Document:

<PAGE>

                    RETIREMENT AGREEMENT AND GENERAL RELEASE
                                READ IT CAREFULLY

NOTICE TO PETER D. GRIFFITH:
---------------------------

This is a very important legal document, and you should carefully review and
understand the terms and effect of this document before signing it. By signing
this Retirement Agreement and General Release ("Agreement"), you are agreeing to
completely release First Federal Savings Bank, FedFirst Financial Corporation,
FedFirst Mutual Holding Company and others from all liability to you. Therefore,
you should consult with an attorney before signing the Agreement. If you choose
to sign the Agreement, you will have seven (7) days following the date of your
signature to revoke the Agreement, and the Agreement shall not become effective
or enforceable until the revocation period has expired.

This is a Retirement Agreement and General Release by and between Peter D.
Griffith and his heirs, administrators, beneficiaries, and assigns (individually
and collectively "Griffith") and First Federal Savings Bank, FedFirst Financial
Corporation and FedFirst Mutual Holding Company, Monessen, Pennsylvania
(sometimes collectively referred to hereinafter as the "Employers"). The
parties, intending to be legally bound, agree as follows:

         1.       RETIREMENT; PAYMENTS TO GRIFFITH, ETC.
                  -------------------------------------

         a.       Effective September 30, 2005, Griffith hereby voluntarily
resigns (i) from employment with the Employers by reason of his retirement and
(ii) as a member of the Board of Directors of each of First Federal Savings
Bank, FedFirst Financial Corporation and FedFirst Mutual Holding Company as well
as the board of directors of any subsidiary or affiliate of the foregoing not
specifically identified herein.

         b.       Following the effective date of this Agreement, the Employers
shall pay to Griffith a single payment equal to the sum of the separate items
set forth in Appendix A (attached hereto), less all appropriate taxes and
withholdings. Such payment shall be made not later than seven (7) business days
after the effective date of this Agreement.

         c.       The Employers shall take such action as may be necessary to
terminate the lease covering the vehicle provided to Griffith by First Federal
Savings Bank and transfer title to the vehicle to Griffith as soon as is
reasonably practicable after the effective date of this Agreement.

         d.       Except to the extent of any amendments contemplated by this
Agreement, the Employers acknowledge this Agreement shall not affect the rights
of Griffith under the following plans and agreements, which rights shall be
determined by reference to the provisions of the applicable plans and
agreements, except as noted below:

                  o  Executive Supplemental Retirement Agreement dated June 30,
                     1999 ("SERP");
                  o  Executive Life Insurance Endorsement Method Split Dollar
                     Agreement date June 30, 1999;
                  o  Consulting Agreement between Griffith and First Federal
                     Savings Bank dated June 30, 1999 (the "Consulting
                     Agreement"); and
                  o  First Federal Savings Bank 401(k) plan.

<PAGE>

         This Agreement shall not affect Griffith's right to elect continuation
coverage under any employee welfare benefit plan sponsored by the Employers to
the extent such election is authorized under federal or state law. Upon
Griffith's election to continue health and dental insurance coverage under
COBRA, the Bank shall pay the cost of such coverage through February 2006 with
respect to Griffith and through July 2006 with respect to Griffith's spouse.
Following the date Griffith attains age 65, the Employers shall make available
to Griffith medicare supplement coverage for the remainder of Griffith's life at
a cost to the Employers not to exceed $212 per month. Any increase in the cost
of such coverage to a level in excess of $212 per month shall be borne solely by
Griffith (the "excess premium"). Following the date Griffith's spouse attains
age 65, the Employers shall make available to her coverage for her lifetime
under the medicare supplement program in which Griffith participates at her sole
expense (the "spousal premium"). In the event that prior to the due date of any
premium payable with respect to such medicare supplement coverage, Griffith has
not paid to the Employers any amount due in the form of excess premiums or
spousal premiums, the Employers shall be under no obligation to advance such
amounts and shall not be liable for any occurrence arising out of the lapse of
such coverage for non-payment of premium. The Employers agree to provide
Griffith or his spouse, as applicable, with reasonable notice of the amount of
and due date for such premiums. Notwithstanding anything in this Agreement to
the contrary, the Employers reserve the right to discontinue the medicare
supplement program at any time. In the event such program is discontinued,
Griffith and, if applicable, his spouse, shall receive reasonable notice of the
Employers' intention to discontinue the program and, upon the discontinuance of
the program, the Employers shall provide Griffith with a monthly payment of $212
for the remainder of his life. In addition, Griffith and the Employers agree
that, as soon as practicable after the effective date of this Agreement, (i) the
SERP shall be amended to reflect a normal retirement age equal to Griffith's age
at September 30, 2005 and (ii) the Consulting Agreement shall be amended to
provide for payment of not more than $148,500 in equal monthly installments over
the period October 1, 2005 through the month in which Griffith's 68th birthday
occurs. Such amendments shall be executed by the parties to this Agreement.

         e.       In the event that the Employers breach any of their
obligations under paragraph b, Griffith agrees that his sole remedy shall be an
action to recover the amount set forth in Appendix A to the extent not
previously paid, and any recovery shall be limited to such amount. Griffith
further agrees that, in any and/or all such circumstances, all of his
obligations and releases under this Agreement will remain in full force and
effect.

         2.       COSTS, INCLUDING ATTORNEYS' FEES. Griffith understands and
                  --------------------------------
agrees that the Employers shall not be liable to Griffith and/or any present or
former attorney for any costs, expenses, or attorneys' fees of any kind or
amount. Furthermore, Griffith expressly agrees that he is not to be considered
to be the "prevailing" or "successful" party within the meaning of any statute,
rule, or other law.

         3.       MUTUAL RELEASE.
                  --------------

         a.       RELEASE BY GRIFFITH. In exchange for the consideration set
                  -------------------
forth in this Agreement and intending to be legally bound, Griffith, and all
other persons or entities claiming with, by, or through him, hereby releases and
forever discharges the Employers, their predecessors, successors, affiliates,
subsidiaries, parents, partners and all of their present and past directors,
officers, agents, employees and attorneys, and all other persons or entities who
could be said to be jointly or severally liable with them (individually and
collectively the "Releasees") from any and all liabilities, claims, actions,
causes of action or suits presently asserted or not asserted, accrued or
unaccrued, known or unknown, that Griffith had, now has, or may have or could
claim to have against them, from the beginning of time to the date of execution
of this Agreement, including, but not limited to, all claims and rights: (i) in
any way arising from or based upon Griffith's employment with the Employers,
such as and including any indemnification of Griffith regarding his actions as a
director or officer of the Employers, which indemnification is no longer

                                       2

<PAGE>

required to be provided by the Employers to Griffith except to the extent that
such release of indemnification coverage by Griffith is not permitted by
applicable law; or (ii) which relate in any way to the termination of Griffith's
employment and other duties with the Employers, whether pursuant to any oral or
written agreements that precede this Agreement. For the same exchange of
consideration referenced immediately above, and intending to be legally bound,
Griffith, and all other persons or entities claiming with, by, or through him,
also releases the Releasees from any and all liabilities, claims, actions,
causes of action or suits presently asserted or not asserted, accrued or
unaccrued, known or unknown, that Griffith had, now has, or may have or could
claim to have against them, from the beginning of time to the date of execution
of this Agreement, including, but not limited to, all claims and rights in any
way arising from or based upon any claims for wrongful discharge, libel,
slander, breach of contract, impairment of economic opportunity, intentional
infliction of emotional distress or any other tort, or claims under federal,
state, or local constitutions, statutes, regulations, ordinances, or common law,
including without limitation claims under the Federal Age Discrimination in
Employment Act, the Federal Older Workers Benefit Protection Act, Title VII of
Civil Rights Act of 1964, the Americans with Disabilities Act, the Pennsylvania
Human Relations Act, Employee Retirement Income Security Act of 1974, the Civil
Rights Acts of 1866, 1871, 1964, and 1991, the Rehabilitation Act of 1973, the
Equal Pay Act of 1963, the American with Disabilities Act of 1990, the Family
and Medical Leave Act of 1993, the Sarbanes Oxley Act of 2002, and any other
statute or law.

