration  of the Plan.  Any action of the  Committee  with  respect to the
administration  of the Plan shall be taken  pursuant  to a majority  vote of the
Committee  members  or  pursuant  to the  written  resolution  of all  Committee
members.

                                   SECTION 5.

                                  PARTICIPANTS

         The  Administrator  shall,  from time to time,  at its  discretion  and
without approval of the  shareholders,  designate those employees of the Company
or any  Subsidiary to whom  incentive  stock options shall be granted under this
Plan.  The  Administrator  may  grant  additional  incentive  stock  options  or
nonqualified  stock  options  under this Plan to some or all  participants  then
holding   opinions   and/or  may  grant  options  solely  or  partially  to  new
participant. In designating participants, the Administrator shall also determine
the number of shares to be optioned to each such participant.

         The  Administrator  shall  from  time to time,  at its  discretion  and
without  approval of the  shareholders,  designate  those  employees,  officers,
directors, consultants, and advisors of the Company or of any Subsidiary to whom
nonqualified stock options shall be granted under this Plan; provided,  however,
that  consultants  or advisors  shall not be eligible to receive  stock  options
hereunder  unless such  consultant or advisor  renders bona fide services to the
Company or Subsidiary and such services are not in connection  with the offer or
sale of securities in a capital-raising transaction.

         The  Board  may  from  time  to time  designate  individuals  as  being
ineligible to participate in the Plan.

<PAGE>

                                   SECTION 6.

                                      STOCK

         The Stock to be optioned  under this Plan shall  consist of  authorized
but unissued or Treasury  shares of Option  Stock.  One million,  eight  hundred
twenty-six thousand,  three hundred seventy-two  (1,826,372) (which reflects the
conversion  adjustment in connection with the merger,  all as more  specifically
set forth in the Agreement and Plan of Merger,  dated  December 31, 1999,  among
Netrix Corporation,  a Delaware  corporation,  Nx1 Acquisition Corp., a Delaware
corporation and wholly-owned  subsidiary of Netrix Corporation,  and AetherWorks
Corporation, a Minnesota corporation).  Shares of Option Stock shall be reserved
and  available  for options under the Plan;  provided,  however,  that the total
number of shares of Option Stock  reserved for options  under this Plan shall be
subject to  adjustment  as  provided  in Section 12 of the Plan.  Options may be
exercised  only in full shares of Common Stock;  no  fractional  shares shall be
issued.  In the event that any outstanding  option under the Plan for any reason
expires or is  terminated  prior to the exercise  thereof,  the shares of Option
Stock allocable to the  unexercised  portion of such option shall continue to be
reserved for options under the Plan and may be optioned hereunder.

                                   SECTION 7.

                                DURATION OF PLAN

         Incentive  stock options may be granted  pursuant to the Plan from time
to time during a period of ten (10) years from the effective  date as defined in
Section 3.  Nonqualified  stock options may be granted pursuant to the Plan from
time to time  after  the  effective  date of the  Plan  and  until  the  Plan is
discontinued  or terminated by the Board.  Any  incentive  stock option  granted
during such ten-year period and any  nonqualified  stock option granted prior to
the  termination  of the Plan by the Board shall remain in full force and effect
until the  expiration  of the option as  specified  in the written  stock option
agreement and shall remain subject to the terms and conditions of this Plan.

                                   SECTION 8.

                                     PAYMENT

         Optionees may pay for shares upon exercise of options granted  pursuant
to this Plan with cash,  personal check,  certified  check,  Common Stock of the
Company  valued at such  Stock's then Fair Market  Value,  or such other form of
payment as may be authorized by the Administrator. The Administrator may, in its
sole  discretion,  limit the forms of payment  available to the Optionee and may
exercise such discretion any time prior to the termination of the option granted
to the Optionee or upon any exercise of the option by the Optionee.

<PAGE>

         With respect to payment in the form of Common Stock of the Company, the
Administrator  may  require  advance  approval  or adopt  such rules as it deems
necessary to assure compliance with Rule 16b-3, or any successor  provision,  as
then in  effect,  of the  General  Rules and  Regulations  under the  Securities
Exchange Act of 1934, if applicable.

