Document:

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                                                                     EXHIBIT 4.1

                               CLECO CORPORATION

                                      AND

                                BANK ONE, N.A.,

                                  as Trustee

                             ____________________

                         SUPPLEMENTAL INDENTURE NO. 1

                           Dated as of May 25, 2000

                                      TO

                                   INDENTURE

                            Dated as of May 1, 2000

                              ___________________

                         8 3/4% Senior Notes due 2005

                                 $100,000,000
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     SUPPLEMENTAL INDENTURE NO. 1, dated as of the 25th day of May, 2000,
between Cleco Corporation, a corporation duly organized and existing under the
laws of the State of Louisiana (the "Company"), and Bank One, N.A., a national
banking association duly organized and existing under the laws of the United
States of America, as trustee (the "Trustee").

                              RECITALS

     The Company has heretofore executed and delivered to the Trustee an
Indenture, dated as of May 1, 2000 (the "Indenture"), providing for the issuance
from time to time of one or more series of its Securities.

     Pursuant to the terms of the Indenture, the Company desires to provide for
the establishment of a new series of Securities to be designated as the 8 3/4%
Senior Notes due 2005 (the "8 3/4% Senior Notes"), the form and substance of
such 8 3/4% Senior Notes and the terms, provisions and conditions thereof to be
set forth as provided in the Indenture and this Supplemental Indenture No. 1.

     Section 301 of the Indenture provides that various matters with respect to
any series of Securities issued under the Indenture may be established in an
indenture supplemental to the Indenture.

     Subparagraph (7) of Section 901 of the Indenture provides that the Company
and the Trustee may enter into an indenture supplemental to the Indenture to
establish the form or terms of Securities of any series as permitted by Sections
201 and 301 of the Indenture.

     For and in consideration of the premises and the issuance of the series of
Securities provided for herein, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the Holders of the Securities of such series,
as follows:

                              ARTICLE ONE

                 Relation to Indenture; Additional Definitions

     SECTION 1.01.  Relation to Indenture.  This Supplemental Indenture No. 1
constitutes an integral part of the Indenture.

     SECTION 1.02.  Additional Definitions.  For all purposes of this
Supplemental Indenture No. 1:

     (1)  Capitalized terms used herein shall have the meanings specified herein
          or in the Indenture, as the case may be;

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     (2)  "8 3/4% Senior Notes" has the meaning set forth in the Recitals herein
          and Section 2.01 hereof;

     (3)  "Change of Control" means the occurrence of any of the following:

               (a)  the sale, lease, transfer, conveyance or other disposition
                    (other than by way of merger or consolidation) of all or
                    substantially all the assets of the Company and the
                    Subsidiaries taken as a whole;

               (b)  the adoption of a plan relating to the liquidation or
                    dissolution of the Company;

               (c)  the consummation of any transaction the result of which is
                    that any "person" or "group" (within the meaning of Section
                    13(d)(3) of the Exchange Act) becomes the "beneficial owner"
                    (as such term is defined in Rule 13d-3 under the Exchange
                    Act) of more than 50% of the total voting power in the
                    aggregate of all classes of the Voting Securities of the
                    Company then outstanding; or

               (d)  the first day on which a majority of the members of the
                    board of directors of the Company or any successor Person
                    under Article Eight of the Indenture (the "Board") are not
                    Continuing Directors;

     (4)  "Change of Control Triggering Event" means the occurrence of a Change
          of Control and a Ratings Event;

     (5)  "Change of Control Triggering Event Notice" has the meaning set forth
          in Section 4.03 hereof;

     (6)  "Continuing Director" means, as of any date of determination, any
          member of the Board who:

               (a)  was a member of the Board on May 25, 2000; or

               (b)  was nominated for election or elected to the Board with the
                    approval of a majority of the Continuing Directors who were
                    members of the Board at the time of such nomination or
                    election;

     (7)  "H.15 Statistical Release" has the meaning set forth in Section 3.02
          hereof;

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     (8)  "Indebtedness" has the meaning set forth in Section 4.01 hereof;

     (9)  "Independent Investment Banker" has the meaning set forth in Section
          3.01 hereof;

     (10) "Interest Payment Date" has the meaning set forth in Section 2.04
          hereof;

     (11) "Investment Grade" means a rating of Baa3 or higher by Moody's (or its
          equivalent under any successor rating categories of Moody's) and a
          rating of BBB- or higher by S&P (or its equivalent under any successor
          rating categories of S&P);

     (12) "Maturity Date" has the meaning set forth in Section 2.03 hereof;

     (13) "Moody's" means Moody's Investors Service, Inc., or any successor to
          its securities ratings business;

