Document:

4.14 - Future Advance Bond

 

		
			FOR FFB USE ONLY:

			Bond Identifier:

			____________________

			Purchase Date:

			____________________

			 

		Bond

			Date	 	April
			28, 2006
	 	 	 
	Place

			of

			Issue	 	

			

			Washington, DC
	 	 	 
	Last Day

			for an

			Advance (3)	 	 
			July 15, 2009

	 	 	 
	Maximum

			Principal

			Amount (4)	 	 

			$1,500,000,000.00

	 	 	 
	Final

			Maturity

			Date (5)	 	 
			July 15, 2029

 

	 

		
			
			FUTURE ADVANCE BOND

			
			SERIES B

	    
	
			1.           
			
			Promise to Pay.

			 

			            FOR
			VALUE RECEIVED, NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
			CORPORATION, a cooperative association existing under the laws
			of the District of Columbia (the "Borrower," which term
			includes any successors or assigns) promises to pay the FEDERAL
			FINANCING BANK ("FFB"), a body corporate and
			instrumentality of the United States of America (FFB, for so long as
			it shall be the holder of this Bond, and any successor or assignee
			of FFB, for so long as such successor or assignee shall be the
			holder of this Bond, being the "Holder"), at the times, in
			the manner, and with interest at the rates to be established as
			hereinafter provided, such amounts as may be advanced from time to
			time by FFB to the Borrower under this Bond (each such amount being
			an "Advance", and more than one such amount being "Advances").

			 

			
			2.           
			 Reference to Certain Agreements.

			
			 

			
			            (a)  Bond Purchase Agreement.  This Bond is the
			"Bond" referred to in, and entitled to the benefits of, the Series B
			Bond Purchase Agreement dated as of even date herewith, made by and
			among FFB, the Borrower, and the Administrator of the Rural
			Utilities Service, a Rural Development agency of the United  

	    
	
			BOND - page 1

	

	
			RUS

	    
	
			
			States Department of Agriculture ("RUS") (such agreement, as
			it may be amended, supplemented, and restated from time to time in
			accordance with its terms, being the "Bond Purchase Agreement").

			
			 

			
			            (b) Bond Guarantee Agreement.  This Bond is the
			"Bond" referred to in, and entitled to the benefits of, the Series B
			Bond Guarantee Agreement dated as of even date herewith, made
			between RUS and the Borrower (such agreement, as it may be amended,
			supplemented, and restated from time to time in accordance with its
			terms, being the "Bond Guarantee Agreement").

			
			 

			
			            (c) Pledge Agreement.  This Bond is one of the
			"Bonds" referred to in the Pledge Agreement dated as of even date
			herewith, made among the Borrower, RUS, and U.S. Bank Trust National
			Association, a national association (such agreement, as it may be
			amended, supplemented, and restated from time to time in accordance
			with its terms, being the "Pledge Agreement").

			
			 

			
			3.           
			 Advances; Advance Requests; RUS Approval
			Requirement; Last Day for an Advance.

			 

			            (a)
			Subject to the terms and conditions of the Bond Purchase Agreement,
			FFB shall make Advances to the Borrower from time to time under this
			Bond, in each case upon delivery to FFB of a written request by the
			Borrower for an Advance under this Bond, in the form of request
			attached to the Bond Purchase Agreement as Exhibit A thereto (each
			such request being an "Advance Request") and completed as
			prescribed in section 7.3.1 of the Bond Purchase Agreement.

			 

			            (b) To
			be effective, an Advance Request must first be delivered to RUS for
			approval and be approved by RUS in writing, and such Advance
			Request, together with written notification of RUS's approval
			thereof (each such notification being an "Advance Request
			Approval Notice"), must be received by FFB consistent with the
			advance notice requirements prescribed in section 7.3.2(b) of the
			Bond Purchase Agreement.  

			 

			            (c) FFB
			shall make each requested Advance on the particular calendar date
			that the Borrower requested in the respective Advance Request to be
			the date on which the respective Advance is to be made (such date
			being the "Requested Advance Date" for such Advance), subject
			to the provisions of the Bond Purchase Agreement describing certain
			circumstances under which a requested Advance shall be made on a
			later date; provided, however, that no Advance shall
			be made under this Bond after the particular date specified on page
			1 of this Bond as being the "Last Day for an Advance."

			 

			
			4.           
			 Principal Amount of Advances; Maximum
			Principal Amount.

			
			 

			            The
			principal amount of each Advance shall be the particular dollar
			amount that the Borrower specified in the respective Advance Request
			as the "Requested Advance Amount" for the  

	    
	
			BOND - page 2

	

	
			RUS

	    
	
			respective Advance;
			provided, however, that the aggregate principal amount
			of all Advances made under this Bond shall not exceed the particular
			amount specified on page 1 of this Bond as being the "Maximum
			Principal Amount."   

			 

			
			5.            Maturity Dates for Advances.

			
			 

			            Subject
			to paragraph 15 of this Bond, each Advance shall mature on the
			particular calendar date that the Borrower selected in the
			respective Advance Request to be the date on which the respective
			Advance is to mature (such date being the "Maturity Date" for
			such Advance), provided that such Maturity Date meets all of the
			criteria for Maturity Dates prescribed in section 7.3.1(a)(5) of the
			Bond Purchase Agreement.

			 

			
			6.           
			 Computation of Interest on Advances.

			
			 

			            (a)
			Subject to paragraphs 11 and 16 of this Bond, interest on the
			outstanding principal of each Advance shall accrue from the date on
			which the respective Advance is made to the date on which such
			principal is due.   

			 

			            (b)
			Interest on each Advance shall be computed on the basis of (1)
			actual days elapsed from (but not including) the date on which the
			respective Advance is made (for the first payment of interest due
			under this Bond for such Advance) or the date on which the payment
			of interest was last due (for all other payments of interest due
			under this Bond for such Advance), to (and including) the date on
			which the payment of interest is next due; and (2) a year of 365
			days (except in calendar years including February 29, when the basis
			shall be a 366-day year).   

			 

			            (c) The
			basic interest rate for each Advance shall be established by FFB, as
			of the date on which the respective Advance is made, on the basis of
			the determination made by the Secretary of the Treasury pursuant to
			section 6(b) of the Federal Financing Bank Act of 1973, as amended
			(codified at 12 U.S.C.  2281 et seq.) (the "FFB
			Act"); provided, however, that the shortest
			maturity used as the basis for any rate determination shall be the
			remaining maturity of the most recently auctioned  United States
			Treasury bills having the shortest maturity of all United States
			Treasury bills then being regularly auctioned.   

			 

			            (d) In
			the event that (1) the Borrower has selected for any Advance a
			Maturity Date that will occur on or after the fifth anniversary of
			the Requested Advance Date for such Advance, and (2) the Borrower
			has elected for such Advance a prepayment/ refinancing privilege
			described in section 11.3 of the Bond Purchase Agreement, then the
			interest rate for such Advance shall also include a price (expressed
			in terms of a basis point increment to the applicable basic interest
			rate) for the particular prepayment/refinancing privilege that the
			Borrower selected, which price shall be established by FFB on the
			basis of a determination made by FFB as to the difference between
			(A) the  

	    
	
			BOND - page 3

	    
	

	
			RUS

	    
	
			estimated market
			yield of a notional obligation if such obligation were to (i) be
			issued by the Secretary of the Treasury, (ii) have a maturity
			comparable to the maturity of such Advance, and (iii) include a
			prepayment and refinancing privilege identical to the particular
			prepayment/refinancing privilege that the Borrower elected for such
			Advance, and (B) the estimated market yield of a notional obligation
			if such obligation were to (i) be issued by the Secretary of the
			Treasury, (ii) have a maturity comparable to the maturity of such
			Advance, but (iii) not include such prepayment and refinancing
			privilege.  

			 

			
			7.           
			 Payment of Interest; Payment Dates.

			
			 

			
			            Interest accrued on the outstanding principal amount of
			each Advance shall be due and payable quarterly on January 15,
			April 15, July 15, and October 15 of each year (each such day being
			a "Payment Date"), beginning on the first Payment Date to
			occur after the date on which the respective Advance is made, up
			through and including the Maturity Date of such Advance; provided,
			however, that with respect to each Advance that is made in
			the 30-day period immediately preceding any Payment Date, payments
			of accrued interest on the outstanding principal amount of the
			respective Advance shall be due beginning on the second Payment Date
			to occur after the date on which such Advance is made.  

			 

			8.           
			
			Repayment of Principal.

			 

			            Subject
			to paragraph 15 of this Bond, the principal amount of each Advance
			shall be payable on the Maturity Date for the respective Advance.

			 

			
			9.         Fee.

			 

			
			           
			
			(a)  A fee to cover expenses and contingencies, assessed by
			FFB pursuant to section 6(c) of the FFB Act, shall accrue on the
			outstanding principal amount of each Advance for the period from the
			date on which the respective Advance is made to the date on which
			the principal amount of such Advance is due, not taking into account
			any maturity extensions permitted by paragraph 15 of this Bond (such
			period being the "Advance Period").   

			 

			            (b) The
			fee on each Advance shall be:   

			
			 

			
			(1) 22.5 basis points (0.225%) per annum of the unpaid
			principal balance of such Advance for an Advance Period of a year or
			less;

			 

			
			(2) 27.5 basis points (0.275%) per annum of the unpaid
			principal balance of such Advance for an Advance Period greater than
			a year but no more than 5 years; and  

	    
	
			BOND - page 4

	    
	

	
			RUS

	     
	
			
			(3) 35 basis points (0.35%) per annum of the unpaid principal
			balance of such Advance for an Advance Period greater than 5 years. 
			
