Document:

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                                                                    Exhibit 10.4

                            FIRST AMENDMENT OF LEASE

     This FIRST AMENDMENT OF LEASE is made as of the 30th day of June, 1998
between PW/MS OP SUB I, LLC, a Delaware limited liability company ("Landlord"),
having an address at PW/MS Management Co., Inc. c/o Gale & Wentworth, LLC,
Park Avenue at Morris County, 200 Campus Drive, Suite 200, Florham Park, New
Jersey 07932-1007 and THE MOLLOY GROUP, INC., a New Jersey corporation, having
an address at 4 Century Drive, Parsippany-Troy Hills, New Jersey 07054
(hereinafter called "Tenant").

                                  WITNESSETH:

     WHEREAS:
     A. Centburg Realty Associates, L.P., predecessor-in-interest to Landlord,
and Tenant heretofore entered into a certain lease dated July 31, 1997, (said
lease as it may have been or may hereafter be amended is hereinafter called the
"Lease") with respect to a portion of the first (1st) floor ("Demised
Premises") in the office building known as and located at 4 Century Drive,
Parsippany-Troy Hills, New Jersey;

     B. Tenant is desirous of (1) increasing the size of the Demised Premises by
the addition of some 10,187 rentable square feet ("Additional Space") on the
second (2nd) floor of the Building, as illustrated on Schedule A, attached
hereto and made a part hereof and (2) extending the expiration date of the
Lease; and

     C. The parties hereto desire to further modify the Lease in certain other
respects.

     NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the parties hereto modify the Lease as follows:

     1. DEFINITIONS. Except as otherwise provided in this First Amendment of
Lease, all defined terms contained in this First Amendment of Lease shall, for
the purposes hereof, have the same meaning ascribed to them in the Lease.

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     2. TERM. Notwithstanding anything to the contrary contained in the Lease,
the date set for the expiration of the term thereof is hereby modified so that
the Expiration Date shall be, and the Initial Term shall end on, January 31,
2002. Landlord may deliver to Tenant a notice ("commencement Date Notice")
confirming, among other things, the revised Expiration Date. If Landlord so
delivers to Tenant's Commencement Date Notice, Tenant shall execute same and
return it to Landlord within five (5) days after Tenant's receipt thereof.
Landlord's failure to timely receive from Tenant at least one (1) fully
executed original counterpart of the Commencement Date Notice shall constitute
Tenant's express consent with and agreement to all the terms contained in the
Commencement Date Notice as prepared by Landlord.

     3. ADDITIONAL SPACE. The Demised Premises shall be deemed to include the
Additional Space on July 1, 1998. As of July 1, 1998, Exhibit A to the Lease
shall be deemed supplemented by Schedule A, attached hereto and made a part
hereof.

     4. RENT. The Lease is hereby amended to provide that the Tenant shall pay
minimum rent ("Minimum Rent") at the annual rate of:

          (i) FOUR HUNDRED SIXTY EIGHT THOUSAND SEVEN HUNDRED THIRTY FIVE AND
          00/100 DOLLARS ($468,735.00) for the period beginning on July 1, 1998
          and ending on August 31, 1998, payable in advance on the first day of
          each calendar month in equal monthly installments of THIRTY NINE
          THOUSAND SIXTY ONE AND 25/100 DOLLARS ($39,061.25);

          (ii) FOUR HUNDRED NINETY SEVEN THOUSAND FORTY SEVEN AND 00/100 DOLLARS
          ($497,047.11) for the period beginning on September 1, 1998 and ending
          on January 31, 1999, payable in advance on the first day of each
          calendar month in equal monthly installments of FORTY ONE THOUSAND
          FOUR HUNDRED TWENTY AND 58/100 DOLLARS ($41,420.58);

          (iii) FIVE HUNDRED SEVENTEEN THOUSAND FOUR HUNDRED TWENTY ONE AND
          00/100 DOLLARS ($517,421.00) for the period beginning on February 1,
          1999 and ending on August 31, 1999, payable in advance on the first
          day of each calendar month in equal monthly installments of FORTY
          THREE THOUSAND ONE HUNDRED EIGHTEEN AND 42/100 DOLLARS ($43,118.42);