     (14) "Ratings Event" means, at any time within 90 days (which period is
          extended so long as the rating of the 8 3/4% Senior Notes is under
          publicly announced consideration for a possible downgrade by either
          Moody's and/or S&P) after the date of public notice of a Change of
          Control, or of the intention of the Company or any other Person to
          effect a Change of Control, the rating of the 8 3/4% Senior Notes is
          decreased below Investment Grade by each of Moody's and S&P;

     (15) "Redemption Price" has the meaning set forth in Section 3.01 hereof;

     (16) "Regular Record Date" has the meaning set forth in Section 2.04
          hereof;

     (17) "Remaining Term" has the meaning set forth in Section 3.02 hereof;

     (18) "Repurchase Date" has the meaning set forth in Section 4.03 hereof;

     (19) "Repurchase Notice" has the meaning set forth in Section 4.03 hereof;

     (20) "Repurchase Period" means the period beginning on the date that is 30
          days after the date on which the Company mails the Holders of the
          8 3/4% Senior Notes the Change of Control Triggering Event Notice and
          ending on the date which is 60 days after the date on which the

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          Company mails the Holders of the 8 3/4% Senior Notes the Change of
          Control Triggering Event Notice;

     (21) "Repurchase Price" has the meaning set forth in Section 4.03 hereof;

     (22) "Restricted Subsidiary" means any Subsidiary that is a consolidated
          operating Subsidiary that accounts for 10% or more of the Company's
          consolidated revenues or assets as of the date of the Company's most
          recent audited financial statements and any other Subsidiary that the
          Board of Directors designates as a Restricted Subsidiary.

     (23) "S&P" means Standard & Poor's Ratings Services, a division of The
          McGraw-Hill Companies, Inc., or any successor to its securities
          ratings business;

     (24) "Treasury Yield" has the meaning set forth in Section 3.02 hereof;

     (25) All references herein to Articles and Sections, unless otherwise
          specified, refer to the corresponding Articles and Sections of this
          Supplemental Indenture No. 1; and

     (26) The terms "herein," "hereof," "hereunder" and other words of similar
          import refer to this Supplemental Indenture No. 1.

                              ARTICLE TWO

            General Terms and Conditions of the 8 3/4% Senior Notes

     SECTION 2.01.  Title of the Securities. There shall be and is hereby
authorized a series of Securities designated as the "8 3/4% Senior Notes due
2005" (the "8 3/4% Senior Notes").

     SECTION 2.02.  Limitation on Aggregate Principal Amount.  The aggregate
principal amount of the 8 3/4% Senior Notes shall be limited to $100,000,000;
provided, however, that the authorized aggregate principal amount of the 8 3/4%
Senior Notes may be increased above such amount by a Board Resolution to such
effect.

     SECTION 2.03.  Maturity Date.  The 8 3/4% Senior Notes shall mature and the
principal amount thereof shall be due and payable, together with all accrued and
unpaid interest thereon, on June 1, 2005 (the "Maturity Date").

     SECTION 2.04.  Interest and Interest Rates.  Each 8 3/4% Senior Note shall
bear interest at the rate of 8 3/4% per annum, accruing from May 25, 2000 and
interest shall be payable, semi-annually in arrears, on June 1 and December 1 of
each year (each such date,

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an "Interest Payment Date"), commencing on December 1, 2000, to the Person in
whose name such 8 3/4% Senior Note or any Predecessor Security is registered, at
the close of business on the immediately preceding May 15 and November 15,
respectively, whether or not such day is a Business Day (each such date, a
"Regular Record Date"). The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount of
interest payable for any partial period shall be computed on the basis of a 360-
day year of twelve 30-day months and the days elapsed in any partial month. In
the event that any date on which interest is payable on a 8 3/4% Senior Note is
not a Business Day, then a payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) with the same force and
effect as if made on the date the payment was originally payable. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that 8 3/4% Senior Note (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, except that interest payable on the
Maturity Date shall be paid to the Holder to whom principal is paid. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date and shall either (i) be paid
to the Person in whose name such 8 3/4% Senior Note (or one or more Predecessor
Securities) is registered at the close of business on the Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of the 8 3/4% Senior Notes not less than 10
days prior to such Special Record Date, or (ii) be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the 8 3/4% Senior Notes may be listed or
traded, and upon such notice as may be required by such exchange or quotation
system, all as more fully provided in the Indenture.

     SECTION 2.05.  Place of Payment.  The Place of Payment where the 8 3/4%
Senior Notes may be presented or surrendered for payment shall be the Corporate
Trust Office of the Trustee.