			

			
			 

			
			(c) The fee on each Advance shall be computed in the same manner as
			accrued interest is computed under paragraph 6(b) of this Bond, and
			shall be due and payable at the same times as accrued interest is
			due and payable under paragraph 7 of this Bond (adjusted as provided
			in paragraph 10 of this Bond if a Payment Date is not a Business
			Day).  The fee on each Advance shall be credited to RUS as required
			by section 505(c) of the Federal Credit Reform Act of 1990, as
			amended (codified at 2 U.S.C.  661d(c)).    

			 

			
			10.           
			 Business Days.

			
			 

			            (a)
			Whenever any Payment Date, the Maturity Date for any Advance, or the
			Final Maturity Date shall fall on a day on which either FFB or the
			Federal Reserve Bank of New York is not open for business, the
			payment that would otherwise be due on such Payment Date, Maturity
			Date, or Final Payment Date, as the case may be, shall be due on the
			first day thereafter on which FFB and the Federal Reserve Bank of
			New York are both open for business (any such day being a "Business
			Day").   

			 

			            (b) In
			the event that any Payment Date falls on a day other than a Business
			Day, then the extension of time for making the payment that would
			otherwise be due on such Payment Date shall be (1) taken into
			account in establishing the interest rate for the respective
			Advance, (2) included in computing interest due in connection with
			such payment, and (3) excluded in computing interest due in
			connection with the next payment.   

			 

			            (c) In
			the event that the Maturity Date for any Advance or the Final
			Maturity Date falls on a day other than a Business Day, then the
			extension of time for making the payment that would otherwise be due
			on such Maturity Date or the Final Maturity, as the case may be,
			shall be (1) taken into account in establishing the interest rate
			for such Advance, and (2) included in computing interest due in
			connection with such payment.

			 

			
			11.  Late Payments.

			
			 

			            (a) In
			the event that any payment of any amount owing under this Bond is
			not made when and as due (any such amount being then an "Overdue
			Amount"), then the amount payable shall be such Overdue Amount
			plus interest thereon (such interest being the "Late Charge")
			computed in accordance with this subparagraph (a).

			 

			
			            (1) The Late Charge shall accrue from the scheduled date
			of payment for the Overdue Amount (taking into account paragraph 10
			of this Bond) to the date on which payment is made. 

	    
	
			BOND - page 5

	    
	

	
			RUS

	    
	
			
			            (2) The Late Charge shall be computed on the basis of
			(A) actual days elapsed from (but not including) the scheduled date
			of payment for such Overdue Amount (taking into account paragraph 10
			of this Bond) to (and including) the date on which payment is made,
			and (B) a year of 365 days (except in calendar years including
			February 29, when the basis shall be a 366-day year).   

			 

			
			            (3) The Late Charge shall accrue at a rate (the "Late
			Charge Rate") equal to one and one-half times the rate to be
			determined by the Secretary of the Treasury taking into
			consideration the prevailing market yield on the remaining maturity
			of the most recent auctioned 13-week United States Treasury bills. 
			
			

			 

			
			            (4) The initial Late Charge Rate shall be in effect
			until the earlier to occur of either (A) the date on which payment
			of the Overdue Amount and the amount of accrued Late Charge is made,
			or (B) the first Payment Date to occur after the scheduled date of
			payment for such Overdue Amount.  In the event that the Overdue
			Amount and the amount of the accrued Late Charge are not paid on or
			before such Payment Date, then the amount payable shall be the sum
			of the Overdue Amount and the amount of the accrued Late Charge,
			plus a Late Charge on such sum accruing at a new Late Charge Rate to
			be then determined in accordance with the principles of clause (3)
			of this subparagraph (a).  For so long as any Overdue Amount remains
			unpaid, the Late Charge Rate shall be re-determined in accordance
			with the principles of clause (3) of this subparagraph (a) on each
			Payment Date to occur thereafter, and shall be applied to the
			Overdue Amount and all amounts of the accrued Late Charge to the
			date on which payment of the Overdue Amount and all amounts of the
			accrued Late Charge is made.

			 

			            (b)
			Nothing in subparagraph (a) of this paragraph 11 shall be construed
			as permitting or implying that the Borrower may, without the written
			consent of FFB, modify, extend, alter or affect in any manner
			whatsoever (except as explicitly provided herein) the right of FFB
			to receive any and all payments on account of this Bond on the dates
			specified in this Bond.  

			 

			
			12.      
			 Final Due Date.

			
			 

			           
			Notwithstanding anything in this Bond to the contrary, all amounts
			outstanding under this Bond remaining unpaid as of the Final
			Maturity Date shall be due and payable on the Final Maturity Date.
			
			

			 

			
			13.           
			 Manner of Making Payments.

			
			 

			            (a) For
			so long as FFB is the Holder of this Bond and RUS is the bond
			servicing agent for FFB (as provided in the Bond Purchase
			Agreement), each payment under this Bond shall be paid  

	    
	
			BOND - page 6

	   
	

	
			RUS

	    
	
			in immediately
			available funds by electronic funds transfer to the account of the
			United States Treasury (for credit to the subaccount of RUS, as bond
			servicing agent for FFB) maintained at the Federal Reserve Bank of
			New York specified by RUS in a written notice to the Borrower, or to
			such other account as may be specified from time to time by RUS in a
			written notice to the Borrower.

			 

			            (b) In
			the event that FFB is the Holder of this Bond and RUS is not
			the bond servicing agent for FFB, each payment under this Bond, with
			the exception of the fee described in paragraph 9 of this Bond,
			shall be paid in immediately available funds by electronic funds
			transfer to the account of the United States Treasury (for credit to
			the subaccount of FFB) maintained at the Federal Reserve Bank of New
			York specified by FFB in a written notice to the Borrower, or to
			such other account as may be specified from time to time by FFB in a
			written notice to the Borrower.  In the event that FFB is the Holder
			of this Bond and RUS is not the bond servicing agent for FFB,
			each payment of the fee described in paragraph 9 of this Bond shall
			be paid in immediately available funds by electronic funds transfer
			to the account of the United States Treasury (for credit to the
			subaccount of RUS) maintained at the Federal Reserve Bank of New
			York specified from time to time by RUS in a written notice
			delivered by RUS to the Borrower.

			 

			            (c) In
			the event that FFB is not the Holder of this Bond, then each
			payment under this Bond, with the exception of the fee described in
			paragraph 9 of this Bond, shall be made in immediately available
			funds by electronic funds transfer to such account as shall be
			specified by the Holder in a written notice to the Borrower.  In the
			event that FFB is not the Holder of this Bond, each payment
			of the fee described in paragraph 9 of this Bond shall be made in
			the manner specified by FFB in the written notice delivered by FFB
			to the Borrower and RUS as provided in section 15.4.2 of the Bond
			Purchase Agreement.

			
			 

			
			14.           
			 Application of Payments.

			
			 

			            Each
			payment made on this Bond shall be applied, first, to the payment of
			Late Charges (if any) payable under paragraphs 11 and 18 of this
			Bond, then to the payment of premiums (if any) payable under
			paragraphs 16 and 17 of this Bond, then to the payment of unpaid
			accrued interest, then on account of outstanding principal, and then
			to the payment of the fee payable under paragraph 9 of this Bond.

			 

			
			15.            Maturity Extensions.

			
			 

			            (a)
			With respect to each Advance (1) for which the Borrower has selected
			a Maturity Date that will occur before the twentieth anniversary of
			the Requested Advance Date specified in the respective Advance
			Request, or (2) for which a Maturity Date that will occur before the
			twentieth anniversary of the Requested

	    
	
			BOND - page 7

	    
	

	
			RUS

	    
	
			Advance Date
			specified in the respective Advance Request has been determined as
			provided in subparagraph (b) of this paragraph 15 (each such
			Maturity Date being an "Interim Maturity Date"), the Borrower
			may, effective as of such Interim Maturity Date, elect to extend the
			maturity of all or any portion of the outstanding principal amount
			of the respective Advance to a new Maturity Date to be selected by
			the Borrower in the manner and subject to the limitations specified
			in this subparagraph (a) (each such election being a "Maturity
			Extension Election"; each such elective extension of the
			maturity of any Advance that has an Interim Maturity Date being a "Maturity
			Extension"; and the Interim Maturity Date that is in effect for
			an Advance immediately before any such elective Maturity Extension
			being, from and after such Maturity Extension, the "Maturity
			Extension Effective Date").   

			 

			
			            (1) Except under the circumstances described in
			clause (3) of this subparagraph (a), the Borrower shall deliver to
			FFB (with a copy to RUS) written notification of each Maturity
			Extension Election, in the form of notification attached to this
			Bond as Annex 1-A (each such notification being a "Maturity
			Extension Election Notice"), making reference to the "Advance
			Identifier" (as that term is defined in the Bond Purchase Agreement)
			that FFB assigned to such Advance (as provided in the Bond Purchase
			Agreement) and specifying, among other things, the following:  

			 

			
			            (A) the amount of the outstanding principal of the such
			Advance with respect to which the Borrower elects to extend the
			maturity; and

			 

			
			            (B) the new Maturity Date that the Borrower selects to
			be in effect for such principal amount after the respective Maturity
			Extension Effective Date, which date:  

			 

			
			            (i) may be either (I) a new Interim Maturity Date, or
			(II) the twentieth anniversary of the Requested Advance Date
			specified in the original Advance Request (if such twentieth
			anniversary date is a Payment Date) or the Payment Date immediately
			preceding such twentieth anniversary date (if such twentieth
			anniversary date is not a Payment Date); and

			 

			
			            (ii) in the event that the Borrower selects a new
			Interim Maturity Date as the new Maturity Date for any Advance, must
			meet the criteria for Maturity Dates prescribed in section
			7.3.1(a)(5) of the Bond Purchase Agreement (provided, 
			however, that, for purposes of selecting a new Maturity Date in
			connection with a Maturity Extension Election, each of the
			references to the "Requested Advance Date" for the respective
			Advance in  

	    
	
			BOND - page 8

	    
	

	
			RUS

	 
	
			
			section 7.3.1(a)(5)(D) of the Bond Purchase Agreement shall be
			deemed to be a reference to the "respective Maturity Extension
			Effective Date").