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         (iv) FIVE HUNDRED FORTY FIVE THOUSAND SEVEN HUNDRED THIRTY THREE AND
         00/100 DOLLARS ($545,733.00) for the period beginning on September 1,
         1999 and ending on August 31, 2000, payable in advance on the first day
         of each calendar month in equal monthly installments of FORTY FIVE
         THOUSAND FOUR HUNDRED SEVENTY SEVEN AND 75/100 DOLLARS ($45,477.75);
         and

         (v) FIVE HUNDRED EIGHTY FOUR THOUSAND TWO HUNDRED THIRTY TWO AND
         00/100 DOLLARS ($584,232.00) for the period beginning on September 1,
         2000, and ending on the Expiration Date, payable in advance on the
         first day of each calendar month in equal monthly installments of
         FORTY EIGHT THOUSAND SIX HUNDRED EIGHTY SIX AND 00/100 DOLLARS
         ($48,686.00).

     5.  DEMISED PREMISES. As of July 1, 1998, the Lease shall be deemed to
provide that (i) the Demised Premises contain a floor area of 24,343 rentable
square feet of which 14,156 rentable square feet are on the first (1st) floor of
the Building and 10,187 rentable square feet are on the second (2nd) floor of
the Building and (ii) Tenant's Occupancy Percentage is 24.33 percent.

     6.  BROKER. Tenant represents that it has had no dealings or
communications with any real estate broker or agent in connection with this
First Amendment of Lease, except for James Hersh of CB Richard Ellis. Tenant
agrees to pay, defend, indemnify and hold Landlord, its partners, directors,
officers and their affiliates and/or subsidiaries harmless from and against any
and all costs, expenses or liability (including attorney's fees, court costs
and disbursements) for any commission or other compensation claimed by any
broker or agent, except for James Hersh of CB Richard Ellis.

     7.  AUTHORITY. Tenant represents that the undersigned officer of the
Tenant corporation has been duly authorized on behalf of the Tenant corporation
to enter into this First Amendment of Lease in accordance with the terms,
covenants and conditions set forth herein, and, upon Landlord's request, Tenant
shall deliver an appropriate certification by the Secretary of the Tenant
corporation to the foregoing effect.

     8.  NO ORAL CHANGES. This First Amendment of Lease may not

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be changed orally, but only by a writing signed by both Landlord and Tenant.
     9. PHYSICAL CONDITION. (A) Tenant acknowledges that it is in occupancy of
the Demised Premises and hereby accepts the Demised Premises, including the
Additional Space, in their "as is" physical condition and state of repair as of
July 1, 1998. In this regard, Landlord shall have no obligation to do any work,
perform any services or grant any construction allowances, except as otherwise
provided to the contrary in Section 9.(B) hereof.
     (B) Landlord, at no cost to Tenant, shall, using Building standard means,
methods, materials and manpower, once (1) demise the Demised Premises and (2)
construct a new entrance to that portion of the Demised Premises on the second
(2nd) floor of the Building. As per Schedule A-1.
     10. RATIFICATION. Except as expressly amended by this First Amendment of
Lease, the Lease, and all terms, covenants and conditions thereof, shall remain
in full force and effect and is hereby in all respects ratified and confirmed.
     11. PARKING. At all times after July 1, 1998, Section 1.1(q) of the Lease
shall be modified to provide that Tenant's License for Allotted Parking shall
be for up to ninety six (96) cars. As of July 1, 1998, ten (10) parking spaces
of the Allotted Parking shall be Designated Spaces.
     12. NO DEFAULT. Tenant confirms that (i) Landlord has fully complied with
all of its obligations contained in the Lease and (ii) no event has occurred
and no condition exists which, with the passage of time or the giving of
notice, or both, would constitute a default by Landlord under the Lease.
     13. RENEWAL OPTION. As of the date hereof, Tenant shall have only one (1)
option to renew the Lease pursuant to Article 51 of the Lease for a single
additional term of five (5) years commencing on February 1, 2002 and ending on
January 31, 2007.
     14. ADDITIONAL SECURITY DEPOSIT. Tenant shall deposit with Landlord on the
date hereof the sum of THIRTY THOUSAND NINE HUNDRED THIRTY FIVE AND 83/100
DOLLARS ($30,935.83) as additional

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security for the faithful performance and observance by Tenant of the terms,
provisions and conditions of the Lease. As of the date Landlord first holds a
security deposit from Tenant equal to SEVENTY EIGHT THOUSAND ONE HUNDRED TWENTY
TWO AND 50/100 DOLLARS ($78,122.50), Section 1.1(o) of the Lease shall be
deemed to define Security as SEVENTY EIGHT THOUSAND ONE HUNDRED TWENTY TWO AND
50/100 DOLLARS ($78,122.50), not FORTY SEVEN THOUSAND ONE HUNDRED EIGHTY SIX
AND 67/100 DOLLARS ($47,186.67).