     SECTION 2.06.  Place of Registration or Exchange; Notice and Demands With
Respect to the 8 3/4% Senior Notes.  The place where the Holders of the 8 3/4%
Senior Notes may present the 8 3/4% Senior Notes for registration of transfer or
exchange and may make notices and demands to or upon the Company with respect to
the 8 3/4% Senior Notes shall be the Corporate Trust Office of the Trustee.

     SECTION 2.07.  Percentage of Principal Amount.  The 8 3/4% Senior Notes
shall be issued at 99.331% of their principal amount, plus accrued interest, if
any, from May 25, 2000.

     SECTION 2.08.  Global Securities.  The 8 3/4% Senior Notes shall be
issuable in whole or in part in the form of one or more Global Securities.  Such
Global Securities shall be deposited with, or on behalf of, The Depository Trust
Company, New York, New York,

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which shall act as Depositary with respect to the 8 3/4% Senior Notes. Such
Global Securities shall bear the legends set forth in the form of 8 3/4% Senior
Note contained herein.

     SECTION 2.09.  Form of Securities.  The 8 3/4% Senior Notes shall be
substantially in the form contained in ARTICLE FIVE hereof.

     SECTION 2.10.  Securities Registrar.  The Trustee shall initially serve as
Securities Registrar.

     SECTION 2.11.  Defeasance and Discharge; Covenant Defeasance.  Article
Fourteen of the Indenture, including without limitation, Sections 1402 and 1403
thereof, shall apply to the 8 3/4% Senior Notes.

     SECTION 2.12.  Sinking Fund Obligations.  The Company has no obligation to
redeem or purchase any 8 3/4% Senior Note pursuant to any sinking fund or
analogous provisions (including payments made in cash in anticipation of future
sinking fund obligations) or upon the happening of a specified event or, except
as provided in Section 4.03 hereof, at the option of a Holder thereof.

                              ARTICLE THREE

                Optional Redemption of the 8 3/4% Senior Notes

     SECTION 3.01.  Redemption Price.  The Company shall have the right to
redeem the 8 3/4% Senior Notes, in whole or in part, at any time at a price
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to (but excluding) the Redemption Date plus the Make-Whole Premium, if
any (the "Redemption Price").  The amount of the Make-Whole Premium with respect
to any 8 3/4% Senior Note (or portion thereof) to be redeemed will be equal to
the excess, if any, of:  (i) the sum of the present values, calculated as of the
Redemption Date, of:  (A) each interest payment that, but for such redemption,
would have been payable on the 8 3/4% Senior Note (or portion thereof) being
redeemed on each Interest Payment Date occurring after the Redemption Date
(excluding any accrued and unpaid interest for the period prior to the
Redemption Date); and (B) the principal amount that, but for such redemption,
would have been payable at the Maturity Date of the 8 3/4% Senior Note (or
portion thereof) being redeemed; over (ii) the principal amount of the 8 3/4%
Senior Note (or portion thereof) being redeemed.  The present values of interest
and principal payments referred to in clause (i) above will be determined in
accordance with generally accepted principles of financial analysis.  Such
present values will be calculated by discounting the amount of each payment of
interest or principal from the date that each such payment would have been
payable, but for the redemption, to the Redemption Date at a discount rate equal
to the Treasury Yield (as defined below) plus 20 basis points.

     The Make-Whole Premium shall be calculated by an independent investment
banking institution of national standing appointed by the Company; provided,
that if the Company

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fails to make such appointment at least 45 Business Days prior to the Redemption
Date, or if the institution so appointed is unwilling or unable to make such
calculation, such calculation shall be made by BNY Capital Markets, Inc., or, if
such firm is unwilling or unable to make such calculation, by an independent
investment banking institution of national standing appointed by the Trustee (in
any such case, an "Independent Investment Banker").

     SECTION 3.02.  Make-Whole Premium.  For purposes of determining the Make-
Whole Premium, "Treasury Yield" means a rate of interest per annum equal to the
weekly average yield to maturity of United States Treasury Notes that have a
constant maturity that corresponds to the remaining term to maturity of the
8 3/4% Senior Notes, calculated to the nearest 1/12th of a year (the "Remaining
Term").  The Treasury Yield shall be determined as of the third Business Day
immediately preceding the applicable Redemption Date.  The weekly average yields
of United States Treasury Notes shall be determined by reference to the most
recent statistical release published by the Federal Reserve Bank of New York and
designated "H.15 (519) Selected Interest Rates" or any successor release (the
"H.15 Statistical Release").  If the H.15 Statistical Release sets forth a
weekly average yield for United States Treasury Notes having a constant maturity
that is the same as the Remaining Term, then the Treasury Yield shall be equal
to such weekly average yield.  In all other cases, the Treasury Yield shall be
calculated by interpolation, on a straight-line basis, between the weekly
average yields on the Unites States Treasury Notes that have a constant maturity
closest to and greater than the Remaining Term and the United States Treasury
Notes that have a constant maturity closest to and less than the Remaining Term
(in each case as set forth in the H.15 Statistical Release).  Any weekly average
yields so calculated by interpolation shall be rounded to the nearest 1/100th of
1%, with any figure of 1/200th of 1% or above being rounded upward.  If weekly
average yields for United States Treasury Notes are not available in the H.15
Statistical Release or otherwise, then the Treasury Yield shall be calculated by
interpolation of comparable rates selected by the Independent Investment Banker.