			 

			
			            (2) To be effective, a Maturity Extension Election
			Notice must be received by FFB on or before the third Business Day
			before the Interim Maturity Date in effect for the respective
			Advance immediately before such Maturity Extension.  

			 

			
			            (3) In the event that either of the circumstances
			described in subclause (A) or (B) of the next sentence occurs, then
			a Maturity Extension Election Notice (in the form of notice attached
			to this Bond as Annex 1-B), to be effective, must first be
			delivered to RUS for approval and be approved by RUS in writing, and
			such Maturity Extension Election Notice, together with written
			notification of RUS's approval thereof, must be received by FFB on
			or before the third Business Day before the Interim Maturity Date in
			effect for the respective Advance immediately before such Maturity
			Extension.  RUS approval of a Maturity Extension Election Notice
			will be required under either of the following circumstances:

			 

			
			            (A) (i) any payment of any amount owing under this Bond
			is not made by the Borrower when and as due; (ii) payment is made by
			RUS in accordance with the guarantee set forth at the end of this
			Bond; and (iii) RUS delivers notice to both the Borrower and FFB
			advising each of them that each Maturity Extension Election Notice
			delivered by the Borrower after the date of such notice shall
			require the approval of RUS; or

			 

			
			            (B) FFB at any time delivers written notice to both the
			Borrower and RUS advising each of them that each Maturity Extension
			Election Notice delivered by the Borrower after the date of such
			notice shall require the approval of RUS.

			 

			            (b)
			With respect to any Advance that has an Interim Maturity Date, in
			the event that FFB does not receive a Maturity Extension Election
			Notice (and, if required under subparagraph (a)(3) of this paragraph
			15, written notification of RUS's approval thereof) on or before the
			third Business Day before such Interim Maturity Date, then the
			maturity of such Advance shall be extended automatically in the
			manner and subject to the limitations specified in this subparagraph
			(b) (each such automatic extension of the maturity of any Advance
			that has an Interim Maturity Date also being a "Maturity
			Extension"; and the Interim Maturity Date that is in effect for
			an Advance immediately before any such automatic Maturity Extension
			also being, from and after such Maturity Extension, the "Maturity
			Extension Effective Date").  The new Maturity Date for such

	    
	
			BOND - page 9

	    
	

	
			RUS

	    
	
			Advance shall be
			the immediately following Payment Date.  The amount of principal
			that will have its maturity extended automatically shall be the
			entire outstanding principal amount of such Advance on such Maturity
			Extension Effective Date, less the amount of any payment of
			principal made on such Maturity Extension Effective Date.           
			
			

			 

			            (c) In
			the event that the maturity of any Advance that has an Interim
			Maturity Date is extended under either subparagraph (a) or (b) of
			this paragraph 15, then the basic interest rate for such Advance,
			from and after the respective Maturity Extension Effective Date,
			shall be the particular rate that is established by FFB, as of such
			Maturity Extension Effective Date, in accordance with the principles
			of paragraph 6(c) of this Bond.

			 

			
			(d) In the event that the maturity of any Advance that has an
			Interim Maturity Date is extended under either subparagraph (a) or
			(b) of this paragraph 15, then the fee for such Advance, from and
			after the respective Maturity Extension Effective Date, shall be the
			particular fee that is assessed by FFB, as of such Maturity
			Extension Effective Date, with the new Advance Period being the
			period from the Maturity Extension Effective Date through the new
			Maturity Date, in accordance with the principles of paragraphs 9(b)
			and (c) of this Bond.

			 

			            (e) In
			the event that (1) the maturity of any Advance that has an Interim
			Maturity Date is extended under either subparagraph (a) or (b) of
			this paragraph 15, and (2) the Maturity Date for such extended
			Advance is a date that will occur before the fifth
			anniversary of the respective Maturity Extension Effective Date,
			then the prepayment/refinancing privilege described in section 11.2
			of the Bond Purchase Agreement shall apply automatically to such
			Advance.

			 

			            (f) In
			the event that (1) the Borrower makes a Maturity Extension Election
			with respect to any Advance that has an Interim Maturity Date, and
			(2) the Borrower selects as the Maturity Date for such extended
			Advance a new Maturity Date that will occur on or after the
			fifth anniversary of the respective Maturity Extension Effective
			Date, then the Borrower must elect a prepayment/refinancing
			privilege for such extended Advance from between the options
			described in sections 11.2 and 11.3 of the Bond Purchase Agreement (provided,
			however, that each of the references to "the Requested
			Advance Date for such Advance" in  section 11.3 of the Bond Purchase
			Agreement shall be deemed to be a reference to "the respective
			Maturity Extension Effective Date").  The Maturity Extension
			Election Notice delivered by the Borrower in connection with each
			such Maturity Extension Election must also specify the particular
			prepayment/refinancing privilege that the Borrower elects for the
			respective extended Advance.  In the event that the Borrower elects
			for any such extended Advance a prepayment/refinancing privilege
			described in section 11.3 of the Bond Purchase Agreement, then the
			interest rate for such  

	    
	
			BOND - page 10

	    
	

	
			RUS

	    
	extended Advance, from and after the respective Maturity
			Extension Effective Date, shall include a price (expressed in terms
			of a basis point increment to the applicable basic interest rate)
			for the particular prepayment/refinancing privilege that the
			Borrower elects, which price shall be established by FFB, as of such
			Maturity Extension Effective Date, in accordance with the principles
			of paragraph 6(d) of this Bond. 
			
			 

			            (g) The
			maturity of each Advance may be extended more than once as provided
			in this paragraph 15, but upon the twentieth anniversary of the
			Requested Advance Date specified in the original Advance Request (if
			such twentieth anniversary date is a Payment Date) or upon the
			Payment Date immediately preceding such twentieth anniversary date
			(if such twentieth anniversary date is not a Payment Date), no
			further Maturity Extensions may occur.

			 

			
			16.  Prepayments.

			
			 

			
			            (a) The Borrower may elect to prepay all or any portion
			of the outstanding principal amount of any Advance made under this
			Bond, or to prepay this Bond in its entirety, in the manner, at the
			price, and subject to the limitations specified in this paragraph 16
			(each such election being a "Prepayment Election").

			 

			            (b) For
			each Prepayment Election in which the Borrower elects to prepay a
			particular amount of the outstanding principal of an Advance, the
			Borrower shall deliver to RUS written notification of the respective
			Prepayment Election, in the form of notification attached to this
			Bond as Annex 2-A (each such notification being a "Prepayment
			Election Notice"), making reference to the Advance Identifier
			that FFB assigned to the respective Advance (as provided in the Bond
			Purchase Agreement) and specifying, among other things, the
			following:  

			 

			
			            (1) the particular date on which the Borrower intends to
			make the prepayment on such Advance (such date being the "Intended
			Prepayment Date" for such Advance), which date:  

			 

			
			            (A) must be a Business Day; and
			 

			 

			
			            (B) for any Advance for which the Borrower has selected
			a fixed premium prepayment/refinancing privilege that includes a
			5-year period during which such Advance shall not be eligible
			for any prepayment or refinancing (such time period being a "No-Call
			Period"), may not be a date that will occur before the
			applicable "First Call Date" determined as provided in section
			11.3.2 of the Bond Purchase Agreement (such date being the "First
			Call Date"); and

			 

			
			            (2) the amount of principal of the respective Advance
			that the Borrower intends to prepay, which amount may be either:

	    
	
			BOND - page 11

	    
	

	
			RUS

	    
	
			
			            (A) the total outstanding principal amount of such
			Advance; or

			 

			
			            (B) an amount less than the total outstanding principal
			amount of such Advance (subject to subparagraph (g) of this
			paragraph 16) (any such amount being a "Portion").

			 

			            (c) For
			each Prepayment Election in which the Borrower elects to have a
			particular amount of funds applied by FFB toward the prepayment of
			the outstanding principal of an Advance, the Borrower shall deliver
			to RUS written notification of the respective Prepayment Election,
			in the form of notification attached to this Bond as Annex 2-B
			(each such notification also being a "Prepayment Election Notice"),
			making reference to the Advance Identifier that FFB assigned to the
			respective Advance (as provided in the Bond Purchase Agreement) and
			specifying, among other things, the following:  

			 

			
			            (1) the particular date on which the Borrower intends to
			make the prepayment on such Advance (such date being the "Intended
			Prepayment Date" for such Advance), which date:  

			 

			
			            (A) must be a Business Day; and
			 

			 

			
			            (B) for any Advance for which the Borrower has selected
			a fixed premium prepayment/refinancing privilege that includes a
			5-year No-Call Period, may not be a date that will occur before the
			applicable First Call Date; and

			 

			
			            (2) the particular amount of funds that the Borrower
			elects to be applied by FFB toward a prepayment of the outstanding
			principal amount of such Advance.

			 

			            (d) To
			be effective, a Prepayment Election Notice must be approved by RUS
			in writing, and such Prepayment Election Notice, together with
			written notification of RUS's approval thereof, must be received by
			FFB on or before the fifth Business Day before the date specified
			therein as the Intended Prepayment Date for the respective Advance
			or Portion.