     15.  NON-BINDING DRAFT.  The mailing or delivery of this document or any
draft of this document by Landlord or its agent to Tenant, its agent or
attorney shall not be deemed an offer by the Landlord on the terms set forth in
this document or draft, and this document or draft may be withdrawn or modified
by Landlord or its agent at any time and for any reason. The purpose of this
section is to place Tenant on notice that this document or draft shall not be
effective, nor shall Tenant have any rights with respect hereto, unless and
until Landlord shall execute and accept this document. No representations or
promises shall be binding on the parties hereto except those representations
and promises contained in a fully executed copy of this document or in some
future writing signed by Landlord and Tenant.

     16.  NEW BASE YEAR FOR TAXES.  For purposes of computing the additional
rent accruing on and after July 1, 1998 that is due Landlord under Section
6.1(a) of the Lease, as of July 1, 1998, (A) Section 1.1(j) of the Lease shall
be deleted and replaced with the following new Section 1.1(j): "First Operating
Year and First Tax Year shall mean the calendar year ending on December 31,
1998 and (B) Section 1.1(i) of the Lease shall be deleted and replaced with the
following new Section 1.1(i):

          BASE TAXES:    The amount determined by multiplying (a) the real
                         estate tax rate in effect on July 1, 1998 and (b) the
                         assessed valuation of the Real Estate for the calendar
                         year ending December 31, 1998, as such assessed
                         valuation is or may be ultimately determined by final
                         administrative or judicial pro-

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                                        ceeding, or by abatement by an
                                        appropriate taxing authority.

     17. NEW BASE YEAR FOR BUILDING OPERATING COSTS. For purposes of computing
the additional rent accruing on and after July 1, 1998 that is due Landlord
under Section 6.2(a) of the Lease, as of July 1, 1998, Section 6.1(a) of the
Lease shall be deleted and replaced with the language recited in Paragraph
16.(A) of this First Amendment of Lease.

     18. NOTICES. As of the date hereof, the following provision from Section
47.3 NOTICES of the Lease shall be deemed deleted:

                                        Bellemead Management Co., Inc.
                                        4 Becker Farm Road
                                        Roseland, New Jersey 07068
                                        Attention: Legal Department

and shall be replaced by the following new provision:

                                        PW/MS QP SUB I, LLC
                                        PW/MS Management Co., Inc.
                                        c/o Gale & Wentworth, LLC
                                        Park Avenue at Morris County
                                        200 Campus Drive, Suite 200
                                        Florham Park, New Jersey 07932-1007
                                        Attention: Marc Leonard Ripp, Esq.
                                                   General Counsel

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment of
Lease to be executed on the day and year first written above.

Signed and delivered

                                        LANDLORD:

WITNESSED BY:                           PW/MS OP SUB I, LLC
                                        By: PW/MS Management Co., Inc.
                                            By: Gale & Wentworth, LLC

/s/ Marc Leonard Ripp, Esq.                        /s/ Mark Yeng
-----------------------------                      -----------------------------
Marc Leonard Ripp, Esq.                            Mark Yeng
Corporate Secretary                                President

ATTESTED BY:                            AGENT FOR LANDLORD:

                                        PW/MS MANAGEMENT CO., INC.
                                        By: Gale & Wentworth, LLC

/s/ Marc Leonard Ripp, Esq.                        /s/ Mark Yeng
-----------------------------                      -----------------------------
Marc Leonard Ripp, Esq.                            Mark Yeng
Corporate Secretary                                President

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ATTESTED BY:                       TENANT:

                                   THE MOLLOY GROUP, INC.