     SECTION 3.03.  Partial Redemption.  If the 8 3/4% Senior Notes are only
partially redeemed pursuant to this ARTICLE THREE, the 8 3/4% Senior Notes shall
be redeemed pro rata or by lot or by any other method that the Trustee deems
fair and appropriate.

     SECTION 3.04.  Notice of Optional Redemption.  If the Company elects to
exercise its right to redeem all or some of the 8 3/4% Senior Notes pursuant to
this ARTICLE THREE, the Company or the Trustee shall mail a notice of such
redemption to each Holder of a 8 3/4% Senior Note that is to be redeemed not
less than 30 days and not more than 60 days before the Redemption Date.

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                              ARTICLE FOUR

                Covenants Applicable to the 8 3/4% Senior Notes

     SECTION 4.01.  Limitation on Liens on Voting Securities of Subsidiaries.
After the date hereof and so long as any of the 8 3/4% Senior Notes remain
Outstanding, the Company shall not, and shall not permit any Subsidiary to,
pledge or grant a security interest in, or permit any pledge, security interest
or other lien upon, any Voting Securities of any Subsidiary owned directly or
indirectly by the Company or any of its Subsidiaries to secure any Indebtedness,
without making effective provision to secure the 8 3/4% Senior Notes equally and
ratably with the other Indebtedness and any other Indebtedness similarly
entitled to be equally and ratably secured.  This covenant shall not apply,
however, to:

     (1)  any pledge, security interest or other encumbrance upon any Voting
          Securities of any Subsidiary existing as of May 25, 2000;

     (2)  the creation or existence of any pledge, security interest or other
          encumbrance upon any Voting Securities of any Subsidiary

          (a)  created at the time of the Company's and/or a Subsidiary's
               acquisition (including acquisition through merger or
               consolidation) of such Voting Securities or within 24 months
               after the Company's and/or a Subsidiary's  acquisition of such
               Voting Securities to secure all or a portion of the purchase
               price for such Voting Securities,

          (b)  existing on such Voting Securities at the time of the Company's
               and/or a Subsidiary's acquisition of such Voting Securities or

          (c)  created solely to secure obligations incurred to finance the
               refurbishment, improvement, installation, development or
               construction of any asset of the Company or any Subsidiary, which
               obligations are incurred no later than 24 months after completion
               of such refurbishment, improvement, installation, development or
               construction, or

     (3)  any extension, renewal or refunding of any pledge, security interest
          or other encumbrance described in clauses (1) and (2).

     For purposes of this Section 4.01, "Indebtedness" means all indebtedness,
whether or not represented by bonds, debentures, notes or other securities,
created or assumed by the Company or any Subsidiary for the repayment of
borrowed money.  All indebtedness for borrowed money secured by a lien upon
property owned by the Company or any Subsidiary and upon which indebtedness for
borrowed money the Company or such Subsidiary customarily pays interest,
although the Company or such Subsidiary has not assumed or

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become liable for the payment of such indebtedness for borrowed money, shall for
purposes of this Section 4.01 be deemed to be Indebtedness of the Company or
such Subsidiary. All indebtedness for borrowed money of others guaranteed as to
payment of principal by the Company or any Subsidiary or in effect guaranteed by
the Company or such Subsidiary through a contingent agreement to purchase such
indebtedness for borrowed money shall be deemed for purposes of this Section
4.01 to be Indebtedness of the Company or such Subsidiary, but no other
contingent obligation of the Company or any Subsidiary in respect of
indebtedness for borrowed money or other obligations incurred by others shall
for purposes of this Section 4.01 be deemed to be Indebtedness of the Company or
such Subsidiary.

     In case the Company or any Subsidiary shall propose to pledge, mortgage,
hypothecate or grant a security interest in any Voting Securities of any
Subsidiary to secure any Indebtedness, other than as permitted by clauses (1),
(2) and (3) in the second preceding paragraph, the Company will prior thereto
give written notice thereof to the Trustee, and the Company will prior to or
simultaneously with such pledge, mortgage, hypothecation or grant of security
interest, by supplemental indenture executed to the Trustee (or to the extent
legally necessary to another trustee or an additional or separate trustee), in a
form reasonably satisfactory to the Trustee, effectively secure (for so long as
such other Indebtedness shall be so secured) all the 8 3/4% Senior Notes equally
and ratably with such Indebtedness and with any other Indebtedness for borrowed
money similarly entitled to be equally and ratably secured.