			 

			            (e) The
			Borrower shall pay to FFB a price for the prepayment of any Advance,
			any Portion of any Advance, or this Bond in its entirety (such price
			being the "Prepayment Price" for such Advance or Portion or
			this Bond, as the case may be) determined as follows:

			 

			
			            (1) in the event that the Borrower elects to prepay the
			entire outstanding principal amount of any Advance, then the
			Borrower shall pay to FFB a Prepayment Price for such Advance equal
			to the sum of:  

	    
	
			BOND - page 12

	    
	

	
			RUS

	    
	
			
			            (A) the entire outstanding principal amount of such
			Advance on the Intended Prepayment Date;

			 

			
			            (B) all unpaid interest (and Late Charges, if any)
			accrued on such Advance through the Intended Prepayment Date; and
			
			

			 

			
			            (C) the amount of the premium or discount credit (if
			any) that is required under the particular prepayment/refinancing
			privilege that applies to such Advance;  

			 

			
			            (2) in the event that the Borrower elects to prepay a
			Portion of any Advance, then the Borrower shall pay to FFB a
			Prepayment Price for such Portion that would equal such Portion's
			pro rata share of the Prepayment Price that would be required for a
			prepayment of the entire outstanding principal amount of such
			Advance (determined in accordance with the principles of clause (1)
			of this subparagraph (e)); and

			 

			
			            (3) in the event that the Borrower elects to prepay this
			Bond in its entirety, then the Borrower shall pay to FFB an amount
			equal to the sum of the Prepayment Prices for all outstanding
			Advances (determined in accordance with the principles of clause (1)
			of this subparagraph (e)).   

			 

			            (f)
			Payment of the Prepayment Price for any Advance, any Portion of any
			Advance, or this Bond in its entirety shall be due to FFB before
			3:00 p.m. (Washington, DC, time) on the Intended Prepayment Date for
			such Advance or Portion or this Bond, as the case may be.

			 

			            (g)
			Each prepayment of a Portion shall, as to the principal amount of
			such Portion, be subject to a minimum amount equal to $100,000.00 of
			principal.  

			 

			            (h) The
			Borrower may make more than one Prepayment Election with respect to
			an Advance, each such Prepayment Election being made with respect to
			a different Portion of such Advance, until such time as the entire
			principal amount of such Advance is repaid in full.  

			 

			
			17.  Refinancings.

			
			 

			
			            (a) The Borrower may elect to refinance the outstanding
			principal amount of any Advance (but not any Portion) in the manner,
			at the price, and subject to the limitations specified in this
			paragraph 17 (each such election being a "Refinancing Election").      
			
			

			 

			            (b)
			Except under the circumstances described in subparagraph (d) of this
			paragraph 17, the Borrower shall deliver to FFB (with a copy to RUS)
			written notification of each  

	    
	
			BOND - page 13

	    
	

	
			RUS

	    
	
			Refinancing
			Election, in the form of notification attached to this Bond as 
			Annex 3-A (each such notification being a "Refinancing
			Election Notice"), making reference to the Advance Identifier
			that FFB assigned to the respective Advance (as provided in the Bond
			Purchase Agreement) and specifying, among other things, the
			following:  

			 

			
			            (1) the particular date on which the Borrower intends to
			refinance the respective Advance (such date being the "Intended
			Refinancing Date" for the respective Advance), which date:

			 

			
			            (A) must be a Payment Date; and

			 

			
			            (B) for any Advance for which the Borrower has selected
			a prepayment/refinancing privilege that includes a 5-year No-Call
			Period, may not be a date that will occur before the applicable
			First Call Date;  

			 

			
			            (2) the amount of the outstanding principal of the
			respective Advance that the Borrower elects to refinance (which may
			not be a Portion); and

			 

			
			            (3) the Maturity Date that the Borrower selects to be in
			effect for such principal amount after such refinancing, which date
			may be:

			 

			
			            (A) the Maturity Date that is in effect for such Advance
			immediately before such refinancing; or

			 

			
			            (B) a new Maturity Date that the Borrower selects in
			connection with such Refinancing Election, provided that such new
			Maturity Date meets the criteria for Maturity Dates prescribed in
			section 7.3.1(a)(5) of the Bond Purchase Agreement (provided,
			however, that for purposes of selecting a new Maturity Date
			in connection with a Refinancing Election, each of the references to
			the "Requested Advance Date" for the respective Advance in section
			7.3.1(a)(5)(D) of the Bond Purchase Agreement shall be deemed to be
			a reference to the "respective Refinancing Effective Date").

			 

			            (c) To
			be effective, a Refinancing Election Notice must be received by FFB
			on or before the fifth Business Day before the date specified
			therein as the Intended Refinancing Date.  

			 

			            (d) In
			the event that either of the circumstances described in clause (1)
			or (2) of the next sentence shall have occurred, then a Refinancing
			Election Notice (in the form of notice attached to this Bond as 
			Annex 3-B), to be effective, must first be delivered to RUS for
			approval and be approved by RUS in writing, and such Refinancing
			Election Notice, together with written notification of RUS's
			approval thereof, must be received by FFB on or before the fifth
			Business Day before the date

	    
	
			BOND - page 14

	    
	

	
			RUS

	    
	
			specified therein
			to be the Intended Refinancing Date.  RUS approval of a Refinancing
			Election Notice will be required under either of the following
			circumstances:

			 

			
			            (1) (A) payment of any amount owing under this Bond is
			not made by the Borrower when and as due; (B) payment is made by RUS
			in accordance with the guarantee set forth at the end of this Bond;
			and (C) RUS delivers notice to both the Borrower and FFB advising
			each of them that each Refinancing Election Notice delivered by the
			Borrower after the date of such notice shall require the approval of
			RUS; or

			 
			 

			
			            (2) FFB at any time delivers written notice to both the
			Borrower and RUS advising each of them that each Refinancing
			Election Notice delivered by the Borrower after the date of such
			notice shall require the approval of RUS.

			 

			            (e) The
			Borrower shall pay to FFB a price for the refinancing of any Advance
			(such price being the "Refinancing Price" for such Advance)
			equal to the sum of:   

			 

			
			            (1) all unpaid interest (and Late Charges, if any)
			accrued on such Advance through the Intended Refinancing Date; and

			 

			
			            (2) the amount of the premium (if any) that is required
			under the particular prepayment/refinancing privilege that applies
			to such Advance.   

			 

			In the event that
			(A) the prepayment/refinancing privilege that applies to the
			particular Advance being refinanced is the privilege described in
			section 11.2 of the Bond Purchase Agreement, and (B) the Market
			Value Premium (or Discount) that is to be included in the
			Refinancing Price for such Advance is a discount on such Advance,
			then such discount shall be applied by FFB in the manner requested
			by the Borrower in a written notice delivered by the Borrower to FFB
			and approved by RUS in writing.

			 

			            (f)
			Payment of the Refinancing Price for any Advance shall be due to FFB
			before 3:00 p.m. (Washington, DC, time) on the Intended Refinancing
			Date for such Advance.

			 

			            (g) In
			the event that a Refinancing Election Notice (and, if required under
			subparagraph (d) of this paragraph 17, written notification of RUS's
			approval thereof) is received by FFB on or before the fifth Business
			Day before the Intended Refinancing Date specified therein, then the
			refinancing of the respective Advance shall become effective on such
			Intended Refinancing Date (in such event, the Intended Refinancing
			Date being the "Refinancing Effective Date").  In the event
			that a Refinancing Election Notice (and, if required under
			subparagraph (d) of this paragraph 17, written notification of RUS's
			approval thereof) is received by FFB after the fifth Business Day
			before the Intended  

	    
	
			BOND - page 15

	   
	

	
			RUS

	    
	
			Refinancing Date
			specified therein, then the refinancing of the respective Advance
			shall become effective on the fifth Business Day to occur after the
			day on which such Refinancing Election Notice (and, if required
			under subparagraph (d) of this paragraph 17, written notification of
			RUS's approval thereof) is received by FFB (in such event, the fifth
			Business Day to occur after the day on which such Refinancing
			Election Notice (and, if required under subparagraph (d) of this
			paragraph 17, written notification of RUS's approval thereof) is
			received by FFB being the "Refinancing Effective Date"),
			provided that the Borrower shall have paid to FFB, in addition to
			the Refinancing Price required under subparagraph (e) of this
			paragraph 17, the interest accrued from the Intended Refinancing
			Date through such Refinancing Effective Date.

			 

			            (h) In
			the event that the Borrower makes a Refinancing Election with
			respect to any Advance, the basic interest rate for such Advance,
			from and after the respective Refinancing Effective Date, shall be
			the particular rate that is established by FFB, as of such
			Refinancing Effective Date, in accordance with the principles of
			paragraph 6(c) of this Bond.

			 

			
			(i) In the event that the Borrower makes a Refinancing Election with
			respect to any Advance, then the fee for such Advance, from and
			after the respective Refinancing Effective Date, shall be the
			particular fee that is assessed by FFB, as of such Refinancing
			Effective Date, with the new Advance Period being the period from
			the Refinancing Effective Date through the new Maturity Date, in
			accordance with the principles of paragraphs 9(b) and (c) of this
			Bond.

			 

			            (j) In
			the event that (1) the Borrower makes a Refinancing Election with
			respect to any Advance, and (2) the Borrower selects as the Maturity
			Date for such refinanced Advance either (A) the Maturity Date that
			is in effect for such Advance immediately before such refinancing,
			and such Maturity Date will occur before the fifth
			anniversary of the respective Refinancing Effective Date, or (B) a
			new Maturity Date that will occur before the fifth
			anniversary of the respective Refinancing Effective Date, then the
			prepayment/refinancing privilege described in section 11.2 of the
			Bond Purchase Agreement shall apply automatically to such Advance.
			