         b.       RELEASE BY THE EMPLOYERS. In exchange for the consideration
                  ------------------------
set forth in this Agreement and intending to be legally bound, the Employers
hereby knowingly and voluntarily release and forever discharge Griffith from any
and all actions, causes of actions, suits, damages, judgments, claims, and/or
demands sounding in negligence, brought in law or in equity, (hereinafter
collectively referred to as "negligence claims"), which negligence claims the
Employers ever had, now or may or might in the future have against Griffith,
based on any acts, omissions, transactions or occurrences occurring prior to or
on the date of execution of this Agreement. Notwithstanding the foregoing,
nothing in this Agreement shall be deemed to be a waiver or release by the
Employers of any claims against Griffith which are based on or arise out of: (i)
a customer relationship between Griffith and the Employers, including but not
limited to, lending relationships between Griffith and the Employers; or (ii)
intentional or fraudulent acts or conduct; or (iii) any alleged misappropriation
of the Employers' funds or the Employers customer funds, for any purposes except
to the extent that any such funds have been reimbursed by Griffith. Also, to the
extent that a waiver or release by the Employers of any particular claim or type
of claim would be prohibited under federal or state law, including, without
limitation, regulations restricting indemnification or any threatened, pending
or completed legal or regulatory action, suit or proceeding, such a waiver shall
not be effective and is not provided by the Employers to Griffith,
notwithstanding any statement to the contrary in this Agreement.

         4.       NO ADMISSION OF WRONGDOING. The parties hereto agree that this
                  --------------------------
Agreement is not to be construed as a finding or admission of wrongdoing or
liability or illegal or unethical conduct by any party. Nothing in this
Agreement shall constitute precedent or evidence in any investigation,
proceeding, or trial, with the exception that this Agreement shall be admissible
evidence in any proceeding to enforce its terms or secure a remedy for breach of
its terms.

         5.       CONFIDENTIAL INFORMATION.
                  ------------------------

         a.       Griffith agrees that he will not communicate the terms and
conditions of the discussions pertaining to and preceding finalization of this
Agreement to any persons other than his spouse, attorneys, and tax advisors.

         b.       Griffith acknowledges that, during the course of the
employment relationship, he has or will become privy to confidential and
proprietary business information belonging to the Employers ("Confidential
Information"), the unauthorized disclosure of which could cause serious and
irreparable

                                       3

<PAGE>

injury to the Employers. The information includes, but is not limited to,
information concerning existing and prospective expansion plans; existing and
potential financing arrangements; existing and potential marketing plans and
activities; proprietary computer software programs and applications; business
plans and strategies and other non-public information. Griffith agrees to hold
and safeguard the Confidential Information in trust for the Employers, their
successors and assigns, and agrees that he will not, for a period of three (3)
years from the date of this Agreement, misappropriate, use for his own
advantage, disclose or otherwise make available to anyone who is not an officer
of the Employers, for any reason, any of the Confidential Information,
regardless of whether the Confidential Information was developed or prepared by
him or others. The scope of this Agreement is not limited to information that is
patented, patentable, copyrighted or technically classifiable as a trade secret.

         6.       NOTICE OF REQUESTS FOR INFORMATION.
                  ----------------------------------

         a.       In the event that Griffith receives a subpoena, interrogatory,
document request, or request for admission, notice of deposition, or other legal
paper ("legal document") or other written or any oral request, that might call
for disclosure of Confidential Information or information relating to the
Employers, Griffith shall as soon as possible and in any event no later than
forty-eight (48) hours after receipt of such request, notify the Employers and
its counsel, by telephone and in writing, of such request. The notice shall
include the information contained in the legal document or any other request,
and shall attach a copy of such legal document, or written request. If a request
for information relating to the Employers is made orally, then Griffith shall,
as soon as possible and in any event no later than seventy-two (72) hours after
receipt of the request, notify the Employers and its counsel by telephone and in
writing of receipt of the request and provide to the Employers such information
Griffith has concerning the request, including but not limited to the date, time
and place the request was received, the party or parties from whom the request
was received, the specific nature and substance of the request and the purpose
of the request.

         b.       If Griffith receives any legal document, or other written or
oral request for confidential information, he shall also notify the person or
persons seeking disclosure of information relating to the Employers, and, if
known, the person, persons or entity on whose behalf the request was made, that
the information requested is confidential and subject to this Agreement, and
that it may not be revealed.

         c.       Griffith shall provide, with the Employers to reimburse all
properly verified and pre-approved out-of-pocket expenses, his assistance and
cooperation in any efforts by the Employers to avoid the disclosure of
Confidential Information, including, but not limited to, any attempts by the
Employers to obtain a protective order from a Court prohibiting its disclosure.
If the Employers are unable to obtain a protective order, then Griffith will
only disclose that Confidential Information which he is legally required to
disclose.

         7.       COOPERATION AND NON-DISPARAGEMENT. The parties agree that they
                  ---------------------------------
will not disparage or make derogatory comments about each other or the
Employers' present and former officers, directors, employees, agents, or
attorneys, or their business practices.

         8.       AGREEMENT NOT TO SUE. Griffith agrees never to sue, institute,
                  --------------------
cause to institute, assist any other person or entity in instituting or permit
to be instituted any legal or administrative proceeding relating to or arising
out of any claim and/or cause of action released in paragraph 3 above. Griffith
further agrees that if he files or causes to be filed any claim or cause of
action which is found to be barred in whole or in part by this Agreement, he
will pay all attorneys' fees and costs incurred by the defending party, its
present and former officers, directors, employees, agents and attorneys, in
defending against those barred claims.

                                       4

<PAGE>

         9.       INJUNCTIVE RELIEF. Griffith agrees that any breach of the
                  -----------------
agreements and representations set forth in paragraphs 5, 6, 7, and 8 will cause
the Employers irreparable harm, that such injury cannot be remedied adequately
by the recovery of monetary damages, that upon such a breach the Employers shall
be entitled, in addition to and not in lieu of, any and all other remedies, to
injunctive or other equitable relief without the posting of any bond or
undertaking and that such injunctive and/or equitable relief will not work a
hardship on him. The Employers further agree that in any and/or all such
circumstances, all of their obligations under this Agreement will remain in full
force and effect.

         10.      CHOICE OF LAW. This Agreement shall be governed by, construed
                  -------------
under and enforced pursuant to the laws of the Commonwealth of Pennsylvania,
except to the extent that federal law applies.

         11.      AGREEMENT FREELY AND VOLUNTARILY ENTERED INTO. Griffith
                  ---------------------------------------------
warrants and represents that he has signed this Agreement after review and
consultation with legal counsel of his choice and that he understands this
Agreement and signs it freely, knowingly and voluntarily, without any legal
reservation and fully intending to be legally bound hereby. Griffith
acknowledges that he was provided an opportunity to review and consider this
Agreement for twenty-one (21) calendar days before the date of his resignation
(September 30, 2005) and that he has voluntarily waived this twenty-one (21) day
consideration period. Griffith further acknowledges and agrees that this
Agreement does not release him from any obligation under any contract or
agreement he entered into as a customer of First Federal Savings Bank and that
such obligations shall be determined solely by reference to the terms of such
contract or agreement; provided, however, that to extent such action is not
inconsistent with such contract or agreement or any applicable law or
regulation, First Federal Savings Bank reserves the right to set-off any
payments otherwise due Griffith under this Agreement in the event of a default
by Griffith in his obligations thereunder.