/s/ ROBERT S. BERNSTEIN            By:  /s/ BRUCE MOLLOY
------------------------------           -----------------------------
   Name:  Robert S. Bernstein            Name:  Bruce Molloy
         ---------------------                 -----------------------
            (Please Print)                         (Please Print)

   Title:  Corporate Secretary           Title:   CEO
            Vice President & CFO                ----------------------
                                                   (Please Print)

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                                   SCHEDULE A

Floor Plan of 10,187 Rentable Square Foot Additional Space on the Second Floor
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                                   SCHEDULE A

                                  [FLOOR PLAN]
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                                  SCHEDULE A-1

                [Main Entrance/Partial Demising Wall Floor Plan]<PAGE>   1
                                                                    Exhibit 10.5

                              SERVICEWARE.COM, INC.
                            2000 STOCK INCENTIVE PLAN

1.       PURPOSE OF THE PLAN.

         The purpose of the ServiceWare.com, Inc. 2000 Stock Incentive Plan (the
"Plan") is to promote the interests of ServiceWare.com, Inc. (the "Company"),
its subsidiaries and its stockholders by (i) attracting and retaining employees,
officers, directors, consultants and advisors of outstanding ability, (ii)
motivating such persons, by means of performance-related incentives, to achieve
long-range performance goals, and (iii) enabling such persons to participate in
the long-term growth and financial success of the Company and its subsidiaries.
The effective date of the Plan is _______________, 2000 ("Effective Date").

2.       ADMINISTRATION.

         (a) Subject to the following paragraphs, the Plan shall be administered
by the Company's Board of Directors (the "Board") or by a Compensation Committee
of the Board (the "Compensation Committee"). If the Board delegates to the
Compensation Committee the authority to administer the Plan, the Compensation
Committee shall be empowered to take all actions reserved to the Board under the
Plan. The Board is authorized to interpret the Plan, to prescribe, amend and
rescind rules and regulations to further the purposes of the Plan, and to make
all other determinations necessary for the administration of the Plan. All such
actions by the Board shall be conclusive, final and binding on all recipients of
grants hereunder ("participants").

         (b) Following registration by the Company of its Common Stock, no par
value ("Common Stock") under Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), any Compensation Committee to which Plan
administration is delegated shall consist solely of Board members who qualify as
(i) "Non-Employee Directors" as defined under Rule 16b-3 under the Exchange Act
and (ii) "outside directors" as defined under Section 162(m) or any successor
provision of the Internal Revenue Code of 1986, as amended (the "Code") and
applicable Treasury regulations thereunder, if and to the extent such
qualification is necessary so that grants made under the Plan or the exercise of
rights thereunder will qualify for any tax or other material benefit to
participants or the Company and its subsidiaries under applicable law.

         (c) Notwithstanding the foregoing, the Board may, subject to any
limitations or restrictions the Board may impose from time to time, delegate to
the Company's Chief Executive Officer the authority to administer the Plan,
including the authority to grant Options (as hereinafter defined) to employees,
consultants or advisors of the Company and its subsidiaries who are not subject,
by reason of their position with the Company or its subsidiaries, to the
requirements of Section 16 of the Exchange Act and who are not expected to be
subject to the limitations of Code Section 162(m).

3.       GRANTS.

         Grants under the Plan may be in the form of options which qualify as
"incentive stock options"
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within the meaning of Code Section 422 or any successor provision ("Incentive
Stock Options"), options which do not so qualify ("Nonqualified Options" and,
collectively with Incentive Stock Options, "Options"), and stock which is
subject to certain forfeiture risks and restrictions on transferability
("Restricted Stock"). Incentive Stock Options may be granted only to employees
of the Company or its subsidiaries. Each grant of an Option shall be designated
in the applicable "Grant Instrument" (as defined in Section 5) as an Incentive
Stock Option or a Nonqualified Option, as appropriate. If, notwithstanding its
designation as an Incentive Stock Option, all or a portion of any Option grant
does not qualify under the Code as an Incentive Stock Option, the portion which
does not so qualify shall be treated for all purposes hereunder as a
Nonqualified Option.