			

			 

			            (k) In
			the event that (1) the Borrower makes a Refinancing Election with
			respect to any Advance, and (2) the Borrower selects as the Maturity
			Date for such refinanced Advance either (A) the Maturity Date that
			is in effect for such Advance immediately before such refinancing,
			and such Maturity Date will occur on or after the fifth
			anniversary of the respective Refinancing Effective Date, or (B) a
			new Maturity Date that will occur on or after the fifth
			anniversary of the respective Refinancing Effective Date, then the
			Borrower must elect a prepayment/refinancing privilege for such
			refinanced Advance from between the options described in sections
			11.2 and 11.3 of the  

	    
	
			BOND - page 16

	    
	

	
			RUS

	    
	
			Bond Purchase
			Agreement (provided, however, that each of the
			references to the "Requested Advance Date for such Advance" in
			section 11.3 of the Bond Purchase Agreement shall be deemed to be a
			reference to the "respective Refinancing Effective Date").  The
			Refinancing Election Notice delivered by the Borrower in connection
			with each such Refinancing Election must also specify the particular
			prepayment/refinancing privilege that the Borrower elects for the
			respective refinanced Advance.  In the event that the Borrower
			elects for any such refinanced Advance a prepayment/refinancing
			privilege described in section 11.3 of the Bond Purchase Agreement,
			then the interest rate for such refinanced Advance, from and after
			the respective Refinancing Effective Date, shall include a price
			(expressed in terms of a basis point increment to the applicable
			basic interest rate) for the particular prepayment/refinancing
			privilege that the Borrower elects, which increment shall be
			established by FFB, as of such Refinancing Effective Date, in
			accordance with the principles of paragraph 6(d) of this Bond.
			 

			 

			            (l) The
			Borrower may make more than one Refinancing Election with respect to
			any Advance.

			 

			
			18.            Rescission of Prepayment Elections and
			Refinancing Elections; Late Charges for Late Payments.
			 

			 

			            (a) The
			Borrower may rescind any Prepayment Election made in accordance with
			paragraph 16 of this Bond or any Refinancing Election made in
			accordance with paragraph 17 of this Bond, but only in accordance
			with this paragraph 18.   

			 

			            (b) The
			Borrower shall deliver to both FFB and RUS written notification of
			each rescission of a Prepayment Election or a Refinancing Election
			(each such notification being an "Election Rescission Notice")
			specifying the particular Advance for which the Borrower wishes to
			rescind such Prepayment Election or Refinancing Election, as the
			case may be, which specification must make reference to both:  

			 

			
			            (1) the particular Advance Identifier that FFB assigned
			to such Advance (as provided in the Bond Purchase Agreement); and

			 

			
			            (2) the RUS account number for such Advance. 
			 

			 

			The Election
			Rescission Notice may be delivered by facsimile transmission to FFB
			at (202) 622-0707 and to RUS at (202) 720-1401, or at such other
			facsimile number or numbers as either FFB or RUS may from time to
			time communicate to the Borrower.

			 

			            (c) To
			be effective, an Election Rescission Notice must be received by both
			FFB and RUS not later than 3:30 p.m. (Washington, DC, time) on the
			second Business Day before the Intended Prepayment Date or the
			Intended Refinancing Date, as the case may be.  

	    
	
			BOND - page 17

	   
	

	
			RUS

	    
	
			            (d) In
			the event that the Borrower (1) makes a Prepayment Election in
			accordance with paragraph 16 of this Bond or a Refinancing Election
			in accordance with paragraph 17 of this Bond; (2) does not rescind
			such Prepayment Election or Refinancing Election, as the case may
			be, in accordance with this paragraph 18; and (3) does not, before
			3:00 p.m. (Washington, DC, time) on the Intended Prepayment Date or
			Intended Refinancing Date, as the case may be, pay to FFB the
			Prepayment Price described in paragraph 16(e) of this Bond or
			Refinancing Price described in paragraph 17(e) of this Bond, as the
			case may be, then a Late Charge shall accrue on any such unpaid
			amount from the Intended Prepayment Date or Intended Refinancing
			Date, as the case may be, to the date on which payment is made,
			computed in accordance with the principles of paragraph 11 of this
			Bond.

			
			 

			
			19.           
			 Amendments to Bond.

			
			 

			            To the
			extent not inconsistent with applicable law, this Bond, for so long
			as FFB or its agent is the holder thereof, shall be subject to
			modification by such amendments, extensions, and renewals as may be
			agreed upon from time to time by FFB and the Borrower, with the
			approval of RUS.

			 

			
			20.           
			 Certain Waivers.

			
			 

			            The
			Borrower hereby waives any requirement for presentment, protest, or
			other demand or notice with respect to this Bond.

			 

			
			21.      
			 Bond Effective Until Paid.

			
			 

			            This
			Bond shall continue in full force and effect until all principal
			outstanding hereunder, all interest accrued hereunder, all premiums
			(if any) payable under paragraphs 16 and 17 of this Bond, all Late
			Charges (if any) payable under paragraphs 11 and 18 of this Bond,
			and all fees (if any) payable under paragraph 9 of this Bond have
			been paid in full.

			 

			
			22.       RUS Guarantee of Bond.

			
			 

			
			            Upon execution of the guarantee set forth at the end of
			this Bond (the "RUS Guarantee"), the payment by the Borrower
			of all amounts due and payable under this Bond, when and as due,
			shall be guaranteed by the United States of America, acting through
			RUS, pursuant to the Rural Electrification Act of 1936, as amended
			(codified at 7 U.S.C.  901 et seq.).  In
			consideration of the RUS Guarantee, the Borrower promises to RUS to
			make all payments due under this Bond when and as due.  

			 

			
			23.       Pledge Agreement.

			
			 

			            This
			Bond is one of several Bonds referred to in the Pledge Agreement,
			wherein the Borrower made provision for the pledge and grant of a
			security interest in, under certain circumstances

	   
	
			BOND - page 18

	    
	

	
			RUS

	    
	
			described therein,
			certain property of the Borrower, described therein, to secure the
			payment of and performance of certain obligations owed to RUS, as
			set forth in the Pledge Agreement.

			 

			
			24.  Guarantee Payments; Reimbursement.

			
			 

			            If RUS
			makes any payment, pursuant to the RUS Guarantee, of any amount due
			and payable under this Bond, when and as due, each and every such
			payment so made shall be deemed to be a payment hereunder; 
			provided, however, that no payment by RUS pursuant to the
			RUS Guarantee shall be considered a payment for purposes of
			determining the existence of a failure by the Borrower to perform
			its obligation to RUS to make all payments under this Bond when and
			as due.  RUS shall have any rights by way of subrogation, agreement
			or otherwise which arise as a result of such payment pursuant to the
			RUS Guarantee.

			 

			
			25.            Default and Enforcement.

			
			 

			
			            In case of a default by the Borrower under this Bond or
			the occurrence of an event of default under the Bond Guarantee
			Agreement, then, in consideration of the obligation of RUS under the
			RUS Guarantee, in that event, to make payments to FFB as provided in
			this Bond, RUS, in its own name, shall have all rights, powers,
			privileges, and remedies of the holder of this Bond, in accordance
			with the terms of this Bond, the Bond Guarantee Agreement, and the
			Pledge Agreement, including, without limitation, the right to
			enforce or collect all or any part of the obligation of the Borrower
			under this Bond or arising as a result of the RUS Guarantee, to file
			proofs of claim or any other document in any bankruptcy, insolvency,
			or other judicial proceeding, and to vote such proofs of claim.

			 

			
			26.            Acceleration.

			
			 

			            The
			entire unpaid principal amount of this Bond, and all interest
			thereon, may be declared, and upon such declaration shall become,
			due and payable to RUS, under the circumstances described, and in
			the manner and with the effect provided, in the Bond Guarantee
			Agreement.

	    
	
			BOND - page 19

	   
	

	
			RUS

	    
	
			
			            IN WITNESS WHEREOF, the Borrower has caused this
			Bond to be signed in its corporate name and its corporate seal to be
			hereunder affixed and attested by its officers thereunto duly
			authorized, all as of the day and year first above written.

	    

 

 

 

		
			
			NATIONAL RURAL UTILITIES

			COOPERATIVE FINANCE CORPORATION

			
			(the "Borrower")

	By:	 
	 	 
	Signature:	/s/ Sheldon C. Petersen                     
			
	 	 
	Print Name:	Sheldon C. Petersen
	 	 
	Title:	Governor and
	 	Chief Executive Officer

 

 

 

		
			
			ATTEST:

	 	 
	 	 
	Signature:	/s/ John J. List                              
			
	 	 
	Print Name:	John J. List
	 	 
	Title:	Assistant Secretary-Treasurer
	 	 

 

 

 

                                        
 

		
			BOND - page 20Exhibit 4.2

ADVANCED DIGITAL INFORMATION CORPORATION

1996 STOCK OPTION PLAN

SECTION 1.    PURPOSE

The purpose of the Advanced Digital Information Corporation 1996 Stock Option Plan (the "Plan") is to enhance the long-term shareholder value of Advanced Digital Information Corporation, a Washington corporation (the "Company"), by offering opportunities to
employees, directors, officers, consultants, agents, advisors and independent contractors of the Company and its Subsidiaries (as defined in Section 2) to participate in the Company's growth and success, and to encourage them to remain in the service of the Company
and its Subsidiaries and to acquire and maintain stock ownership in the Company.