         12.      COMPLETE WRITTEN SETTLEMENT. This Agreement expresses a full
                  ---------------------------
and complete settlement of all matters outstanding between Griffith and the
Employers. Griffith agrees that there are absolutely no agreements or
reservations relating to Griffith's retirement and Griffith's release of the
Employers that are not clearly expressed in writing herein. This Agreement may
not be modified except in writing signed by all parties hereto. Griffith
specifically acknowledges and agrees that, as of the effective date of this
Agreement, the Employment Agreement between Griffith, First Federal Savings Bank
and FedFirst Financial Corporation dated as of April 6, 2005 ("Employment
Agreement") is terminated and, thereafter, shall be without force or effect.

         13.      BINDING ON SUCCESSORS AND ASSIGNS. This Agreement shall be
                  ---------------------------------
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns.

         14.      COUNTERPARTS. This Agreement may be executed in multiple
                  ------------
counterparts, and shall be fully valid, legally binding and enforceable whether
executed in a single document or in such counterparts.

         15.      TERMINATION OF THIS AGREEMENT.
                  -----------------------------

         a.       Notwithstanding any other provisions of this Agreement, this
Agreement shall terminate automatically upon Griffith's death and Griffith's
rights under this Agreement shall cease as of the date of such termination.

         b.       Notwithstanding any other provisions of this Agreement, the
Employers may terminate this Agreement if Griffith breaches any of the
agreements and representations set forth in paragraphs 5, 6, 7, and 8 of this
Agreement.

                                       5

<PAGE>

         16.      REGULATORY COMPLIANCE. Notwithstanding any other provision in
                  ---------------------
this Agreement, the Employers' obligations hereunder are subject to compliance
with all applicable federal and state regulatory requirements. The Employers
may, at any time, take such action it deems necessary to comply with all such
applicable regulatory requirements, including suspending payments under this
Agreement or terminating the Agreement in its entirety. Any payments made or
benefits provided to Griffith pursuant to this Agreement, or otherwise, are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and
any rules and regulations promulgated thereunder and the provisions of 12 C.F.R.
Section 563.39.

                                      * * *

                                       6
<PAGE>

AGREED TO AND INTENDING TO BE LEGALLY BOUND HEREBY, THE PARTIES BELOW HAVE
EXECUTED THIS RETIREMENT AGREEMENT AND GENERAL RELEASE AS OF THE 9TH DAY OF
SEPTEMBER, 2005.

WITNESS:

/s/ Angela Daniele                            /s/ Peter D. Griffith
--------------------------------------        ----------------------------------
Name:  Angela Daniele                         Peter D. Griffith
Title: Secretary

ATTEST:                                       FIRST FEDERAL SAVINGS BANK

/s/ Angela Daniele                            /s/ Joseph U. Frye
--------------------------------------        ----------------------------------
Name:  Angela Daniele                         Name:  Joseph U. Frye
Title: Secretary                              Title: Vice Chairman of the
                                                     Board of Directors

ATTEST:                                       FEDFIRST FINANCIAL CORPORATION

/s/ Angela Daniele                            /s/ Joseph U. Frye
--------------------------------------        ----------------------------------
Name:  Angela Daniele                         Name:  Joseph U. Frye
Title: Secretary                              Title: Vice Chairman of the
                                                     Board of Directors

ATTEST:                                       FEDFIRST MUTUAL HOLDING COMPANY

/s/ Angela Daniele                            /s/ Joseph U. Frye
--------------------------------------        ----------------------------------
Name:  Angela Daniele                         Name:  Joseph U. Frye
Title: Secretary                              Title: Vice Chairman of the
                                                     Board of Directors

                                       7

<PAGE>
<TABLE>
<CAPTION>

                                             APPENDIX A

<S>                                                                                              <C>
Payment representing continuation of base salary through 12/31/06:                               $218,750

Payment in lieu of 2005 and 2006 ESOP allocations:                                               $ 20,000

Payment in lieu of remaining 2005 and 2006 employer match under Employers' 401(k) Plan:          $ 14,000

Payment in lieu of remaining 2005 and 2006 discretionary profit sharing                          $ 16,400

Enhanced Payment equal to Employers' cost of certain welfare benefits (life, disability)
through 12/31/06 and miscellaneous benefits :                                                    $  7,000

Payment in lieu of continuing director compensation (36 months):                                 $ 64,800

TOTAL PAYMENT UNDER PARAGRAPH 1 OF THE AGREEMENT:                                                $340,950

</TABLE>DOBI MEDICAL INTERNATIONAL, INC.

                            2000 STOCK INCENTIVE PLAN
         (as adopted and assumed from DOBI Medical Systems, Inc., and as
                                    amended)

                     (As amended through December 10, 2003)

     1. Purpose. The purpose of the DOBI Medical International, Inc., 2000 Stock
Incentive Plan as amended through December 10, 2003 (the "Plan") is to provide a
means through which the Company and its Subsidiaries and Affiliates may attract
able persons to enter and remain in the employ of the Company and its
Subsidiaries and Affiliates and to provide a means whereby eligible persons can
acquire and maintain ownership of Stock, or be paid incentive compensation
measured by reference to the value of the Stock, thereby strengthening their
commitment to the welfare of the Company and its Subsidiaries and Affiliates and
promoting an identity of interest between the shareholders of the Company and
these eligible persons.

     So that the appropriate incentive can be provided, the Plan provides
for granting Nonqualified Stock Options, Restricted Stock Awards and Stock
Bonuses, or any combination of the foregoing. This Plan also provides for
granting Incentive Stock Options to the extent that Section 422 of the Code or
such other applicable Section becomes available to give favorable or preferred
tax treatment to the grant of Stock. Capitalized terms not defined in the text
are defined in Section 24.

     2. Stock Subject to The Plan. Subject to Section 18, the total number of
Stock reserved and available for grant and issuance pursuant to this Plan will
be the greater of (i) 15% of Common Stock outstanding (determined on a fully
diluted basis exclusive of Common Stock issued or issuable pursuant to options
and other awards granted under the Plan) or (ii) 5,630,000 shares of Common
Stock. At all times the Company shall reserve and keep available a sufficient
number of Stock as shall be required to satisfy the requirements of all
outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan. Stock that have been (a) reserved for
issuance under Options which have expired or otherwise terminated without
issuance of the underlying Stock, (b) reserved for issuance or issued under an
Award granted hereunder but have been forfeited or repurchased by the Company at
the original issue price, or (c) reserved for issuance or issued under an Award
that otherwise terminates without Stock being issued, shall again be available
for issuance.

     3. Eligibility. Awards may be granted to employees, officers, managers,
consultants, independent contractors and advisors of the Company or any Parent,
Affiliate or Subsidiary of the Company; provided such consultants, contractors
and advisors render bona fide services not in connection with the offer and sale
of securities in a capital-raising transaction.

     4. Administration.

     4.1. Committee Authority. This Plan will be administered by the Committee
or by the Board. Any power, authority or discretion granted to the Committee

<PAGE>

may also be taken by the Board. Subject to the general purposes, terms and
conditions of this Plan, and to the direction of the Board, the Committee will
have full power to implement and carry out this Plan. Without limitation, the
Committee will have the authority to:

                        (a)   select persons to receive Awards;

                        (b)   determine the nature, extent, form and terms of
                              Awards and the number of Stock or other
                              consideration subject to Awards;

                        (c)   subject to the provisions of Section 4.3,
                              determine the vesting, exercisability and payment
                              of Awards;

                        (d)   correct any defect, supply any omission or
                              reconcile any inconsistency in this Plan, any
                              Award or any Award Agreement;

                        (e)   determine whether Awards will be granted
                              singly, in combination with, in tandem with, in
                              replacement of, or as alternatives to, other
                              Awards under this Plan or any other incentive or
                              compensation plan of the Company or any Parent or
                              Subsidiary of the Company;

                        (f)   prescribe, amend and rescind rules and
                              regulations relating to this Plan or any Award;

                        (g)   construe and interpret this Plan, any Award
                              Agreement and any other agreement or document
                              executed pursuant to this Plan;

                        (h)   grant waivers of Plan or Award conditions;

                        (i)   determine whether an Award has been earned;

                        (j)   accelerate the vesting of any Award; and

                        (k)   make all other determinations necessary or
                              advisable for the administration of this Plan.