4.       SHARES SUBJECT TO THE PLAN.

         Subject to adjustment as provided in Section 9, the maximum aggregate
number of shares of Common Stock that may be subject to grants made under the
Plan is 3,000,000 shares [post-split] (plus any shares of Common Stock covered
by any unexercised portion of terminated stock options granted under the
ServiceWare, Inc. Amended and Restated Stock Option Plan (the "1996 Plan")),
plus an automatic annual increase on the first day of each fiscal year of the
Company beginning on or after January 1, 2001 and ending on or before December
31, 2010 equal to the lesser of (i) 1,500,000 shares, (ii) 6.25% of the shares
outstanding on the last day of the immediately preceding fiscal year, or (iii)
such lesser number of shares as is determined by the Board. The Common Stock to
be offered under the Plan shall be authorized and unissued Common Stock or
issued Common Stock which shall have been reacquired by the Company and held in
its treasury. The Common Stock covered by any unexercised portion of terminated
stock options granted under the Plan or under the 1996 Plan, or by any grant of
Restricted Stock which is forfeited, may again be subject to new grants under
the Plan. In the event the purchase price of an Option is paid in whole or in
part through the delivery of Common Stock, only the net number of shares of
Common Stock issuable in connection with the exercise of the Option shall be
counted against the number of shares remaining available for grant under the
Plan. At any time following registration by the Company of its Common Stock
under Section 12 of the Exchange Act, no participant shall receive grants in
respect of more than _______ shares of Common Stock in any calendar year
(subject to adjustment as provided in Section 9).

5.       PARTICIPANTS.

         The Board shall determine and designate from time to time those
employees, directors, consultants and advisors of the Company or its
subsidiaries who shall be granted Options or Restricted Stock under the Plan and
the number of shares of Common Stock to be covered by each such Option or
Restricted Stock grant; provided, that any such consultants or advisors who
receive grants under the Plan render bona fide services to the Company or its
subsidiaries that are not in connection with the offer or sale of securities in
a capital-raising transaction. In making its determinations, the Board shall
take into account the present and potential contributions of the respective
individuals to the success of the Company and its subsidiaries and such other
factors as the Board shall deem relevant in connection with accomplishing the
purposes of the Plan. Each grant shall be evidenced by a written Option or
Restricted Stock agreement or grant form ("Grant Instrument") as the Board shall
approve from time to time.

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6.       FAIR MARKET VALUE.

         For all purposes under the Plan, the term "Fair Market Value" shall
mean, as of any applicable date, (i) if the principal securities market on which
the Common Stock is traded is a national securities exchange or The Nasdaq
National Market ("NNM"), the closing price of the Common Stock on such exchange
or NNM, as the case may be, or if no sale of the Common Stock shall have
occurred on such date, on the next preceding date on which there was a reported
sale; (ii) if the Common Stock is not traded on a national securities exchange
or NNM, the closing price on such date as reported by The Nasdaq SmallCap
Market, or if no sale of the Common Stock shall have occurred on such date, on
the next preceding date on which there was a reported sale; (iii) if the
principal securities market on which the Common Stock is traded is not a
national securities exchange, NNM or The Nasdaq SmallCap Market, the average of
the bid and asked prices reported by the National Quotation Bureau, Inc.; or
(iv) if the price of the Common Stock is not so reported, the Fair Market Value
of the Common Stock as determined in good faith by the Board.

7.       GRANTS OF OPTIONS.

         (a)      Exercise Price of Options. Incentive Stock Options shall be
granted at an exercise price of not less than 100% of the Fair Market Value on
the date of grant; provided, however, that Incentive Stock Options granted to a
participant who at the time of such grant owns (within the meaning of Code
Section 424(d)) more than 10% of the voting power of all classes of stock of the
Company (a "10% Holder") shall be granted at an exercise price of not less than
110% of the Fair Market Value on the date of grant. Nonqualified Options shall
be granted at an exercise price as determined in each case by the Board.

         (b)      Term and Termination of Options.

                  (1) The Board shall determine the term within which each
Option may be exercised, in whole or in part, provided that (i) such term shall
not exceed 10 years from the date of grant, (ii) the term of an Incentive Stock
Option granted to a 10% Holder shall not exceed 5 years from the date of grant,
and (iii) the aggregate Fair Market Value (determined on the date of grant) of
Common Stock with respect to which Incentive Stock Options granted to a
participant under the Plan or any other plan of the Company and its subsidiaries
become exercisable for the first time in any single calendar year shall not
exceed $100,000.

                  (2) Unless otherwise determined by the Board, all rights to
exercise Options shall terminate on the first to occur of (i) the scheduled
expiration date as set forth in the applicable Grant Instrument, (ii) 90 days
following the date of termination of employment for any reason other than the
participant's death or permanent disability (as defined in Code Section
22(e)(3)), (iii) 1 year following the date of termination of employment or
provision of services by reason of the participant's death or permanent
disability (as defined in Code Section 22(e)(3)), or (iv) as may be otherwise
provided in the event of a Change of Control as defined in Section 11; provided,
however, that in the event that a participant ceases to be employed by or to
provide services to the Company and its subsidiaries due to a termination for
"cause" (as defined in Section 7(b)(3)), all rights to exercise Options held by
such participant shall terminate immediately as of the date such participant
ceases to be employed by or to provide services to the Company or its
subsidiaries.