SECTION 2.    DEFINITIONS

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

2.1   AWARD

       "Award" means an award or grant made to a Participant pursuant to the Plan, including awards or grants of Incentive Stock Options and Nonqualified Stock Options or any combination thereof.

2.2   BOARD

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

2.3   CAUSE

       "Cause" means dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as
determined by the Plan Administrator, and its determination shall be conclusive and binding.

 2.4   CODE

       "Code" means the Internal Revenue Code of 1986, as amended from time to time.

2.5   COMMON STOCK

       "Common Stock" means the common stock, no par value, of the Company.

2.6   CORPORATE TRANSACTION

       "Corporate Transaction" means any of the following events:

-1-

              (a)    Consummation of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the
Common Stock are converted into cash, securities or other property, if following such merger or consolidation the holders of the Company's outstanding voting securities immediately prior to such merger or consolidation own less than 66-2/3% of the outstanding voting
securities of the surviving corporation;

              (b)    Consummation of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company's
assets other than a transfer of the Company's assets to a majority-owned subsidiary corporation (as the term "subsidiary corporation" is defined in Section 8.3) of the Company;

              (c)    Approval by the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the Company; or

              (d)    Acquisition by a person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in effect on the date of adoption of the Plan) of the Exchange Act of a
majority or more of the Company's outstanding voting securities (whether directly or indirectly, beneficially or of record). Ownership of voting securities shall take into account and shall include ownership as determined by applying Rule 13d-3(d)(1)(i) (as in effect
on the date of adoption of the Plan) pursuant to the Exchange Act.

2.7   DISABILITY

       "Disability" means "disability" as that term is defined for purposes of Section 22(e)(3) of the Code.

2.8   ELIGIBLE DIRECTOR

       "Eligible Director" means a member of the Board who is not also an employee of the Company or any "parent corporation" or "subsidiary corporation" (as those terms are defined in Section 8.3) of the Company.

2.9   EXCHANGE ACT

       "Exchange Act" means the Securities Exchange Act of 1934, as amended.

2.10   FAIR MARKET VALUE

       "Fair Market Value" shall be as established in good faith by the Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National Market, the average of the high and the low selling price for the Common Stock as
reported by the Nasdaq National Market for a single trading day or (b) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the closing selling price for the Common Stock as such price is officially quoted in the composite tape
of transactions on such exchange for a single trading day.  If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of Fair Market Value.

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2.11   GOOD REASON

       "Good Reason" means the occurrence of any of the following events or conditions and the failure of the Successor Corporation to cure such event or condition within 30 days after receipt of written notice by the Holder:

              (a)    a change in the Holder's status, title, position or responsibilities (including reporting responsibilities) that, in the Holder's reasonable judgment, represents a
substantial reduction in the status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Holder of any duties or responsibilities that, in the Holder's reasonable judgment, are materially inconsistent with such status,
title, position or responsibilities; or any removal of the Holder from or failure to reappoint or reelect the Holder to any of such positions, except in connection with the termination of the Holder's employment for Cause, for Disability or as a result of his or her
death, or by the Holder other than for Good Reason;

              (b)    a reduction in the Holder's annual base salary;

              (c)    the Successor Corporation's requiring the Holder (without the Holder's consent) to be based at any place outside a 35-mile radius of his or her place of employment
prior to a Corporate Transaction, except for reasonably required travel on the Successor Corporation's business that is not materially greater than such travel requirements prior to the Corporate Transaction;

              (d)   the Successor Corporation's failure to (i) continue in effect any material compensation or benefit plan (or the substantial equivalent thereof) in which the Holder
was participating at the time of a Corporate Transaction, including, but not limited to, the Plan, or (ii) provide the Holder with compensation and benefits substantially equivalent (in terms of benefit levels and/or reward opportunities) to those provided for under
each material employee benefit plan, program and practice as in effect immediately prior to the Corporate Transaction;

              (e)   any material breach by the Successor Corporation of its obligations to the Holder under the Plan or any substantially equivalent plan of the Successor Corporation;
or

              (f)    any purported termination of the Holder's employment or service for Cause by the Successor Corporation that does not comply with the terms of the Plan or any
substantially equivalent plan of the Successor Corporation.

2.12   GRANT DATE

       "Grant Date" means the date the Plan Administrator adopted the granting resolution or a later date designated in a resolution of the Plan Administrator as the date an Award is to be granted, or the date an Option is
automatically granted pursuant to Section 9.

2.13   HOLDER

       "Holder" means the Participant to whom an Award is granted or, for a Holder who has died, the personal representative of the Holder's estate, the person(s) to whom the Holder's rights under the Award have passed by will or by
the applicable laws of descent and distribution or the beneficiary designated pursuant to Section 10.

2.14   INCENTIVE STOCK OPTION

        "Incentive Stock Option" means an Option to purchase Common Stock granted under Section 7 with the intention that it qualify as an "incentive stock option" as that term is defined in Section 422 of the Code.

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2.15   NONQUALIFIED STOCK OPTION

       "Nonqualified Stock Option" means an Option to purchase Common Stock granted under Section 7 other than an Incentive Stock Option.

2.16   OPTION

       "Option" means the right to purchase Common Stock granted under Section 7.

2.17   PARTICIPANT

       "Participant" means an individual who is a Holder of an Award or, as the context may require, any employee, director, officer, consultant, agent, advisor or independent contractor of the Company or a Subsidiary who has been
designated by the Plan Administrator as eligible to participate in the Plan.

2.18   PLAN ADMINISTRATOR

       "Plan Administrator" means the Board or any committee of the Board designated to administer the Plan under Section 3.1.

2.19   SECURITIES ACT

       "Securities Act" means the Securities Act of 1933, as amended.

2.20   SUBSIDIARY

       "Subsidiary," except as provided in Section 8.3 in connection with Incentive Stock Options, means any entity that is directly or indirectly controlled by the Company or in which the Company has a significant ownership interest,
as determined by the Plan Administrator, and any entity that may become a direct or indirect parent of the Company.

2.21   SUCCESSOR CORPORATION

       "Successor Corporation" has the meaning set forth under Section 12.2.

SECTION 3.    ADMINISTRATION

3.1   PLAN ADMINISTRATOR

       The Plan shall be administered by the Board or a committee or committees   (which term includes subcommittees) appointed by, and consisting of two or more members of, the Board.  If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan Administrator and the membership of any committee acting as Plan Administrator of the Plan with respect to any persons subject or likely to become subject to
Section 16 under the Exchange Act the provisions regarding (a) "outside directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange Act.  The Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible Participants to different committees, subject to such limitations as the Board deems appropriate.  Committee members shall serve for such term as the Board may determine, subject to removal by
the Board at any time.

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3.2   ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR

       Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of Common Stock subject to an Award, all terms, conditions, restrictions and limitations, if any, of an Award and the terms of any instrument that evidences the Award.  The Plan
Administrator shall also have exclusive authority to interpret the Plan and may from time to time adopt, and change, rules and regulations of general application for the Plan's administration.  The Plan Administrator's interpretation of the Plan and its rules
and regulations, and all actions taken and determinations made by the Plan Administrator pursuant to the Plan, shall be conclusive and binding on all parties involved or affected.   The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.

SECTION 4.    STOCK SUBJECT TO THE PLAN

4.1   AUTHORIZED NUMBER OF SHARES

       Subject to adjustment from time to time as provided in Section 12.1, a maximum of 3,250,000 shares of Common Stock shall be available for issuance under the Plan.  Shares issued under the Plan shall be drawn from
authorized and unissued shares.

4.2   LIMITATIONS

       Subject to adjustment from time to time as provided in Section 12.1, not more than 200,000 shares of Common Stock may be made subject to Awards under the Plan to any individual Participant in the aggregate in any one fiscal
year of the Company, such limitation to be applied in a manner consistent with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation on deductibility of compensation under Section 162(m) of the Code.

4.3   REUSE OF SHARES

       Any shares of Common Stock that have been made subject to an Award that cease to be subject to the Award (other than by reason of exercise or payment of the Award to the extent it is exercised for in shares), shall again be
available for issuance in connection with future grants of Awards under the Plan; provided, however, that any such shares shall be counted in accordance with the requirements of Section 162(m) of the Code.

SECTION 5.    ELIGIBILITY

       Awards may be granted under the Plan to those officers, directors and key employees of the Company and its Subsidiaries as the Plan Administrator from time to time selects; provided, however, that Eligible Directors shall be
eligible to receive Awards only under Section 9.  Awards may also be made to consultants, agents, advisors and independent contractors who provide services to the Company and its Subsidiaries.

SECTION 6.    AWARDS

6.1   FORM AND GRANT OF AWARDS

       The Plan Administrator shall have the authority, in its sole discretion, to determine the type or types of Awards to be made under the Plan.  Such Awards may consist of Incentive Stock Options and/or Nonqualified Stock
Options.   Awards may be granted singly or in combination.

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6.2   ACQUIRED COMPANY AWARDS

       Notwithstanding anything in the Plan to the contrary, the Plan Administrator may grant Awards under the Plan in substitution for awards issued under other plans, or assume under the Plan awards issued under other plans, if the
other plans are or were plans of other acquired entities ("Acquired Entities") (or the parent of the Acquired Entity) and the new Award is substituted, or the old award is assumed, by reason of a merger, consolidation, acquisition of property or of stock,
reorganization or liquidation (the "Acquisition Transaction").  In the event that a written agreement pursuant to which the Acquisition Transaction is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution
for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Plan Administrator without any further action by the Plan Administrator, except as may be required for compliance with Rule 16b-3 under
the Exchange Act, and the persons holding such Awards shall be deemed to be Participants and Holders.