                        The Committee shall have the authority, subject to the
        provisions of the Plan, to establish, adopt, or revise such rules and
        regulations and to make all such determinations relating to the Plan as
        it may deem necessary or advisable for the administration of the Plan.
        The Committee's interpretation of the Plan or any documents evidencing
        Awards granted pursuant thereto and all decisions and determinations by
        the Committee with respect to the Plan shall be final, binding, and
        conclusive on all parties unless otherwise determined by the Board.

                   4.2.       Committee Discretion. Any determination made by
the Committee with respect to any Award will be made in its sole discretion at
the time of grant of the Award or, unless in contravention of any express term
of this Plan or Award, at any later time, and such determination will be final
and binding on the Company and on all persons having an interest in any Award
under this Plan.

                   4.3.       Vesting of Options. Unless an alternative vesting
period is provided by the Committee with respect to any particular Award of
Options under this Plan,

                                       2
<PAGE>

25% of each Award of Options shall vest upon the first anniversary of each
Award, and a like amount shall vest on each subsequent anniversary.

                   5. Options. The Committee may grant Options to eligible
        persons and will determine whether such Options will be intended to be
        "incentive Stock options" which may give favorable or preferred tax
        treatment to the Grantee to the extent that Section 422 of the Code or
        such other applicable section becomes available ("ISO's") or
        Nonqualified Stock Options ("NQSO's"), the number of shares subject to
        the Option, the Exercise Price of the Option, the period during which
        the Option may be exercised, and all other terms and conditions of the
        Option, subject to the following:

                   5.1.       Form of Option Grant. Each Option granted under
this Plan will be evidenced by an Award Agreement ("Stock Option Agreement"),
which will expressly identify the Option as an ISO or an NQSO, and will be in
such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.

                   5.2.       Exercise Period. Options may be exercisable to the
extent vested within the times or upon the events determined by the Committee as
set forth in the Stock Option Agreement governing such Option; provided,
however, that no Option will be exercisable after the expiration of ten (10)
years from the date the Option is granted; and provided further that no ISO
granted to a person who directly or by attribution owns more than ten percent
(10%) of the total combined voting power of all classes of Stockholders of the
Company or of any Parent or Subsidiary of the Company ("Ten Percent
Stockholder") will be exercisable after the expiration of five (5) years from
the date the ISO is granted. The Committee also may provide for Options to
become exercisable at one time or from time to time, periodically or otherwise,
in such number of shares or percentage of shares as the Committee determines.

                   5.3.       Exercise Price. The Exercise Price of an Option
will be determined by the Committee when the Option is granted and may be not
less than 75% of the Fair Market Value of the Stock on the date of grant;
provided that: (i) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Stock on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Stockholder will not be less than 110%
of the Fair Market Value of the Stock on the date of grant. Payment for the
Stock purchased shall be made in accordance with Section 8 of this Plan.

                   5.4.       Date of Grant. The date of grant of an Option will
be the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.

                   5.5.       Method of Exercise. Options may be exercised only
by delivery to the Company of a written option exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Stock being purchased, the restrictions
imposed on the Stock purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price for the number of Stock being purchased.

                                       3
<PAGE>

                   5.6.       Termination. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:

                        (a)   If the Participant is an employee, a manager or a
                              director at the time an Award is made and is
                              Terminated for any reason except death,
                              Disability, Retirement, for Cause, or Voluntary
                              Termination (as defined below), then the
                              Participant may exercise such Participant's
                              Options only to the extent that such Options have
                              vested on or prior to the Termination Date no
                              later than three (3) months after the Termination
                              Date (or such shorter or longer time period not
                              exceeding five (5) years as may be determined by
                              the Committee, with any exercise beyond three (3)
                              months after the Termination Date deemed to be an
                              NQSO), but in any event, no later than the
                              expiration date of the Options.

                        (b)   If the Participant is an employee, a manager
                              or a director at the time an Award is made and
                              such Participant voluntarily terminates employment
                              with the Company (a "Voluntary Termination"), then
                              the Participant may exercise such Participant's
                              Options only to the extent that such Options have
                              vested on or prior to the Termination Date no
                              later than one (1) month after the Termination
                              Date (or such shorter or longer time period not
                              exceeding five (5) years as may be determined by
                              the Committee, with any exercise beyond three (3)
                              months after the Termination Date deemed to be an
                              NQSO), but in any event, no later than the
                              expiration date of the Options.

                        (c)   If the Participant is an employee, a manager
                              or a director at the time an Award is made and is
                              Terminated because of Participant's death or
                              Disability, then Participant's Options shall vest
                              in full, notwithstanding such Participant's then
                              applicable vesting schedule, and must be exercised
                              by Participant (or Participant's legal
                              representative or authorized assignee) no later
                              than twelve (12) months after the Termination Date
                              (or such shorter or longer time period not
                              exceeding five (5) years as may be determined by
                              the Committee, with any such exercise beyond
                              twelve (12) months after the Termination Date when
                              the Termination is for Participant's death or
                              Disability, deemed to be an NQSO), but in any
                              event no later than the expiration date of the
                              Options.

                        (d)   If the Participant is an employee, a manager
                              or a director at the time an Award is made and
                              Termination occurs because of Participant's
                              Retirement, then the Participant may exercise such
                              Participant's Options only to the extent that such
                              Options have vested on or prior to the Termination
                              Date, together with such number of Options as are
                              scheduled to vest at the next regularly scheduled
                              vesting date in accordance with the specific
                              provisions of the vesting schedule contained in
                              such Participant's Award Agreement, provided that
                              such regularly scheduled vesting date would have
                              occurred not later than

                                       4
<PAGE>

                              twelve (12) months after the Termination Date, no
                              later than twelve (12) months after the
                              Termination Date (or such shorter or longer time
                              period not exceeding five (5) years as may be
                              determined by the Committee, with any exercise
                              beyond three (3) months after the Termination Date
                              deemed to be an NQSO), but in any event, no later
                              than the expiration date of the Options.

                        (e)   Notwithstanding the provisions in paragraph
                              5.6(a) above, if a Participant is an employee and
                              is terminated for Cause, neither the Participant,
                              the Participant's estate nor such other person who
                              may then hold the Option shall be entitled to
                              exercise any Option with respect to any Stock
                              whatsoever, after termination of service, whether
                              or not after termination of service the
                              Participant may receive payment from the Company
                              or Subsidiary for vacation pay, for services
                              rendered prior to termination, for services
                              rendered for the day on which termination occurs,
                              for salary in lieu of notice, or for any other
                              benefits. In making such determination, the Board
                              shall give the Participant an opportunity to
                              present to the Board evidence on his behalf. For
                              the purpose of this paragraph, termination of
                              service shall be deemed to occur on the date when
                              the Company dispatches notice or advice to the
                              Participant that his service is terminated.

                        (f)   If the Participant is not an employee or a
                              director, the Award Agreement shall specify
                              treatment of the Award upon Termination.

                   5.7.       Limitations on ISO. The aggregate Fair Market
Value (determined as of the date of grant) of Stock with respect to which ISO's
are exercisable for the first time by a Participant during any calendar year
(under this Plan or under any other incentive stock option plan of the Company,
Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair
Market Value of Stock on the date of grant with respect to which ISO's are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000, then the Options for the first $100,000 worth of Stock to become
exercisable in such calendar year will be ISO's and the Options for the amount
in excess of $100,000 that become exercisable in that calendar year will be
NQSO's. In the event that the Code or the regulations promulgated hereunder are
amended after the Effective Date of this Plan to provide for a different limit
on the Fair Market Value of Stock permitted to be subject to ISO, such different
limit will be automatically incorporated herein and will apply to any Options
granted after the effective date of such amendment.