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                  (3) As used in this Plan, the term "cause" shall mean a
determination by the Board that the participant has engaged in conduct that is
fraudulent, disloyal, criminal or injurious to the Company or its subsidiaries,
including, without limitation, embezzlement, theft, commission of a felony or
dishonesty in the course of his or her employment or service, or the disclosure
of trade secrets or confidential information of the Company or its subsidiaries
to persons not entitled to receive such information.

         (c) Payment for Shares. Full payment for shares purchased upon exercise
of Options granted under the Plan shall be made at the time the Options are
exercised in whole or in part. Payment of the purchase price shall be made in
cash or in such other form as the Board may approve, including, without
limitation, (i) by the participant's delivery to the Company of a promissory
note containing such terms as the Board may determine, (ii) by the participant's
delivery to the Company of shares of Common Stock that have been held by the
participant for at least six months prior to exercise of the Options, valued at
the Fair Market Value of such shares on the date of exercise, or (iii) if the
Common Stock is publicly traded, pursuant to a cashless exercise arrangement
with a broker on such terms as the Board may determine; provided, however, that
if payment is made pursuant to clause (i), the then par value of the purchased
shares shall be paid in cash. No shares of Common Stock shall be issued to the
participant until such payment has been made, and a participant shall have none
of the rights of a stockholder with respect to Options held by such participant.

         (d) Other Terms and Conditions. The Board shall have the discretion to
determine terms and conditions, consistent with the Plan, that will be
applicable to Options, including, without limitation, performance-based criteria
for acceleration of the date on which certain Options shall become exercisable.
Options granted to the same or different participants, or at the same or
different times, need not contain similar provisions.

         (e) Substitution of Options. Options may be granted under the Plan from
time to time in substitution for stock options of other entities ("Acquired
Companies") in connection with the merger or consolidation of the Acquired
Company with the Company or its subsidiaries, the acquisition by the Company or
by its subsidiaries of all or a portion of the assets of the Acquired Company,
or the acquisition of stock of the Acquired Company such that the Acquired
Company becomes a subsidiary of the Company.

8.       GRANTS OF RESTRICTED STOCK.

         The Board may issue or transfer shares of Common Stock to employees,
directors, consultants or advisors under a grant of Restricted Stock, upon such
terms as the Board deems applicable, including the provisions set forth below:

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

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

         (c) Requirement of Employment. If a participant who has received a
Restricted Stock grant ceases to be employed by the Company and its subsidiaries
during the Restriction Period, or if other specified conditions are not met, the
Restricted Stock grant shall terminate as to all shares covered by the grant as
to which the restrictions have not lapsed, and those shares of Common Stock
shall be canceled in exchange for the purchase price, if any, paid by the
participant for such shares. The Board may provide, however, for complete or
partial exceptions to this requirement as it deems appropriate.

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

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

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

9.       ADJUSTMENTS TO REFLECT CAPITAL CHANGES.

         The number and kind of shares subject to outstanding grants, the
exercise price applicable to Options previously granted, and the number and kind
of shares available subsequently to be granted under the Plan shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares or other change in capitalization with a similar
substantive effect upon the Plan or grants under the Plan. The Board shall have
the power and sole discretion to determine the nature and amount of the
adjustment to be made in each case. The adjustment so made shall be final and
binding on all participants.

10.      RIGHT OF FIRST REFUSAL; RIGHT TO REPURCHASE.

         (a) At any time prior to registration by the Company of its Common
Stock under Section 12 of the Exchange Act, the Company shall have a right of
first refusal with respect to any proposed sale or other disposition by
participants (and their successors in interest by purchase, gift or other mode
of transfer) of any shares of Common Stock issued to them under the Plan which
are transferable. This

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right of first refusal shall be exercisable by the Company in accordance with
the terms and conditions established by the Board.

         (b) At any time prior to registration by the Company of its Common
Stock under Section 12 of the Exchange Act, in the event that a participant's
employment or service is terminated for cause (as defined in Section 7(b)(3)),
the Company shall have the right, exercisable within 90 days following such
termination, to repurchase any shares of Common Stock issued to such participant
under the Plan for the purchase price paid by such participant for such shares
of Common Stock.