SECTION 7.    AWARDS OF OPTIONS

7.1   GRANT OF OPTIONS

       The Plan Administrator is authorized under the Plan, in its sole discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock Options, which shall be appropriately designated.

7.2   OPTION EXERCISE PRICE

       The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator, but shall not be less than 100% of the Fair Market Value of the Common Stock on the Grant Date.

7.3   TERM OF OPTIONS

       The term of each Option shall be as established by the Plan Administrator or, if not so established, shall be five years from the Grant Date.

7.4   EXERCISE OF OPTIONS

       The Plan Administrator shall establish and set forth in each instrument that evidences an Option the time at which or the installments in which the Option shall become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time.  If not so established in the instrument evidencing the Option, the Option will become exercisable according to the following schedule, which may be waived or modified by the Plan Administrator at any time:

	
Period of Holder's Continuous

 Employment or Service With the Company

 or Its Subsidiaries

 From the Option Grant Date

	
 

	
Percent of Total Option

 That Is Exercisable

	
After 1 year

		
25%

	
After 2 years

		
50%

	
After 3 years

		
75%

	
After 4 years

		
100%

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       To the extent that the right to purchase shares has accrued thereunder, an Option may be exercised from time to time by written notice to the Company, in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised and accompanied by payment in full as described in Section 7.5.  The Plan Administrator may determine at any time that an Option may not be exercised as to less than 100 shares at any
one time (or the lesser number of remaining shares covered by the Option).

7.5   PAYMENT OF EXERCISE PRICE

       The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased.  Such
consideration must be paid in cash or check, or, unless the Plan Administrator at any time determines otherwise, a combination of cash and/or check and one or both of the following alternative forms:  (a) tendering (either actually or, if and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) Common Stock already owned by the Holder for at least six months (or any shorter period necessary to avoid a charge to the Company's earnings for financial reporting
purposes) having a Fair Market Value on the day prior to the exercise date equal to the aggregate Option exercise price; or (b) if and so long as the Common Stock is registered under Section 12(b) or12(g) of the Exchange Act, delivery of a properly executed exercise
notice, together with irrevocable instructions, to (i) a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in
connection with the exercise and (ii) the Company to deliver the certificates for such purchased shares directly to such brokerage firm, all in accordance with the regulations of the Federal Reserve Board.  In addition, the exercise price for shares purchased
under an Option may be paid either singly or in combination with one or more of the alternative forms of payment authorized by this Section 7.5, by (y) a promissory note delivered pursuant to Section 10 or (z) such other consideration as the Plan Administrator may
permit.

7.6   POST-TERMINATION EXERCISES

       The Plan Administrator shall establish and set forth in each instrument that evidences an Option whether the Option will continue to be exercisable, and the terms and conditions of such exercise, if a Holder ceases to be
employed by,   or to provide services to, the Company or its Subsidiaries, which provisions may be waived or modified by the Plan Administrator at any time.  If not so established in the instrument evidencing the Option, the Option will be exercisable
according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time.

       In case of termination of the Holder's employment or services other than by reason of death or Cause, the Option shall be exercisable, to the extent of the number of shares purchasable by the Holder at the date of such
termination,   only within three months after the date the Holder ceases to be an employee,   director, officer, consultant, agent, advisor or independent contractor of the Company or a Subsidiary if termination of the Holder's employment or services is for
any reason other than Disability and only within one year after the date of such termination by reason of Disability, but in no event later than the remaining term of the Option.  Any Option exercisable at the time of the Holder's death may be exercised, at any
time or from time to time within one year after the date of death, but in no event later than the remaining term of the Option, to the extent of the number of shares purchasable by the Holder at the date of the Holder's death, by the personal representative of the
Holder's estate, the person(s) to whom the Holder's rights under the Award have passed by will or the applicable laws of descent and distribution or the beneficiary designated pursuant to Section 11.  Any portion of an Option that is not exercisable on the date
of termination of the Holder's employment or services shall terminate on such date, unless the Plan Administrator determines otherwise.  In case of termination of the Holder's employment or services for Cause, the Option shall automatically terminate upon first
notification to the Holder of such termination, unless the Plan Administrator determines otherwise.   If a Holder's employment or services with the Company are suspended

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pending an investigation of whether the Holder shall be terminated for Cause, all the Holder's rights under any Option likewise shall be suspended during the period of investigation.

       A transfer of employment or services between or among the Company and its Subsidiaries shall not be considered a termination of employment or services.   The effect of a Company-approved leave of absence on the terms and
conditions of an option shall be determined by the Plan Administrator, in its sole discretion.

SECTION 8   INCENTIVE STOCK OPTION LIMITATIONS

       To the extent required by Section 422 of the Code, Incentive Stock Options shall be subject to the following additional terms and conditions:

8.1   DOLLAR LIMITATION

       To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in excess of $100,000 shall be treated as a Nonqualified Stock Option.  In the event the Participant holds two or more such Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of the order in which such Options are granted.

8.2   10% SHAREHOLDERS

       If a Participant owns more than 10% of the total voting power of all classes of the Company's stock, then the exercise price per share of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of the
Common Stock on the Grant Date and the Option term shall not exceed five years.  The determination of 10% ownership shall be made in accordance with Section 422 of the Code.

8.3   ELIGIBLE EMPLOYEES

       Individuals who are not employees of the Company or one of its parent corporations or subsidiary corporations may not be granted Incentive Stock Options.  For purposes of this Section 8.3, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms for purposes of Section 422 of the Code.

8.4   TERM

       The term of an Incentive Stock Option shall not exceed 10 years.

8.5   EXERCISABILITY

       To qualify for Incentive Stock Option tax treatment, an Option designated as an Incentive Stock Option must be exercised within three months after termination of employment for reasons other than death, except that, in the case
of termination of employment due to total disability, such Option must be exercised within one year after such termination.  Employment shall not be deemed to continue beyond the first 90 days of a leave of absence unless the Participant's reemployment rights
are guaranteed by statute or contract.  For purposes of this Section 8.5, "total disability" shall mean a mental or physical impairment of the Participant which is expected to result in death or which has lasted or is expected to last for a continuous period of
12 months or more and which causes the Participant to be unable, in the opinion of the Company and two independent physicians, to perform his or her duties for the Company and to be engaged in any substantial gainful activity.  Total disability shall be deemed
to have occurred on the first day after the Company and the two independent physicians have furnished their opinion of total disability to the Plan Administrator.

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8.6   TAXATION OF INCENTIVE STOCK OPTIONS

       In order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Participant must hold the shares issued upon the exercise of an Incentive Stock Option for two years after the Grant
Date of the Incentive Stock Option and one year from the date of exercise.   A Participant may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option.  The Plan Administrator may require a Participant to give the
Company prompt notice of any disposition of shares acquired by the exercise of an Incentive Stock Option prior to the expiration of such holding periods.

8.7   PROMISSORY NOTES

       The amount of any promissory note delivered pursuant to Section 10 in connection with an Incentive Stock Option shall bear interest at a rate specified by the Plan Administrator but in no case less than the rate required to
avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes.

SECTION 9.    AWARDS OF OPTIONS TO NONEMPLOYEE DIRECTORS

       Notwithstanding any other provision of the Plan to the contrary, grants to Eligible Directors shall be made only pursuant to the terms and conditions set forth below.

9.1   ANNUAL GRANTS

       Commencing with the Company's 1997 Annual Meeting of Shareholders, each Eligible Director shall automatically receive a grant of an Option to purchase 4,000 shares of Common Stock immediately following each year's Annual
Meeting of Shareholders ("Annual Grants").  Annual Grants shall vest and become exercisable upon the optionee's continued service as a director until the next Annual Meeting of Shareholders after the Grant Date.

9.2   INITIAL GRANTS

       Each Eligible Director shall automatically receive a grant of an Option to purchase 11,000 shares of Common Stock immediately following his or her initial election or appointment to the Board ("Initial Grants").  Initial
Grants shall vest and become exercisable as follows:  Options for 2,750 shares shall become exercisable on and after one year after the Grant Date, and Options for an additional 2,750 shares shall become exercisable on and after each of the three succeeding
anniversaries of the Grant Date.

9.3   NONQUALIFIED STOCK OPTIONS; TERM OF OPTIONS

       Options granted to an Eligible Director under the Plan shall constitute Nonqualified Stock Options.  The term of each Option granted under this Section 9 shall be five years from the Grant Date.

9.4   OPTION EXERCISE PRICE

       The exercise price for shares purchased under an Option granted under this Section 9 shall be the Fair Market Value of the Common Stock on the Grant Date.

9.5   POST-TERMINATION EXERCISES

       In case of termination of the Holder's services other than by reason of death or Cause, the Option shall be exercisable, to the extent of the number of shares purchasable by the Holder at the date of such termination, only
within three months after the date the Holder ceases to be a director of the Company if such

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termination is for reasons other than Disability and only within one year if such termination is by reason of Disability, but in no event later than the remaining term of the Option.  Any Option exercisable at the time of the Holder's death may be exercised,
to the extent of the number of shares purchasable by the Holder at the date of the Holder's death, by the personal representative of the Holder's estate entitled thereto at any time or from time to time within one year after the date of death, but in no event later
than the remaining term of the Option.  In case of termination of the Holder's services for Cause, the Option shall automatically terminate upon first notification to the Holder of such termination.  If a Holder's services with the Company are suspended
pending an investigation of whether the Holder shall be terminated for Cause, all the Holder's rights under any Option likewise shall be suspended during the period of investigation.