     SECTION 4.02.  Limitation on Issuance or Disposition of Voting Securities
of Restricted Subsidiaries.  The Company shall not, and shall not permit any
Restricted Subsidiary to, issue, sell, assign, transfer or otherwise dispose of,
directly or indirectly, any Voting Securities of any Restricted Subsidiary
(except to the Company or to one or more Restricted Subsidiaries or for the
purpose of qualifying directors); provided, however, that this covenant shall
not apply if:

     (1)  all or any part of such Voting Securities are issued, sold, assigned,
          transferred or otherwise disposed of in a transaction for
          consideration that is at least equal to the fair value of such Voting
          Securities, as determined by the Board of Directors acting in good
          faith, or

     (2)  the issuance, sale, assignment, transfer or other disposition is
          required to comply with the order of a court or regulatory authority
          of competent jurisdiction, other than an order issued at the Company's
          or a Restricted Subsidiary's request.

     SECTION 4.03.  Put Right of Holders Upon a Change of Control Triggering
Event.  In the event that there occurs a Change of Control Triggering Event,
each Holder of 8 3/4% Senior Notes shall have the right, at such Holder's
option, to require the Company to purchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's

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8 3/4% Senior Notes during the Repurchase Period, at a price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to (but
excluding) the Repurchase Date (the "Repurchase Price"). The Company shall mail
or cause to be mailed notice of the occurrence of a Change of Control Triggering
Event (the "Change of Control Triggering Event Notice") to the Trustee and to
each Holder of the 8 3/4% Senior Notes within 30 days following any Change of
Control Triggering Event. The Change of Control Triggering Event Notice shall
state: (i) that a Change of Control Triggering Event has occurred; (ii) that all
8 3/4% Senior Notes tendered during the Repurchase Period will be accepted for
repurchase; (iii) the date by which the repurchase right must be exercised,
which date is the last day of the Repurchase Period; (iv) the Repurchase Price;
and (v) the procedure which a Holder of 8 3/4% Senior Notes must follow to
exercise the repurchase right. To exercise this repurchase right, a Holder of
8 3/4% Senior Notes must deliver during the Repurchase Period a written notice
to the Company (or an agent designated by the Company for such purpose in the
Change of Control Triggering Event Notice) of the Holder's exercise of such
right (the "Repurchase Notice"), together with the 8 3/4% Senior Note with
respect to which the repurchase right is being exercised, duly endorsed for
transfer to the Company. The Repurchase Notice shall be irrevocable, must be
received by the Company prior to the last day of the Repurchase Period and shall
state the name in which the 8 3/4% Senior Note is registered on the Securities
Register and the principal amount of the 8 3/4% Senior Note to be repurchased.
The Company shall repurchase the 8 3/4% Senior Note with respect to which this
repurchase right is being exercised on the fifth Business Day after receipt of
the Repurchase Notice (the "Repurchase Date"). 8 3/4% Senior Notes repurchased
pursuant to this Section 4.03 shall be delivered to the Trustee and canceled as
provided in Section 310 of the Indenture.

                                 ARTICLE FIVE

                          Form of 8 3/4% Senior Notes

     SECTION 5.01.  The 8 3/4% Senior Notes and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:

                          (FORM OF FACE OF SECURITY)

     IF THE NOTE IS TO BE A GLOBAL SECURITY, INSERT - THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.  THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY.

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     [For so long as this Global Security is deposited with or on behalf of The
Depository Trust Company, it shall bear the following legend.]  Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) to Cleco Corporation or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company (and any payment
hereon is made to Cede & Co. or such other entity as is requested by an
authorized representative of The Depository Trust Company) ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.]