                                   SECTION 9.

                 TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS

         Each incentive stock option granted pursuant to this Section 9 shall be
evidenced by a written agreement.  The Option Agreement shall be in such form as
may be  approved  from  time to  time by the  Administrator  and may  vary  from
Optionee to  Optionee;  provided,  however,  that each  Optionee and each Option
Agreement  shall  comply  with  and  be  subject  to  the  following  terms  and
conditions:

         (a) NUMBER OF SHARES AND OPTION PRICE. The Option Agreement shall state
the total number of shares covered by the incentive stock option.  To the extent
required to qualify the Option as an incentive stock option under Section 422 of
the Internal  Revenue  Code, or any  successor  provision,  the option price per
share shall not be less than one hundred percent (100%) of the Fair Market Value
of the Common Stock per share on the date the  Administrator  grants the option;
provided,  however,  that if an Optionee owns stock  constituting  more than ten
percent (10%) of the total combined  voting power of all classes of stock of the
Company or of its  Parent or any  Subsidiary,  the option  price per share of an
incentive  stock  option  granted  to such  Optionee  shall not be less than one
hundred ten  percent  (110%) of the Fair  Market  Value of the Common  Stock per
share on the date of the grant of the option. The Administrator  shall have full
authority  and  discretion in  establishing  the option price and shall be fully
protected in so doing.

         (b) TERM AND  EXERCISABILITY OF INCENTIVE STOCK OPTION. The term during
which any incentive  stock option granted under the Plan may be exercised  shall
be  established  in each case by the  Administrator.  To the extent  required to
qualify  the  Option as an  incentive  stock  option  under  Section  422 of the
Internal  Revenue  Code,  or any  successor  provision,  in no event  shall  any
incentive stock option be exercisable  during a term of more than ten (10) years
after the date on which it is granted;  provided,  however,  that if an Optionee
owns stock constituting more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of its parent or any Subsidiary,
the incentive stock option granted to such Optionee shall be exercisable  during
a tern of not more than five (5) years after the date on which it is granted.

         The Option  Agreement  shall  state  when the  incentive  stock  option
becomes  exercisable  and shall also state the  maximum  term  during  which the
option may be exercised.  In the event an incentive  stock option is exercisable
immediately,  the  manner  of  exercise  of the  option  in the  event it is not
exercised in full immediately  shall be specified in the Option  Agreement.  The
Administrator  may  accelerate the vesting and  exercisability  of any incentive
stock option  granted  hereunder  only in the case of the disability or death of
the Optionee.

         (c) OTHER  PROVISIONS.  The  Option  Agreement  authorized  under  this
Section 9 shall contain such other  provisions as the  Administrator  shall deem
advisable.  Any  such  Option  Agreement  shall  contain  such  limitations  and

<PAGE>

restrictions  upon the  exercise of the option as shall be  necessary  to ensure
that such option will be considered  an  "incentive  stock option" as defined in
Section 422 of the Internal Revenue Code or to conform to any change therein.

                                   SECTION 10.

               TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS

         Each  nonqualified  stock  option  granted  pursuant to this Section 10
shall be evidenced by a written Option Agreement.  The Option Agreement shall be
in such form as may be approved from time to time by the  Administrator  and may
vary from Optionee to Optionee;  provided,  however, that each Optionee and each
Option  Agreement  shall comply with and be subject to the  following  terms and
conditions:

         (a) NUMBER OF SHARES AND OPTION PRICE. The Option Agreement shall state
the total number of shares  covered by the  nonqualified  stock  option.  Unless
otherwise  determined by the Administrator,  the option price per share shall be
one  hundred  percent  (100%) of the Fair Market  Value of the Common  Stock per
share on the date the Administrator grants the option;  provided,  however, that
the  option  price may not be less than  eighty-five  percent  (85%) of the Fair
Market Value of the Common Stock per share on the date of grant.