9.6   CORPORATE TRANSACTION

       In the event of a Corporate Transaction, each Award that is at the time outstanding shall automatically accelerate so that each such Award shall, immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if, in the opinion of the Company's accountants, it would render unavailable "pooling of interests" accounting for a Corporate Transaction that would otherwise qualify for such accounting
treatment.  All such Awards not exercised prior to that time shall terminate and cease to remain outstanding immediately following the consummation of the Corporate Transaction.

9.7   AVAILABILITY OF SHARES

       The Options provided for in this Section 9 are subject to the availability of shares under the Plan.  If at the date of any grant under this Section 9 there are insufficient shares of Common Stock available to satisfy the
grants in whole, then the shares available shall be divided by the number of Eligible Directors then entitled to a grant and each such Eligible Director shall be granted an Option for that number of shares.

9.8   OTHER TERMS APPLICABLE

       Except as otherwise provided in this Section 9, Options granted to Eligible Directors shall be subject to the terms and conditions of the Plan applicable to other Participants.

SECTION 10.    LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES

       To assist a Holder (including a Holder who is an officer or director of the Company) in acquiring shares of Common Stock pursuant to an Award granted under the Plan, the Plan Administrator, in its sole discretion, may
authorize,   either at the Grant Date or at any time before the acquisition of Common Stock pursuant to the Award, (a) the extension of a loan to the Holder by the Company, (b) the payment by the Holder of the purchase price, if any, of the Common Stock in
installments, or (c) the guarantee by the Company of a loan obtained by the Holder from a third party.  The terms of any loans, installment payments or loan guarantees, including the interest rate and terms of repayment, will be subject to the Plan
Administrator's discretion.  Loans, installment payments and loan guarantees may be granted with or without security.  The maximum credit available is the purchase price, if any, of the Common Stock acquired, plus the maximum federal and state income and
employment tax liability that may be incurred in connection with the acquisition.

SECTION 11.    ASSIGNABILITY

       No Award granted under the Plan may be pledged, assigned or transferred by the Holder other than by will or by the laws of descent and distribution, and during the Holder's lifetime, such Awards may be exercised only by the
Holder.   Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit such assignment, transfer and

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exercisability and may permit a Holder of such Awards to designate a beneficiary who may exercise the Award or receive compensation under the Award after the Holder's death; provided, however, that any Award so assigned or transferred shall be subject to all the
same terms and conditions contained in the instrument evidencing the Award.

SECTION 12.    ADJUSTMENTS

12.1   ADJUSTMENT OF SHARES

       In the event that, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure results in (a) the outstanding shares, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of securities of the Company or of any
other corporation or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of Common Stock of the Company, then the Plan Administrator shall make proportional adjustments in (i) the maximum
number and class of securities subject to the Plan as set forth in Section 4.1, (ii) the number and class of securities that may be made subject to Awards to any individual Participant as set forth in Sections 4.2, 9.1, 9.2 and 9.3 and (iii) the number and class of
securities subject to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor.  The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding.

12.2   CORPORATE TRANSACTION

       Except as otherwise provided in the instrument that evidences the Award,   in the event of a Corporate Transaction, each Award that is at the time outstanding shall automatically accelerate so that each such Award shall,
  immediately prior to the specified effective date for the Corporate Transaction,   become 100% vested, except that such acceleration will not occur if, in the opinion of the Company's accountants, it would render unavailable "pooling of interests"
accounting for a Corporate Transaction that would otherwise qualify for such accounting treatment.  Except for Options granted pursuant to Section 9, such Award shall not so accelerate, if and to the extent (a) such Award is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or parent thereof (the "Successor Corporation") or to be replaced with a comparable award for the purchase of shares of the capital stock of the Successor Corporation or, (b) such Award is to be replaced
with a cash incentive program of the Successor Corporation that preserves the spread existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such Award.   The determination
of Award comparability under clause (a) above shall be made by the Plan Administrator, and its determination shall be conclusive and binding.   All such Awards shall terminate and cease to remain outstanding immediately following the consummation of the
Corporate Transaction, except to the extent such Awards (other than Options granted pursuant to Section 9) are assumed by the Successor Corporation.  Any such Awards that are assumed or replaced in the Corporate Transaction and do not otherwise accelerate at
that time shall be accelerated in the event the Holder's employment or services should subsequently terminate within two years following such Corporate Transaction, unless such employment or services are terminated by the Successor Corporation for Cause or by the
Holder voluntarily without Good Reason.  Notwithstanding the foregoing,   no Incentive Stock Option shall become exercisable pursuant to this Section 12.2 without the Holder's consent, if the result would be to cause such Option not to be treated as an
Incentive Stock Option (whether by reason of the annual dollar limitation described in Section 8.1 or otherwise).

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12.3   FURTHER ADJUSTMENT OF AWARDS

       Subject to the preceding Section 12.2, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation,   reorganization, liquidation or change in control of the Company, as
defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to Participants, with respect to Awards (other than Options granted pursuant to Section 9).  Such authorized action may include
(but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for exercise,   alternate forms and amounts of payments and
other modifications, and the Plan Administrator may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants.  The Plan Administrator may take such actions before or after granting Awards to
which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change in control that is the reason for such action.

12.4   LIMITATIONS

       The grant of Awards will in no way affect the Company's right to adjust,   reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

SECTION 13.    WITHHOLDING

       The Company may require the Holder to pay to the Company the amount of any withholding taxes that the Company is required to withhold with respect to the grant or exercise of any Award.  In such instances, subject to the
Plan and applicable law and unless the Plan Administrator determines otherwise, the Holder may satisfy withholding obligations, in whole or in part, by paying cash,   by electing to have the Company withhold shares of Common Stock or by transferring shares of
Common Stock to the Company, in such amounts as are equivalent to the Fair Market Value of the withholding obligation.  The Company shall have the right to withhold from any shares of Common Stock issuable pursuant to an Award or from any cash amounts otherwise
due or to become due from the Company to the Participant an amount equal to such taxes.  The Company may also deduct from any Award any other amounts due from the Participant to the Company or a Subsidiary.

SECTION 14.   AMENDMENT AND TERMINATION OF PLAN

14.1   AMENDMENT OF PLAN

       The Plan may be amended by the shareholders of the Company.  The Board may also amend the Plan in such respects as it shall deem advisable; however, to the extent required for compliance with Section 422 of the Code or any
applicable law or regulation, shareholder approval will be required for any amendment that will (a) increase the aggregate number of shares as to which Awards may be granted, (b) modify the class of employees eligible to receive Awards, or (c) otherwise require
shareholder approval under any applicable law or regulation.

14.2   TERMINATION OF PLAN

       The Company's shareholders or the Board may suspend or terminate the Plan at any time.  The Plan will have no fixed expiration date; provided, however, that no Incentive Stock Options may be granted more than 10 years
after the earlier of the Plan's adoption by the Board or approval by the shareholders.

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14.3   CONSENT OF HOLDER

       The amendment or termination of the Plan shall not, without the consent of the Holder of any Award under the Plan, impair or diminish any rights or obligations under any Award theretofore granted under the Plan.

        Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Holder, be made in a manner so as to constitute a "modification" that would cause such Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option.

SECTION 15.   GENERAL

15.1   AWARD AGREEMENTS

       Awards granted under the Plan shall be evidenced by a written agreement which shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and which are not inconsistent with
the Plan.

15.2   CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS

       None of the Plan, participation in the Plan as a Participant or any action of the Plan Administrator taken under the Plan shall be construed as giving any Participant or employee of the Company any right to be retained in the
employ of the Company or limit the Company's right to terminate the employment or services of the Participant.

15.3   REGISTRATION; CERTIFICATES FOR SHARES

       The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state securities laws, any shares of Common
Stock,   security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made.   The Company may issue certificates for shares with such legends and subject to such
restrictions on transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws.

       Inability of the Company to obtain, from any regulatory body having jurisdiction, the authority deemed by the Company's counsel to be necessary for the lawful issuance and sale of any shares hereunder or the unavailability of
an exemption from registration for the issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such shares as to which such requisite authority shall not have been obtained.

15.4   NO RIGHTS AS A SHAREHOLDER

       No Award shall entitle the Holder to any dividend, voting or other right of a shareholder unless and until the date of issuance under the Plan of the shares that are the subject of such Award, free of all applicable
restrictions.

15.5   COMPLIANCE WITH LAWS AND REGULATIONS

       Notwithstanding anything in the Plan to the contrary, the Board, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting, imiting or conditioning

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the Plan with respect to other Participants. Additionally, in interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.

15.6   NO TRUST OR FUND

       The Plan is intended to constitute an "unfunded" plan.  Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.

15.7   SEVERABILITY

       If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator's determination, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction,   person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

SECTION 16   EFFECTIVE DATE

       The Plan's effective date is the date on which it is adopted by the Board, so long as it is approved by the Company's shareholders at any time within 12 months of such adoption.

       ADOPTED BY THE BOARD ON JULY 22, 1996 AND APPROVED BY THE COMPANY'S SOLE SHAREHOLDER ON AUGUST 9, 1996.  AMENDED BY THE BOARD ON DECEMBER 10, 1997 AND APPROVED BY THE COMPANY'S SHAREHOLDERS ON FEBRUARY 25, 1998. 
AMENDED BY THE BOARD ON DECEMBER 9, 1998 AND APPROVED BY THE COMPANY'S SHAREHOLDERS ON FEBRUARY 24, 1999.  SHARE NUMBERS IN THE PLAN HAVE BEEN ADJUSTED TO REFLECT THE COMPANY'S 2:1 STOCK SPLIT THAT OCCURRED ON JULY 19, 1999.

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