                              CLECO CORPORATION

                         8 3/4% SENIOR NOTES DUE 2005

No. _______                                                  $_________
                                                   CUSIP No. ____________

     Cleco Corporation, a corporation duly organized and existing under the laws
of the State of Louisiana (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _____________________________, or registered
assigns, the principal sum of _________ Dollars on June 1, 2005, and to pay
interest thereon from May 25, 2000 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semi-annually on June 1
and December 1 in each year, commencing December 1, 2000, at the rate of 8 3/4%
per annum until the principal hereof is paid or made available for payment.  The
amount of interest payable for any period shall be computed on the basis of
twelve 30-day months and a 360-day year.  The amount of interest payable for any
partial period shall be computed on the basis of a 360-day year of twelve 30-day
months and the days elapsed in any partial month.   In the event that any date
on which interest is payable on this Security is not a Business Day, then a
payment of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay) with the same force and effect as if made on the date the
payment was originally payable.  A "Business Day" shall mean, when used with
respect to any Place of Payment, each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in that Place of Payment
are authorized or obligated by law or executive order to close.  The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the May 15
or November 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date; provided, however, that interest payable
on the Maturity Date shall be paid to the Holder to whom principal is paid.  Any
such interest not punctually paid or duly provided for shall forthwith cease to
be payable to the Holder on such Regular Record

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Date, and shall either be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to the Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or quotation system, all as more fully provided in said Indenture.

     Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose, which shall initially be the Corporate Trust Office of the Trustee, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
at the option of the Company payment of interest may be made (i) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Security Register or (ii) by wire transfer in immediately available funds at
such place and to such account as may be designated in writing by the Person
entitled thereto as specified in the Security Register.

     Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:_____________________

                                        CLECO CORPORATION

(SEAL)                                  By:
                                           ----------------------------
                                           Name:
                                           Title:

Attest:

By:
   --------------------------------
   Name:
   Title:

                                       13
<PAGE>

                              CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

Dated:
      --------------------

                                   BANK ONE, N.A.,
                                   As Trustee

                                   By:
                                      ------------------------------------
                                      Authorized Signatory

                                       14
<PAGE>

                         (FORM OF REVERSE OF SECURITY)

     This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued or to be issued in one or more
series under an Indenture, dated as of May 1, 2000 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and  Bank One, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.   This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $100,000,000;
provided, however, that the authorized aggregate principal amount of the
Securities may be increased above such amount by a Board Resolution to such
effect.

     The Securities of this series are subject to redemption upon not less than
30 days' notice by mail at any time, as a whole or in part, at the election of
the Company, at a price equal to 100% of the principal amount of this Security
plus accrued and unpaid interest, if any, to (but excluding) the Redemption Date
plus the Make-Whole Premium, if any; all as more fully provided in the
Indenture.  The amount of the Make-Whole Premium with respect to this Security
(or portion hereof being redeemed) will be equal to the excess, if any, of:  (i)
the sum of the present values, calculated as of the Redemption Date, of:  (A)
each interest payment that, but for such redemption, would have been payable on
this Security (or portion hereof being redeemed) on each Interest Payment Date
occurring after the Redemption Date (excluding any accrued and unpaid interest
for the period prior to the Redemption Date); and (B) the principal amount of
this Security (or portion hereof being redeemed) that, but for such redemption,
would have been payable at the Maturity Date; over (ii) the principal amount of
this Security (or portion hereof being redeemed).

     In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like terms for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.

     The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.

     The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.

                                       15
<PAGE>

     If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected.  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences.  Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 33% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonably indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity.  The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in

                                       16
<PAGE>

writing, and thereupon one or more new Securities of this series and of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees. No service charge
shall be made for any such registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue,  and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.   As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

     All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

     THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.

                                  ARTICLE SIX

                           Miscellaneous Provisions

     SECTION 6.01.  The Indenture, as supplemented by this Supplemental
Indenture No. 1, is in all respects adopted, ratified and confirmed.  This
Supplemental Indenture No. 1 shall be deemed part of the Indenture in the manner
and to the extent herein and therein provided.

     SECTION 6.02.  The recitals herein contained are made by the Company and
not by the Trustee, and the Trustee assumes no responsibility for the
correctness thereof.  The Trustee makes no representation as to the validity or
sufficiency of this Supplemental Indenture No. 1.

     SECTION 6.03.  This Supplemental Indenture No. 1 may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

                                       17
<PAGE>

     SECTION 6.04.  THIS SUPPLEMENTAL INDENTURE NO. 1 AND EACH 8 3/4% SENIOR
NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

                                       18
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1 to be duly executed as of the day and year first above written.

                                 CLECO CORPORATION

                                 By:
                                    --------------------------------
                                    Name:
                                    Title:

Attest:

-----------------------------
Name:
Title:

                                 BANK ONE, N.A.,
                                 As Trustee

                                 By:
                                    --------------------------------
                                    Name:
                                    Title:

Attest:

-----------------------------
Name:
Title:

                                       19PHOTOWORKS, INC.
                     1999 STOCK INCENTIVE COMPENSATION PLAN

1.       PURPOSES

         1.1 The purpose of the Seattle  Filmworks,  Inc.  1999 Stock  Incentive
Compensation Plan (the "Plan") is to enhance the long-term  shareholder value of
Seattle Filmworks,  Inc., a Washington corporation (the "Company"),  by offering
opportunities  to  employees,  persons to whom  offers of  employment  have been
extended,  directors,  officers,  consultants,  agents, advisors and independent
contractors  of the  Company and its  Subsidiaries  (as defined in Section 2) to
participate in the Company's growth and success, and to encourage them to remain
in the service of the Company and its  Subsidiaries  and to acquire and maintain
stock ownership in the Company.