                   5.8.       Modification, Extension or Renewal. The Committee
may modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefore, provided that, except as expressly provided
for in this Plan or an Award Agreement, any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may, by a written notice to affected Participants,
reduce the Exercise Price of outstanding Options without the consent of such
Participants; provided, however, that the Exercise Price may not be reduced
below

                                       5
<PAGE>

the minimum Exercise Price that would be permitted under Section 5.3 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.

                   5.9.       Limitations on Exercise. The Committee may specify
a reasonable minimum number of Stock that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Stock for which it is then
exercisable.

                   6.   Restricted Stock Award. A Restricted Stock Award is
        an offer by the Company to sell to an eligible person (a
        "Participant-Offeree") Stock that are subject to restrictions. The
        Committee will determine to whom an offer will be made, the number of
        Stock the Participant-Offeree may purchase, the price to be paid (the
        "Purchase Price"), the restrictions to which the Stock will be subject,
        and all other terms and conditions of the Restricted Stock Award,
        subject to the following:

                   6.1.       Form of Restricted Stock Award. All purchases
under a Restricted Stock Award made pursuant to this Plan will be evidenced by
an Award Agreement ("Restricted Stock Purchase Agreement") that will be in such
form (which need not be the same for each Participant-Offeree) as the Committee
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. A Participant-Offeree shall evidence his or her
acceptance of the offer of Restricted Stock by executing and delivering the
Restricted Stock Purchase Agreement and full payment for the Stock to the
Company not later than thirty (30) days from the date the Restricted Stock
Purchase Agreement is delivered to the Participant-Offeree. If the
Participant-Offeree does not execute and deliver the Restricted Stock Purchase
Agreement and tender full payment for the Stock to the Company within said
thirty (30) days, then the offer will terminate, unless otherwise determined by
the Committee.

                   6.2.       Purchase Price. The Purchase Price of Stock sold
pursuant to a Restricted Stock Award will be determined by the Committee on the
date the Restricted Stock Award is granted.

                   6.3.       Terms of Restricted Stock Awards. Restricted Stock
Awards shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Stock that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and
have different performance goals and other criteria.

                   6.4.       Stock Restrictions. Each certificate representing
Restricted Stock awarded under the Plan shall bear the following legend until
the lapse of all restrictions with respect to such Stock:

                                       6
<PAGE>

                   "Transfer of this certificate and the Stock represented
hereby is restricted pursuant to the terms of a Restricted Stock Purchase
Agreement, dated as of _______, between the Company and ____________, and the
Certificate of Incorporation and the Bylaws of the Company, as amended from time
to time. A copy of the Certificate of Incorporation and Bylaws are on file at
the principal executive offices of the Company."

                   Appropriate stop-transfer orders with respect to Restricted
Stock shall be entered on the Company's Stockholder records and/or with the
Company's transfer agent and registrar; provided, however, that the failure or
refusal to enter any stop-transfer order shall not be construed as a
modification or waiver of any provision of the Plan, the Award Agreement, or
otherwise.

                   6.5.       Termination During Performance Period. If a
Participant is Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Stock, cash or otherwise)
with respect to the Restricted Stock Award only to the extent earned as of the
date of Termination in accordance with the Restricted Stock Purchase Agreement,
unless the Committee will determine otherwise.

                   7.   Stock Bonuses.

                   7.1.       Awards of Stock Bonuses. A Stock Bonus is an award
of Stock (which may consist, in whole or in part, of Restricted Stock) for
services rendered to the Company or any Parent or Subsidiary of the Company. A
Stock Bonus may be awarded for past services already rendered to the Company, or
any Parent or Subsidiary of the Company pursuant to an Award Agreement (the
"Stock Bonus Agreement") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals as are set out
in advance in the Participant's individual Award Agreement (the "Performance
Stock Bonus Agreement") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement by the Company, Parent or
Subsidiary and/or individual of Performance Factors or such other criteria as
the Committee may determine.

                   7.2.       Terms of Stock Bonuses. The Committee will
determine the number of Stock to be awarded to the Participant. If the Stock
Bonus is being earned upon the satisfaction of performance goals pursuant to a
Performance Stock Bonus Agreement, then the Committee will: (a) determine the
nature, length and starting date of any Performance Period for each Stock Bonus;
(b) select from among the Performance Factors to be used to measure the
performance, if any; and (c) determine the number of Stock that may be awarded
to the Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Stock may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the Performance Factors applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.

                                       7
<PAGE>

                   7.3.       Form of Payment. The earned portion of a Stock
Bonus may be paid currently or on a deferred basis with such interest or
dividend equivalent, if any, as the Committee may determine. Payment may be made
in the form of cash or whole Stock or a combination thereof, either in a lump
sum payment or in installments, all as the Committee may determine.

                   8.   Payment For Stock Purchases.

                   8.1.       Payment. Payment for Stock purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:

                        (a)   by cancellation of indebtedness of the Company to
                              the Participant;

                        (b)   by surrender of Stock that either: (1) have
                              been owned by Participant for more than six (6)
                              months and have been paid for within the meaning
                              of SEC Rule 144 (and, if such Stock were purchased
                              from the Company by use of a promissory note, such
                              note has been fully paid with respect to such
                              Stock); or (2) were obtained by Participant in the
                              public market;

                        (c)   by tender of a promissory note having such
                              terms as may be approved by the Committee and
                              bearing interest at a rate sufficient to avoid
                              imputation of income under Sections 483 and 1274
                              of the Code; provided, however, that Participants
                              who are not employees or directors of the Company
                              will not be entitled to purchase Stock with a
                              promissory note unless the note is adequately
                              secured by collateral other than the Stock;

                        (d)   by waiver of compensation due or accrued to
                              the Participant for services rendered;

                        (e)   with respect only to purchases upon exercise
                              of an Option, and provided that a public market
                              for the Company's Stock exists:

                        (f)   through a "same day sale" commitment from the
                              Participant and a broker-dealer that is a member
                              of the National Association of Securities Dealers
                              (an "NASD Dealer") whereby the Participant
                              irrevocably elects to exercise the Option and sell
                              a portion of the Stock so purchased to pay for the
                              Exercise Price, and whereby the NASD Dealer
                              irrevocably commits upon receipt of such Stock to
                              forward the Exercise Price directly to the
                              Company; or

                        (g)   through a "margin" commitment from the
                              Participant and an NASD Dealer whereby the
                              Participant irrevocably elects to exercise the
                              Option and to pledge the Stock so purchased to the
                              NASD Dealer in a margin account as security for a
                              loan from the NASD Dealer in the amount of the
                              Exercise Price, and whereby the NASD Dealer
                              irrevocably commits upon receipt of

                                       8
<PAGE>

                              such Stock to forward the Exercise Price directly
                              to the Company; or

                        (h)   by any combination of the foregoing.

                   9.   Withholding Taxes.

                   9.1.       Withholding Generally. Whenever Stock are to
be issued in satisfaction of Awards granted under this Plan, the Company may
require the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Stock. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.

                   9.2.       Stock Withholding. When, under applicable tax
laws, a Participant incurs tax liability in connection with the exercise or
vesting of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the Committee
may in its sole discretion allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from the
Stock to be issued that number of Stock having a Fair Market Value equal to the
minimum amount required to be withheld, determined on the date that the amount
of tax to be withheld is to be determined. All elections by a Participant to
have Stock withheld for this purpose will be made in accordance with the
requirements established by the Committee and shall be in writing in a form
acceptable to the Committee.
Jessie
                   10.  Privileges of Stock Ownership. No Participant will
        have any of the rights of a Stockholder with respect to any Stock Option
        until the Participant has exercised his Stock Option, paid for the
        Stock, and the Stock has been issued to the Participant. Thereafter, the
        Participant will be a Stockholder and have all the rights of Stockholder
        with respect to such Stock, including the right to vote and receive all
        dividends or other distributions made or paid with respect to such
        Stock; provided, that if such Stock are Restricted Stock, then any new,
        additional or different securities the Participant may become entitled
        to receive with respect to such Stock by virtue of a dividend of Stock,
        split of Stock or any other change in the legal or capital structure of
        the Company will be subject to the same restrictions as the Restricted
        Stock; provided, further, that the Participant will have no right to
        retain such stock dividends or stock distributions with respect to Stock
        that are repurchased at the Participant's Purchase Price or Exercise
        Price pursuant to Section 12 hereof.