         (b) TERM AND  EXERCISABILITY  OF NON-QUALIFIED  STOCK OPTION.  The term
during  which  any  nonqualified  stock  option  granted  under  the Plan may be
exercised  shall be  established in each case by the  Administrator.  The Option
Agreement shall state when the nonqualified stock option becomes exercisable and
shall also state the maximum term during which the option may be  exercised.  In
the event a nonqualified stock option is exercisable immediately,  the manner of
exercise  of the  option in the event it is not  exercised  in full  immediately
shall  be  specified  in the  stock  option  agreement.  The  Administrator  may
accelerate the exercisability of any nonqualified stock option granted hereunder
which is not immediately exercisable as of the date of grant.

         (c)  WITHHOLDING.  The Company or its  Subsidiary  shall be entitled to
withhold  and deduct  from future  wages of the  Optionee  all legally  required
amounts  necessary  to satisfy any and all  withholding  and  employment-related
taxes attributable to the Optionee's exercise of a nonqualified stock option. In
the  event the  Optionee  is  required  under the  Option  Agreement  to pay the
Company, or make arrangements satisfactory to the Company respecting payment of,
such withholding and  employment-related  taxes, the  Administrator  may, in its
discretion  and  pursuant to such rules as it may adopt,  permit the Optionee to
satisfy such  obligation,  in whole or in part,  by electing to have the Company
withhold shares of Common Stock  otherwise  issuable to the Optionee as a result
of the  option's  exercise  equal to the amount  required to be withheld for tax
purposes.  Any stock  elected to be withheld  shall be valued at its Fair Market
Value,  as of the date the  amount of tax to be  withheld  is  determined  under
applicable  tax law. The  Optionee's  election to have shares  withheld for this
purpose  shall be made on or  before  the date the  option is  exercised  or, if
later,  the date  that the  amount of tax to be  withheld  is  determined  under
applicable  tax law. Such election  shall be approved by the  Administrator  and
otherwise  comply  with  such  rules as the  Administrator  may  adopt to assure
compliance with Rule 16b-3, or any successor  provision,  as then in effect,  of
the General Rules and Regulations under the Securities  Exchange Act of 1934, if
applicable.

<PAGE>

(d) OTHER  PROVISIONS.  The Option  Agreement  authorized  under this Section 10
shall contain such other provisions as the Administrator shall deem advisable.

                                   SECTION 11.

                               TRANSFER OF OPTION

         No incentive stock option shall be  transferable,  in whole or in part,
by the  Optionee  other than by will or by the laws of descent and  distribution
and,  during the  Optionee's  lifetime,  the option may be exercised only by the
Optionee.  If the Optionee  shall  attempt any transfer of any  incentive  stock
option  granted  under the Plan during the  Optionee's  lifetime,  such transfer
shall be void and the incentive stock option, to the extent not fully exercised,
shall terminate.

         The Administrator  may, in its sole discretion,  permit the Optionee to
transfer any or all  nonqualified  stock options to any member of the Optionee's
"immediate  family" as such term is defined in Rule 16a-l(e)  promulgated  under
the Securities  Exchange Act of 1934, or any successor  provision,  or to one or
more  trusts  whose  beneficiaries  are  members of such  Optionee's  "immediate
family" or  partnerships  in which such family  members  are the only  partners;
provided,  however, that the Optionee receives no consideration for the transfer
and such transferred  nonqualified  stock option shall continue to be subject to
the same terms and  conditions  as were  applicable to such  nonqualified  stock
option immediately prior to its transfer.

                                   SECTION 12.

             RECAPITALIZATION, SALE, MERGER, EXCHANGE OR LIQUIDATION

         In the event of an  increase  or  decrease  in the  number of shares of
Common Stock  resulting  from a subdivision  or  consolidation  of shares or the
payment of a stock  dividend or any other  increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the Company,
or of a conversion into Common Stock by Digi  International of the Notes held by
it, the number of shares of Option Stock reserved under Section 6 hereof and the
number of shares of Option  Stock  covered  by each  outstanding  option and the
price per share  thereof  shall be adjusted by the Board to reflect such change.
Additional  shares which may be credited  pursuant to such  adjustment  shall be
subject to the same restrictions as are applicable to the shares with respect to
which the adjustment relates.