2.       DEFINITIONS

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

         2.1      Acquired Entities.

         "Acquired Entities" has the meaning given in Section 6.2.

         2.2      Acquisition Transaction.

         "Acquisition Transaction" has the meaning given in Section 6.2.

         2.3      Award.

         "Award"  means a grant  made to a  Participant  pursuant  to the  Plan,
including,  without limitation,  grants of Options,  Stock Appreciation  Rights,
Stock Awards, Other Stock-Based Awards or any combination of the foregoing.

         2.4      Board.

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

         2.5      Cause.

         "Cause" means dishonesty, fraud, misconduct, disclosure of confidential
information, conviction of, or a plea of guilty or no contest to, a felony under
the laws of the United States or any state thereof,  habitual  absence from work
for reasons other than  illness,  intentional  conduct which causes  significant
injury to the Company,  habitual abuse of alcohol or a controlled substance,  in
each case as determined by the Plan  Administrator,  and its determination shall
be conclusive and binding.

<PAGE>

         2.6      Change in Control.

         "Change  in  Control"  means  (i)  the  consummation  of  a  merger  or
consolidation  of the Company with or into another entity or any other corporate
reorganization,  if more than 50% of the combined voting power of the continuing
or surviving  entity's  securities  outstanding  immediately  after such merger,
consolidation  or  other  reorganization  is  owned  by  persons  who  were  not
shareholders of the Company  immediately prior to such merger,  consolidation or
other  reorganization or (ii) the sale,  transfer or other disposition of all or
substantially  all of the Company's assets. A transaction shall not constitute a
Change in  Control if its sole  purpose is to change the state of the  Company's
incorporation or to create a holding company that will be owned in substantially
the  same  proportions  by  the  persons  who  held  the  Company's   securities
immediately before such transaction.

         2.7      Code.

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

         2.8      Common Stock.

         "Common Stock" means the common stock, par value $.01, of the Company.

         2.9      Disability.

         "Disability"  means  a  medically   determinable   mental  or  physical
impairment  or  condition  of the Holder which is expected to result in death or
which has lasted or is expected to last for a  continuous  period of twelve (12)
months or more and which  causes the Holder to be unable,  in the opinion of the
Plan Administrator on the basis of evidence  acceptable to it, to perform his or
her duties for the Company and, in the case of a determination of Disability for
purposes of determining the exercise period for an Incentive Stock Option, to be
engaged in any substantial  gainful  activity.  Upon making a  determination  of
Disability,  the Plan Administrator  shall, for purposes of the Plan,  determine
the date of the  Holder's  termination  of  employment,  service or  contractual
relationship.

         2.10     Exchange Act.

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

         2.11     Fair Market Value.

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

                                       2

<PAGE>

         2.12     Grant Date.

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

         2.13     Holder.

         "Holder"  means  the  Participant  to whom an Award is  granted  or the
personal representative of a Holder who has died.

         2.14     Incentive Stock Option.

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

         2.15     Involuntary Termination.

         "Involuntary  Termination" means termination of the Holder's service to
the Company (or the parent or subsidiary  company  employing such Holder) or the
other party to the transaction constituting a Change in Control by reason of (i)
the  involuntary  discharge  of such  Holder by the  Company  (or the  parent or
subsidiary  company employing such Holder) or the other party to the transaction
constituting  a Change in  Control  for  reasons  other  than  Cause or (ii) the
voluntary  resignation  of the Holder  following  (A) a change in such  Holder's
position with the Company (or its successor or the parent or subsidiary  company
that employs such Holder) or the other party to the  transaction  constituting a
Change in Control that  materially  reduces such Holder's  level of authority or
responsibility or (B) a reduction in such Holder's compensation  (including base
salary,  fringe benefits and participation in bonus or incentive  programs based
on corporate performance) by more than 20%.

         2.16     Nonqualified Stock Option.

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

         2.17     Option.

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

         2.18     Option Shares.

         "Option  Shares"  means  the  shares of Common  Stock  issuable  upon a
Holder's exercise of an Option granted under the Plan.

         2.19     Other Stock-Based Award.

         "Other Stock-Based Award" means an Award granted under Section 11.