                   11.  Transferability. Awards granted under this Plan, and
        any interest therein, will not be transferable or assignable by any
        Participant, and may not be made subject to execution, attachment or
        similar process, otherwise than by will or by the laws of descent and
        distribution, except as determined by the Committee and expressly set
        forth in the Award Agreement.

                   12.  Restrictions on Stock. At the discretion of the
        Committee, the Company may reserve to itself and/or its assignee(s) in
        the Award Agreement a right to repurchase a portion of or all Stock held
        by a Participant following such Participant's Termination at any time
        within ninety (90) days after the later of Participant's Termination
        Date and the date Participant purchases Stock under this Plan, for cash

                                       9
<PAGE>

        and/or cancellation of purchase money indebtedness, at the Participant's
        Exercise Price or Purchase Price, as the case may be.

                   13.  Certificates. All certificates for Stock or other
        securities delivered under this Plan will be subject to such
        stop-transfer orders, legends and other restrictions consistent with the
        terms of the Awards as the Committee may deem necessary or advisable,
        including restrictions under any applicable federal, state or foreign
        securities law, or any rules, regulations and other requirements of the
        SEC or any stock exchange or automated quotation system upon which the
        Stock may be listed or quoted.

                   14. Escrow; Pledge of Stock. To enforce any restrictions on a
        Participant's Stock, the Committee may require the Participant to
        deposit all certificates representing Stock, together with powers of
        attorney or other instruments of transfer approved by the Committee,
        appropriately endorsed in blank, with the Company or an agent designated
        by the Company to hold in escrow until such restrictions have lapsed or
        terminated, and the Committee may cause a legend or legends referencing
        such restrictions to be placed on the certificates. Any Participant who
        is permitted to execute a promissory note as partial or full
        consideration for the purchase of Stock under this Plan will be required
        to pledge and deposit with the Company all or part of the Stock so
        purchased as collateral to secure the payment of Participant's
        obligation to the Company under the promissory note; provided, however,
        that the Committee may require or accept other or additional forms of
        collateral to secure the payment of such obligation and, in any event,
        the Company will have full recourse against the Participant under the
        promissory note notwithstanding any pledge of the Participant's Stock or
        other collateral. In connection with any pledge of the Stock,
        Participant will be required to execute and deliver a written pledge
        agreement in such form as the Committee will from time to time approve.
        In the discretion of the Committee, the pledge agreement may provide
        that the Stock purchased with the promissory note may be released from
        the pledge on a pro rata basis as the promissory note is paid.

                   15.  Exchange And Buyout of Awards. The Committee may, at any
        time or from time to time, authorize the Company, with the consent of
        the respective Participants, to issue new Awards in exchange for the
        surrender and cancellation of any or all outstanding Awards. The
        Committee may at any time buy from a Participant an Award previously
        granted with payment in cash, Stock (including Restricted Stock) or
        other consideration, based on such terms and conditions as the Committee
        and the Participant may agree.

                   16.  Securities Law And Other Regulatory Compliance. An Award
        will not be effective unless such Award is in compliance with all
        applicable federal and state securities laws, rules and regulations of
        any governmental body, and the requirements of any stock exchange or
        automated quotation system upon which the Stock may then be listed or
        quoted, as they are in effect on the date of grant of the Award and also
        on the date of exercise or other issuance. However, in the event that an
        Award is not effective as discussed in the preceding sentence, the
        Company will use reasonable efforts to modify, revise or renew such
        Award in a manner so as to make the Award effective. Notwithstanding any
        other provision in this Plan, the Company will have no obligation to
        issue or deliver certificates for Stock under this Plan prior to: (a)
        obtaining any approvals from governmental agencies that the Company
        determines are necessary or advisable; and/or (b) completion of any
        registration or other qualification of such Stock under any state or
        federal law or

                                       10
<PAGE>

        ruling of any governmental body that the Company determines to be
        necessary or advisable. The Company will be under no obligation to
        register the Stock with the SEC or to effect compliance with the
        registration, qualification or listing requirements of any state
        securities laws, stock exchange or automated quotation system, and the
        Company will have no liability for any inability or failure to do so.

                   17.  No Obligation to Employ. Nothing in this Plan or any
        Award granted under this Plan will confer or be deemed to confer on any
        Participant any right to continue in the employ of, or to continue any
        other relationship with, the Company or any Parent or Subsidiary of the
        Company or limit in any way the right of the Company or any Parent or
        Subsidiary of the Company to terminate Participant's employment or other
        relationship with the Company at any time, with or without cause.

                   18.  Corporate Transactions.

                   18.1.      Assumption or Replacement of Awards by Successor.
If a Change-of-Control Event occurs:

                              (i)  the successor company in any Change-of-
                              Control Event may, if approved in writing by the
                              Committee prior to any Change-of-Control Event:

                                   (1)  substitute equivalent Options or Awards
                              or provide substantially similar consideration to
                              Participants as was provided to Stockholders
                              (after taking into account the existing provisions
                              of the Awards), or

                                   (2)  issue, in place of outstanding Stock of
                              the Company held by the Participant, substantially
                              similar Stock or other property subject to
                              repurchase restrictions no less favorable to the
                              Participant.

                              (ii) Notwithstanding anything in this Plan to the
                              contrary, the Committee may, in its sole
                              discretion, provide that the vesting of any or all
                              Options and Awards granted pursuant to this Plan
                              will accelerate immediately prior to the
                              consummation of a Change-of-Control Event. If the
                              Committee exercises such discretion with respect
                              to Options, such Options will become exercisable
                              in full prior to the consummation of such event at
                              such time and on such conditions as the Committee
                              determines, and if such Options are not exercised
                              prior to the consummation of such event, they
                              shall terminate at such time as determined by the
                              Committee.

                   18.2.      Other Treatment of Awards. Subject to any
greater rights granted to Participants under Section 18.1, if a
Change-of-Control Event occurs or has occurred, any outstanding Awards will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, or sale of assets constituting the
Change-of-Control Event.

                                       11
<PAGE>

                   18.3.      Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. If the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Stock issuable upon
exercise of any such option will be adjusted appropriately pursuant to Section
424(a) of the Code). If the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.

                   18.4.      Adjustment of Stock in Certain Capital Changes.

                        (a)   Upon the occurrence of a Change-of-Control
                              Event, an extraordinary transaction or other event
                              or circumstance affecting the Stock shall occur,
                              including, but not limited to, any distribution
                              (whether in the form of cash, Stock or other
                              property), reorganization or conversion into a
                              corporation, recapitalization, Stock split,
                              reverse Stock split, reorganization, merger,
                              consolidation, spin-off, combination, repurchase,
                              Stock exchange, sale of assets or other similar
                              transaction or event, and the Committee determines
                              that a change or adjustment in the terms of any
                              Award is appropriate, then the Committee may, in
                              its sole discretion, make such equitable changes
                              or adjustments or take any other actions that it
                              deems necessary or appropriate (which shall be
                              effective at such time as the Committee in its
                              sole discretion determines), including, but not
                              limited to (A) causing changes or adjustments to
                              any or all of (i) the number and kind of Stock or
                              other securities or property which may thereafter
                              be issued in connection with Awards, (ii) the
                              number and kind of Stock or other securities or
                              property issued or issuable in respect of
                              outstanding Awards, (iii) the exercise price
                              relating to any Award, and (iv) the number and
                              kind of Stock or other securities reserved for
                              issuance under this Plan, and (B) canceling
                              outstanding Awards in exchange for replacement
                              awards or cash, in such amounts or for such price
                              as the Committee may determine as fair, in its
                              sole discretion, it being understood that the
                              Committee shall have the authority to cause
                              different changes or adjustments to be made to any
                              Awards held by Participants even if such Awards
                              are identical and such Participants are similarly
                              situated; further, provided, however, that with
                              respect to Options which are intended by the
                              Committee to remain ISOs' subsequent to any such
                              adjustment, such adjustment shall be made in
                              accordance with Section 424 of the Code.