11.      DEFINITION OF CHANGE OF CONTROL.

         For purposes of this Plan, a "Change of Control" shall mean the
occurrence of any of the following events:

         (a) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act), other than the Company or an employee benefit plan of the
Company, of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 50% of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Voting Securities"); or

         (b) the approval by the Company's stockholders of a reorganization,
merger, consolidation or recapitalization of the Company (a "Business
Combination"), other than a Business Combination in which more than 50% of the
combined voting power of the outstanding voting securities of the surviving or
resulting entity immediately following the Business Combination is held by the
persons who, immediately prior to the Business Combination, were the holders of
the Voting Securities; or

         (c) the approval by the Company's stockholders of a complete
liquidation or dissolution of the Company, or a sale of all or substantially all
of the Company's assets; or

         (d) individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, that any individual becoming a director subsequent to
such date whose election or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board.

12.      CONSEQUENCES OF A CHANGE OF CONTROL.

         (a) Upon a Change of Control, (i) each outstanding Option shall be
assumed by the Acquiring Corporation (as defined below) or parent thereof or
replaced with a comparable option or right to purchase shares of the capital
stock, or equity equivalent instrument, of the Acquiring Corporation or parent
thereof, or other comparable rights (such assumed and comparable options and
rights, together, the "Replacement Options") and (ii) each share of Restricted
Stock shall be converted to a comparable restricted grant of capital stock, or
equity equivalent instrument, of the Acquiring Corporation or parent thereof or
other comparable restricted property (such assumed and comparable restricted
grants, together, the "Replacement Restricted Stock"); provided, however, that
if the

                                        6
<PAGE>   7
Acquiring Corporation or parent thereof does not agree to grant Replacement
Options and Replacement Restricted Stock, then all outstanding Options which
have been granted under the Plan and which are not exercisable as of the
effective date of the Change of Control shall automatically accelerate and
become exercisable immediately prior to the effective date of the Change of
Control, and all restrictions and conditions on any Restricted Stock shall lapse
upon the effective date of the Change of Control. In addition, all Replacement
Options issued by the Acquiring Corporation to a participant shall accelerate
and become exercisable, and all restrictions and conditions on any Replacement
Restricted Stock issued by the Acquiring Corporation to a participant shall
lapse, if the participant's employment is terminated without "cause" (as defined
in Section 7(b)(3)) in the period beginning on the effective date of the Change
of Control and ending 12 months after such date. The term "Acquiring
Corporation" means the surviving, continuing, successor or purchasing
corporation, as the case may be. The Board may determine in its discretion (but
shall not be obligated to do so) that in lieu of the issuance of Replacement
Options, all holders of outstanding Options which are exercisable immediately
prior to a Change of Control (including those that become exercisable under this
Section 12(a) and any that become exercisable under Section 12(b)) will be
required to surrender them in exchange for a payment by the Company, in cash or
Common Stock as determined by the Board, of an amount equal to the amount (if
any) by which the then Fair Market Value of Common Stock subject to unexercised
Options exceeds the exercise price of those Options, with such payment to take
place as of the date of the Change of Control or such other date as the Board
may prescribe.

         (b) In the event that the Acquiring Corporation or parent thereof
agrees to grant Replacement Options and Replacement Restricted Stock pursuant to
Section 12(a) hereof, then 50% of the outstanding Options granted under the Plan
which are not exercisable as of the effective date of the Change of Control
shall automatically accelerate and become exercisable immediately prior to the
effective date of the Change of Control, and all restrictions and conditions on
50% of any Restricted Stock shall lapse upon the effective date of the Change of
Control. For purposes of this provision, the 50% acceleration and lapse
provisions shall be applied pro rata to all unvested Options, and to all
Restricted Stock, respectively, held by each participant, regardless of when
granted.

         (c) Any Options that are not assumed or replaced by Replacement
Options, exercised or cashed out prior to or concurrent with a Change of Control
will terminate effective upon the Change of Control or at such other time as the
Board deems appropriate.