         Unless otherwise  provided in the stock option agreement,  in the event
of an acquisition of the Company  through the sale of  substantially  all of the
Company's assets and the consequent  discontinuance of its business or through a
merger, consolidation, exchange, reorganization, reclassification, extraordinary
dividend, divestiture or liquidation of the Company (collectively referred to as
a "transaction"),  all outstanding options shall become immediately exercisable,
whether or not such  options had become  exercisable  prior to the  transaction;
provided,  however,  that if the acquiring  party seeks to have the  transaction
accounted  for on a "pooling  of  interests"  basis and,  in the  opinion of the
Company's   independent   certified   public   accountants,   accelerating   the
exercisability  of such  options  would  preclude a pooling of  interests  under
generally  accepted  accounting  principles,  the exercisability of such options
shall not  accelerate.  In  addition  to the  foregoing,  in the event of such a
transaction, the Board may provide for one or more of the following:

<PAGE>

         (a)  the  complete   termination  of  this  Plan  and  cancellation  of
outstanding  options not exercised prior to a date specified by the Board (which
date shall give  Optionees a reasonable  period of time in which to exercise the
options prior to the effectiveness of such transaction);

         (b)  that  Optionees  holding  outstanding  incentive  or  nonqualified
options  shall  receive,  with respect to each share of Option Stock  subject to
such  options,  as of the  effective  date of any such  transaction,  cash in an
amount  equal to the excess of the Fair Market Value of such Option Stock on the
date  immediately  preceding the effective date of such transaction in excess of
the option price per share of such options; provided that the Board may, in lieu
of such  cash  payment,  distribute  to such  Optionees  shares  of stock of the
Company or shares of stock of any  corporation  succeeding the Company by reason
of such  transaction,  such  shares  having a value  equal  to the cash  payment
herein; or

         (c) the continuance of the Plan with respect to the exercise of options
which were  outstanding as of the date of adoption by the Board of such plan for
such  transaction  and provide to  Optionees  holding  such options the right to
exercise their respective  options as to an equivalent number of shares of stock
of the corporation succeeding the Company by reason of such transaction.

         The Board may  restrict  the  rights  of or the  applicability  of this
Section  12 to  the  extent  necessary  to  comply  with  Section  16(b)  of the
Securities  Exchange  Act of  1934,  the  Internal  Revenue  Code  or any  other
applicable law or regulation.  The grant of an option pursuant to the Plan shall
not  limit in any way the  right or power  of the  Company  to make  adjustments
reclassifications,  reorganizations  or  changes  of  its  capital  or  business
structure or to merge, exchange or consolidate or to dissolve,  liquidate,  sell
or transfer all or any part of its business or assets.

         Except as expressly provided herein, no issuance, for consideration, by
the  Company of shares of stock of any class,  or  securities  convertible  into
shares of stock of any class,  shall affect, and no adjustment by reason thereof
shall be made with  respect  to, the  number or price of shares of Common  Stock
subject to an Option.

                                   SECTION 13.

                            SECURITIES LAW COMPLIANCE

         No shares of Common  Stock shall be issued  pursuant to the Plan unless
and until there has been compliance,  in the opinion of Company's counsel,  with
all applicable legal requirements,  including without limitation, those relating
to securities laws and stock exchange  listing  requirements.  As a condition to
the issuance of Option Stock to Optionee, the Administrator may require Optionee
to (i)  represent  that the  shares of  Option  Stock  are  being  acquired  for
investment  and  not  resale  and to  make  such  other  representations  as the
Administrator shall deem necessary or appropriate to qualify the issuance of the

<PAGE>

shares  as  exempt  from the  Securities  Act of 1933 and any  other  applicable
securities  laws,  and (ii)  represent  that  Optionee  shall not dispose of the
shares of Option Stock in violation of the  Securities Act of 1933, or any other
applicable securities laws.