                        (b)   If the Company engages in a transaction the
                              principal purpose of which is to change the
                              Company from a "pass-through"

                                       12
<PAGE>

                              entity for federal income tax purpose to an entity
                              taxed as a corporation, the Options and Awards
                              outstanding immediately prior to the consummation
                              of transaction shall be treated by the surviving
                              company in such transaction in the same manner as
                              specified in Section 18.1(b)(i)(1).

                   19.  Adoption and Stockholder Approval. This Plan
became effective on December 18, 2002, the date that this Plan was approved by
the Stockholders of the Company, consistent with applicable laws (the "Effective
Date").

                   20.  Term of Plan. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of Stockholder approval.

                   21.  Amendment or Termination of Plan. The Board may at any
time terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the Stockholders of the Company, amend this Plan in any manner that requires
such Stockholder approval.

                   22.  Effect of Section 162(m) of the Code. The Plan and all
Awards issued there under are intended to be exempt from the application of
Section 162(m) of the Code, which restricts under certain circumstances the
Federal income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The exemption is based on Treasury
Regulation Section 1.162-27(f) as in effect on the effective date of the Plan,
with the understanding that such regulation generally exempts from the
application of Section 162(m) of the Code compensation paid pursuant to a plan
that existed before a company becomes publicly held. The Committee may, without
Stockholder approval (unless otherwise required to comply with Rule 16b-3 under
the Exchange Act), amend the Plan retroactively and/or prospectively to the
extent it determines necessary in order to comply with any subsequent
clarification of Section 162(m) of the Code required to preserve the Company's
Federal income tax deduction for compensation paid pursuant to the Plan. To the
extent that the Committee determines as of the Date of Grant of an Award that
(i) the Award is intended to comply with Section 162(m) of the Code and (ii) the
exemption described above is no longer available with respect to such Award,
such Award shall not be effective until any Stockholder approval required under
Section 162(m) of the Code has been obtained.

                   23.  General.

                   23.1.      Additional Provisions of an Award. Awards under
the Plan also may be subject to such other provisions (whether or not applicable
to the benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the Participant
in financing the purchase of Stock upon the exercise of Options, provisions for
the forfeiture of or restrictions on resale or other disposition of Stock
acquired under any Award, provisions giving the Company the right to repurchase
Stock acquired under any Award in the event the Participant elects to dispose of
such Stock, and provisions to comply with Federal and state securities laws and
Federal and state tax withholding requirements. Any such provisions shall be
reflected in the applicable Award Agreement.

                                       13
<PAGE>

                   23.2.      Claim to Awards and Employment Rights. Unless
otherwise expressly agreed in writing by the Company, no employee or other
person shall have any claim or right to be granted an Award under the Plan or,
having been selected for the grant of an Award, to be selected for a grant of
any other Award. Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ or
service of the Company, a Subsidiary or an Affiliate.

                   23.3. Designation and Change of Beneficiary. Each Participant
shall file with the Committee a written designation of one or more persons as
the beneficiary who shall be entitled to receive the amounts payable with
respect to an Award of Restricted Stock, if any, due under the Plan upon his
death. A Participant may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If no beneficiary designation is
filed by the Participant, the beneficiary shall be deemed to be his or her
spouse or, if the Participant is unmarried at the time of death, his or her
estate.

                   23.4.      Payments to Persons Other Than Participants. If
the Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his or her affairs because of illness or accident, or
is a minor or is otherwise legally incompetent or incapacitated, or has died,
then any payment due to such person or such person's estate (unless a prior
claim therefore has been made by a duly appointed legal representative) may, if
the Committee so directs the Company, be paid to such person's spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee, in its absolute discretion, to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and the
Company therefore.

                   23.5.      No Liability of Committee Members. No member of
the Committee shall be personally liable by reason of any contract or other
instrument executed by such Committee member or on his or her behalf in his or
her capacity as a of the Committee nor for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless each member of the
Committee and each other employee, officer or Manager of the Company to whom any
duty or power relating to the administration or interpretation of the Plan may
be allocated or delegated, against any cost or expense (including counsel fees)
or liability (including any sum paid in settlement of a claim) arising out of
any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or willful bad faith; provided, however, that approval
of the Board shall be required for the payment of any amount in settlement of a
claim against any such person. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Operating Agreement or other governing or charter
documents, or as a matter of law, or otherwise, or any power that the Company
may have to indemnify them or hold them harmless.

                   23.6. Governing law. The Plan and all agreements hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Delaware without regard to the principles of conflicts of law thereof.

                                       14
<PAGE>

                   23.7.      Funding. No provision of the Plan shall require
the Company, for the purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. Participants shall have no rights under the Plan other than as general
unsecured creditors of the Company, except that insofar as they may have become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under general law.

                   23.8.      Reliance on Reports. Each member of the Committee
and each member of the Board shall be fully justified in relying, acting or
failing or refusing to act, and shall not be liable for having so relied, acted
or failed or refused to act in good faith, upon any report made by the
independent public accountant of the Company and its Subsidiaries and Affiliates
and upon any other information furnished in connection with the Plan by any
person or persons other than himself.

                   23.9.      Relationship to Other Benefits. No payment under
the Plan shall be taken into account in determining any benefits under any
pension, retirement, profit sharing, group insurance or other benefit plan of
the Company or any Subsidiary except as otherwise specifically provided in such
other plan.

                   23.10.     Expenses. The expenses of administering the Plan
shall be borne by the Company and its Subsidiaries and Affiliates.

                   23.11.     Pronouns. Masculine pronouns and other words of
masculine gender shall refer to both men and women. 23.12. Titles and Headings.
The titles and headings of the sections in the Plan are for convenience of
reference only, and in the event of any conflict, the text of the Plan, rather
than such titles or headings shall control.

                   23.13.     Termination of Employment. For all purposes
herein, a person who transfers from employment or service with the Company to
employment or service with a Subsidiary or Affiliate or vice versa shall not be
deemed to have terminated employment or service with the Company, a Subsidiary
or Affiliate.

                   23.14.     Nonexclusively of The Plan. Neither the adoption
of this Plan by the Board, the submission of this Plan to the Stockholders of
the Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such incentive
arrangements as it may deem desirable, including, without limitation, the
granting of Stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.

                   24.  Definitions. As used in this Plan, the following terms
        will have the following meanings:

                        "Affiliate" means any affiliate of the Company within
        the meaning of 17 CFR ss. 230.405.

                  "Award" means any award under this Plan, including any Option,
        Restricted Stock or Stock Bonus.

                                       15
<PAGE>

                   "Award Agreement" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.

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

                   "Cause" means the Company, a Subsidiary or Affiliate having
cause to terminate a Participant's employment or service under any existing
employment, consulting or any other agreement between the Participant and the
Company or a Subsidiary or Affiliate or, in the absence of such an employment,
consulting or other agreement, upon (i) the determination by the Committee that
the Participant has ceased to perform his duties to the Company, a Subsidiary or
Affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his duties to such party, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company, a Subsidiary or Affiliate or (iii) the Participant having been
convicted of a felony or a misdemeanor carrying a jail sentence of six (6)
months or more.