         (d) Notwithstanding anything in the Plan to the contrary, in the event
of a Change of Control, no action described in the Plan shall be taken
(including, without limitation, actions described in subsections (a), (b) and
(c) above) if such actions would make the Change of Control ineligible for
"pooling of interests" accounting treatment or would make the Change of Control
ineligible for desired tax treatment if, in the absence of such actions, the
Change of Control would qualify for such treatment and the Company intends to
use such treatment with respect to such Change of Control.

13.      TRANSFERABILITY OF OPTIONS.

         Unless otherwise determined by the Board with respect to Nonqualified
Options, Options granted under the Plan shall not be transferable other than by
will or the laws of descent and distribution and are exercisable during a
participant's lifetime only by the participant.

                                        7
<PAGE>   8
14.      WITHHOLDING.

         The Company shall have the right to deduct any taxes required by law to
be withheld in respect of grants under the Plan from amounts paid to a
participant in cash as salary, bonus or other compensation. In the Board's
discretion, a participant may be permitted to elect to have withheld from the
shares otherwise issuable to the participant, or to tender to the Company, a
number of shares of Common Stock the aggregate Fair Market Value of which does
not exceed the applicable withholding rate for federal (including FICA), state
and local tax liabilities. Any such election must be in a form and manner
prescribed by the Board.

15.      CONSTRUCTION OF THE PLAN.

         The validity, construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely by the Board. Any determination by the Board shall be
final and binding on all participants. The Plan shall be governed in accordance
with the laws of the State of Delaware, without regard to the conflict of law
provisions of such laws.

16.      NO RIGHT TO GRANT; NO RIGHT TO EMPLOYMENT.

         No person shall have any claim of right to be granted an Option or
Restricted Stock under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee any right to be retained in the employ
of the Company or any of its subsidiaries or as giving any consultant, advisor
or director of the Company or any of its subsidiaries any right to continue to
serve in such capacity.

17.      GRANTS NOT INCLUDABLE FOR BENEFIT PURPOSES.

         Income recognized by a participant pursuant to the provisions of the
Plan shall not be included in the determination of benefits under any employee
pension benefit plan (as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974) or group insurance or other benefit
plans applicable to the participant which are maintained by the Company or any
of its subsidiaries, except as may be provided under the terms of such plans or
determined by resolution of the Board.

18.      NO STRICT CONSTRUCTION.

         No rule of strict construction shall be implied against the Company,
the Board or any other person in the interpretation of any of the terms of the
Plan, any grant made under the Plan or any rule or procedure established by the
Board.

19.      CAPTIONS.

         All Section headings used in the Plan are for convenience only, do not
constitute a part of the Plan, and shall not be deemed to limit, characterize or
affect in any way any provisions of the Plan, and all provisions of the Plan
shall be construed as if no captions had been used in the Plan.

                                        8
<PAGE>   9
20.      SEVERABILITY.

         Whenever possible, each provision in the Plan and every grant under the
Plan shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Plan or any grant under the Plan
shall be held to be prohibited by or invalid under applicable law, then such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law, and all other
provisions of the Plan and every other grant under the Plan shall remain in full
force and effect.

21.      LEGENDS.

         All certificates for Common Stock delivered under the Plan shall be
subject to such transfer and other restrictions as the Board may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange or quotation system upon which the
Common Stock is then listed or quoted and any applicable federal or state
securities laws, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate references to such restrictions.

22.      AMENDMENT.

         The Board may, by resolution, amend or revise the Plan, except that
such action shall not be effective without stockholder approval if such
stockholder approval is required to maintain the compliance of the Plan and/or
grants made to directors, executive officers or other persons with Rule 16b-3
promulgated under the Exchange Act or any successor rule. The Board may not
modify any Options previously granted under the Plan in a manner adverse to the
holders thereof without the consent of such holders, except in accordance with
the provisions of Sections 9, 12 or 23.

23.      MODIFICATION FOR GRANTS OUTSIDE THE U.S.

         The Board may, without amending the Plan, determine the terms and
conditions applicable to grants of Options or Restricted Stock to participants
who are foreign nationals or employed outside the United States in a manner
otherwise inconsistent with the Plan if the Board deems such terms and
conditions necessary in order to recognize differences in local law or
regulations, tax policies or customs.

24.      EFFECTIVE DATE; TERMINATION OF PLAN.

         The Plan's Effective Date is _________________, 2000. The Plan shall
terminate on _______________, 2010, unless it is earlier terminated by the
Board. Termination of the Plan shall not affect previous grants under the Plan.

                                        9

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