         As a further  condition to the grant of any  incentive or  nonqualified
stock option or the issuance of Option Stock to Optionee, Optionee agrees to the
following:

         (a) In the  event  the  Company  advises  Optionee  that  it  plans  an
underwritten  public  offering  of its  Common  Stock  in  compliance  with  the
Securities  Act of 1933,  as  amended,  and the  underwriters  seek to  restrict
certain shareholders from selling, contracting to sell or otherwise disposing of
part or all of their  rights  relating to their shares of the  Company's  Common
Stock,  then Optionee will, for a period not to exceed 180 days from the date of
the prospectus  comply with such restrictions as they may apply to any incentive
or nonqualified stock options granted to Optionee pursuant to the Plan or to any
of the shares of Common Stock underlying such options.

         (b)  In  the  event  the  Company  makes  any  public  offering  of its
securities and determines in its sole  discretion that it is necessary to reduce
the  number of issued but  unexercised  stock  purchase  rights for the sole and
explicit  purpose  of  compliance  with any  states  securities  or Blue Sky law
limitations  with respect  thereto,  the Board of Directors of the Company shall
have  the  right  (i) to  accelerate  the  exercisability  of any  incentive  or
nonqualified stock option, vested or unvested, and the date on which such option
must be exercised, provided that the Company gives Optionee prior written notice
of such  acceleration,  and (ii) to cancel any options or portions thereof which
Optionee  does not  exercise  prior to or  contemporaneously  with  such  public
offering.

         (c) In the event of a  transaction  (as  defined  in  Section 12 of the
Plan)  which is treated as a "pooling of  interests"  under  generally  accepted
accounting principles,  Optionee will comply with Rule 145 of the Securities Act
of 1933,  and any other  restrictions  imposed under other  applicable  legal or
accounting  principles  if  Optionee  is an  "affiliate'  (as  defined  in  such
applicable legal and accounting principles) at the time of the transaction,  and
Optionee will execute any  documents  necessary to ensure  compliance  with such
rules.

         The  Company  reserves  the  right  to  place  a  legend  on any  stock
certificate  issued upon exercise of an option  granted  pursuant to the Plan to
assure compliance with this Section 14.

                                   SECTION 14.

                             RIGHTS AS A SHAREHOLDER

         An Optionee (or the Optionee's  successor or successors)  shall have no
rights as a  shareholder  with respect to any shares  covered by an option until
the date of the  issuance of a stock  certificate  evidencing  such  shares.  No
adjustment shall be made for dividends  (ordinary or  extraordinary,  whether in
cash, securities or other property), distributions or other rights for which the
record  date is prior to the date such  stock  certificate  is  actually  issued
(except as otherwise provided in Section 12 of the Plan).

<PAGE>

                                   SECTION 15.

                              AMENDMENT OF THE PLAN

         The Board may from time to time,  insofar as permitted by law,  suspend
or discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 12, shall
impair the terms and  conditions of any option which is  outstanding on the date
of such revision or amendment to the material  detriment of the Optionee without
the consent of the Optionee.  Notwithstanding the foregoing, no such revision or
amendment shall (i) materially increase the number of shares subject to the Plan
except as provided  in Section 12 hereof,  (ii)  change the  designation  of the
class of  employees  eligible to receive  options,  (iii)  decrease the price at
which options may be granted,  or (iv) materially increase the benefits accruing
to  Optionees  under the Plan without the  approval of the  shareholders  of the
Company if such approval is required for compliance with the requirements of any
applicable  law or  regulation.  Furthermore,  the  Plan may  not,  without  the
approval of the shareholders, be amended in any manner that will cause incentive
stock  options to fail to meet the  requirements  of Section 422 of the Internal
Revenue Code.

                                   SECTION 16.

                        NO OBLIGATION TO EXERCISE OPTION

         The granting of an option shall impose no obligation  upon the Optionee
to exercise such option.

                                   SECTION 17.

                           NO GUARANTEE OF EMPLOYMENT

         The granting of an option  hereunder  shall not impose upon the Company
or any  Subsidiary  any  obligation to retain the Optionee in its employ for any
period.

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