                   "Change-of-Control Event" means any one or more of the
following:

                        (i)   a dissolution or liquidation of the Company,

                        (ii)  a merger or consolidation in which the
                        Company is not the surviving corporation (other than a
                        merger or consolidation with a wholly-owned subsidiary,
                        are in corporation of the Company in a different
                        jurisdiction, or other transaction in which there is no
                        substantial change in the Stockholders of the Company or
                        their relative Stock holdings and the Awards granted
                        under this Plan are assumed, converted or replaced by
                        the successor corporation, which assumption will be
                        binding on all Participants),

                        (iii) a merger in which the Company is the
                        surviving corporation but after which the Stockholders
                        of the Company immediately prior to such merger (other
                        than any Stockholder that merges, or which owns or
                        controls another corporation that merges, with the
                        Company in such merger) cease to own their Stock or
                        other equity interest in the Company,

                        (iv)  the sale of substantially all of the assets
                        of the Company, or

                        (v)   the acquisition, sale, or transfer of more
                        than 50% of the outstanding Stock of the Company by
                        tender offer or similar transaction.

                   Notwithstanding the foregoing, a transaction the principal
purpose of which is to change the Company from a "pass-through" entity for
federal income tax purpose to an entity taxed as a corporation shall not, by
itself, constitute a Change-of-Control Event.

                                       16
<PAGE>

                   "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.

                   "Committee" means (i) the Stock Option Committee or such
other committee appointed by the Board consisting of two or more Outside
Directors or (ii) the Board. If no Committee has been appointed, or if no
Committee is serving as such, any reference to the Committee shall include the
Board.

                   "Company" means DOBI Medical Systems, Inc., a Delaware
corporation, and any successor thereto.

                   "Director" means a person who is a director of the Board of
Directors of the Company.

                   "Disability" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.

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

                   "Exercise Price" means the price at which a holder of an
Option may purchase the Stock issuable upon exercise of the Option.

                   "Fair Market Value" means, as of any date, the value of a
Stock determined as follows:

                   (a)  if such Stock are then quoted on the NASDAQ National
                        Market, the closing price on the NASDAQ National Market
                        on the date of determination as reported in The Wall
                        Street Journal;

                   (b)  if such Stock are publicly traded and are then
                        listed on a national securities exchange, the closing
                        price on the date of determination on the principal
                        national securities exchange on which the Stock are
                        listed or admitted to trading as reported in The Wall
                        Street Journal;

                   (c)  if such Stock are publicly traded but is not quoted
                        on the NASDAQ National Market nor listed or admitted to
                        trading on a national securities exchange, the average
                        of the closing bid and asked prices on the date of
                        determination as reported in The Wall Street Journal or,
                        if not reported in The Wall Street Journal, as reported
                        by any reputable publisher or quotation service, as
                        determined by the Committee in good faith;

                   (d)  if none of the foregoing is applicable, by the
                        Committee in good faith based upon factors available at
                        the time of the determination, including, but not
                        limited to, capital raising activities of the Company.

                   "ISO" has the meaning set forth in Section 5.

                                       17
<PAGE>

                   "Insider" means an officer or Manager of the Company or any
other person whose transactions in the Company's securities would be subject to
Section 16 of the Exchange Act if the Company were subject to the reporting
requirements of the Exchange Act.

                   "NQSO" has the meaning set forth in Section 5.

                   "Option" means an award of an option to purchase Stock
pursuant to Section 5.

                   "Outside Director" means a person who is (i) a member of the
Board of Directors of the Company, (ii) a "non employee director" within the
meaning of Rule 16b-3 under the Exchange Act, or any successor rule or
regulation, and (iii) an "outside director" within the meaning of Section 162(m)
of the Code.

                   "Parent" means any corporation or other legal entity (other
than the Company) in an unbroken chain of corporations and/or other legal
entities ending with the Company if each of such corporations and other legal
entities other than the Company owns stock, other equity securities or other
equity interests possessing 50% or more of the total combined voting power of
all classes of stock, equity securities or other equity interests in one of the
other corporations or other entities in such chain.

                   "Participant" means a person who receives an Award under this
Plan.

                   "Performance Factors" means the factors selected by the
Committee from time to time, including, but not limited, the following measures
to determine whether the performance goals established by the Committee and
applicable to Awards have been satisfied:

                   24.2.

                   (a)  Net revenue and/or net revenue growth;

                   (b)  Earnings before income taxes and amortization and/or
                        earnings before income taxes and amortization growth;

                   (c)  Operating income and/or operating income growth;

                   (d)  Net income and/or net income growth;

                   (e)  Earnings per share and/or earnings per share growth;

                   (f)  Total Stockholder return and/or total Stockholder
                        return growth;

                   (g)  Return on equity;

                   (h)  Operating cash flow return on income;

                   (i)  Adjusted operating cash flow return on income;

                                       18
<PAGE>

                   (j)  Economic value added;

                   (k)  Individual confidential business objectives;

                   (l)  Successful capital raises;

                   (m)  Obtaining standard FDA approvals;

                   (n)  Completion of product development;

                   (o)  Recruiting key employees;

                   (p)  Actual shipments expressed in Stock or dollars;

                   (q)  Successful completion of an audit;

                   (r)  Sales levels; and

                   (s)  Other factors deemed reasonable and appropriate by
                        the Committee.

                   "Performance Period" means the period of service determined
by the Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.

                   "Plan" means this DOBI Medical Systems, Inc., 2000 Stock
Incentive Plan, as amended from time to time.

                   "Restricted Stock Award" means an award of Stock pursuant to
Section 6.

                   "Retirement" shall mean retirement pursuant to the retirement
policy developed by the Committee, if any, as may be applicable at the time that
a Participant in question voluntarily ceases to be an employee, manager or
director of the Company following attaining retirement age, which retirement age
shall initially be set at age 65, unless and until the Committee in its
discretion determines otherwise.

                   "SEC" means the Securities and Exchange Commission.

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

                   "Stockholder" means any holder of the Company's Blank Check
Preferred Stock, its Class A Preferred Shares, or its Common Stock, as defined
in the Company's Certificate of Incorporation, as it may be amended from time to
time, which stock has been duly authorized and validly issued.

                   "Subsidiary" means any corporation or other legal entity
(other than the Company) in an unbroken chain of corporations and/or other legal
entities beginning with the Company if each of the corporations and entities
other than the last corporation or entity in the unbroken chain owns stock,
other equity securities or other equity interests possessing 50% or more of the
total combined voting power

                                       19
<PAGE>

of all classes of stock, other equity securities or other equity interests in
one of the other corporations or entities in such chain.

                   "Ten Percent Stockholder" has the meaning set forth in
Section 5.2.

                   "Termination" or "Terminated" means, for purposes of this
Plan with respect to a Participant, that the Participant has for any reason
ceased to provide services as an employee, officer, director Manager,
consultant, independent contractor, or advisor to the Company or a Parent or
Subsidiary of the Company. An employee will not be deemed to have ceased to
provide services in the case of (i) sick leave, (ii) military leave, or (iii)
any other leave of absence approved by the Committee, provided, that such leave
is for a period of not more than 90 days, unless re-employment upon the
expiration of such leave is guaranteed by contract or statute or unless provided
otherwise pursuant to formal policy adopted from time to time by the Company and
issued and promulgated to employees in writing. In the case of any employee on
an approved leave of absence, the Committee may make such provisions respecting
suspension of vesting of the Award while on leave from the employ of the Company
or a Subsidiary as it may deem appropriate, except that in no event may an
Option be exercised after the expiration of the term set forth in the Option
agreement. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the
Participant ceased to provide services (the "Termination Date").

                   "Stock" means the common stock of the Company having a par
value of $0.001 per share, and as defined in the Company's Certificate of
Incorporation, as it maybe amended from time to time, which Stock has been or is
hereafter reserved for issuance under this Plan, as adjusted pursuant to
Sections 2 and 18 hereof, and any successor security.

                   "Stock Bonus" means an award of Stock, or cash in lieu of
Stock, pursuant to Section 7.

                   "Unvested Stock" means "Unvested Stock" as defined in the
Award Agreement.

                   "Vested Stock" means "Vested Stock" as defined in the Award
Agreement.

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