                                       3

<PAGE>

         2.20     Participant.

         "Participant"  means an  individual  who is a Holder of an Award or, as
the context may require, any employee, director (including directors who are not
employees), officer, consultant, agent, advisor or independent contractor of the
Company or a Subsidiary  who has been  designated by the Plan  Administrator  as
eligible to participate in the Plan.

         2.21     Plan Administrator.

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

         2.22     Restricted Stock.

         "Restricted  Stock" means shares of Common Stock granted  pursuant to a
Stock Award under  Section 10, the rights of  ownership  of which are subject to
restrictions prescribed by the Plan Administrator.

         2.23     Securities Act.

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

         2.24     Stock Appreciation Right.

         "Stock Appreciation Right" means an Award granted under Section 9.

         2.25     Stock Award.

         "Stock Award" means an Award granted under Section 10.

         2.26     Subsidiary.

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

3.       ADMINISTRATION

         3.1      Plan Administrator.

         The  Plan  shall  be  administered  by  the  Board  or a  committee  or
committees (which term includes  subcommittees)  appointed by, and consisting of
two or more members of, the Board.  Any such committee shall have the powers and
authority  vested in the Board  hereunder  (including the power and authority to
interpret  any  provision  of the  Plan  or of any  Award).  The  Board,  or any
committee thereof appointed to administer the Plan, is referred to herein as the
"Plan  Administrator."  If and so long as the Common Stock is  registered  under

                                       4
<PAGE>

Section  12(b) or  12(g) of the  Exchange  Act,  the  Board  shall  consider  in
selecting the Plan  Administrator  and the membership of any committee acting as
Plan  Administrator  for any  persons  subject  or likely to become  subject  to
Section  16  under  the  Exchange  Act the  provisions  regarding  (a)  "outside
directors" as contemplated  by Section 162(m) of the Code and (b)  "Non-Employee
Directors"  as  contemplated  by Rule 16b-3 under the Exchange Act. The Board or
Plan  Administrator may delegate the  responsibility  for administering the Plan
with  respect to  designated  classes of  eligible  Participants  to one or more
senior executive officers or committees  thereof,  the members of which need not
be  members  of the  Board,  subject  to such  limitations  as the  Board  deems
appropriate.  Committee  members  shall  serve  for such  term as the  Board may
determine, subject to removal by the Board at any time.

         3.2      Administration and Interpretation by the Plan Administrator.

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

4.       STOCK SUBJECT TO THE PLAN

         4.1      Authorized Number of Shares.

         Subject to adjustment  from time to time as provided in Section 14.1, a
maximum of 800,000  shares of Common Stock shall be available for issuance under
the Plan.  Shares  issued  under the Plan  shall be drawn  from  authorized  and
unissued shares.

         4.2      Limitations.

         (a)  Subject to  adjustment  from time to time as  provided  in Section
14.1, not more than 375,000 shares of Common Stock may be made subject to Awards
under the Plan to any  individual  Participant  in the  aggregate in any one (1)
calendar year,  except that the Company may make  additional  one-time grants to
newly hired  Participants  of up to 375,000  shares per such  Participant;  such
limitation shall be applied in a manner consistent with the requirements of, and
only to the  extent  required  for  compliance  with,  the  exclusion  from  the
limitation on deductibility of compensation under Section 162(m) of the Code.

                                       5

<PAGE>

         (b)  Subject to  adjustment  from time to time as  provided  in Section
14.1,  not more than 50,000 shares of Common Stock may be made subject to Awards
to any non-employee director in the aggregate in any one calendar year.

         4.3      Reuse of Shares.

         Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for or settled in shares) and any shares
repurchased  by the Company from a Holder upon exercise of a right of repurchase
shall again be available for issuance in connection with future grants of Awards
under the Plan;  provided,  however,  that any such  shares  shall be counted in
accordance  with the  requirements  of Section  162(m) of the Code if and to the
extent  applicable.  Shares that are subject to tandem  Awards  shall be counted
only once. Also, upon a  stock-for-stock  exercise only the net number of shares
will be deemed to have been used under this Plan.

5.       ELIGIBILITY

         Awards may be granted under the Plan to those  officers,  directors and
key employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects.  Awards may also be made to consultants,  agents, advisors
and  independent  contractors  who  provide  services  to the  Company  and  its
Subsidiaries.

6.       AWARDS

         6.1      Form and Grant of Awards.

         The  Plan  Administrator   shall  have  the  authority,   in  its  sole
discretion,  to determine the type or types of Awards to be made under the Plan.
Such  Awards may  include,  but are not  limited to,  Incentive  Stock  Options,
Nonqualified Stock Options,  Stock Appreciation  Rights,  Stock Awards and Other
Stock-Based Awards. Awards may be granted singly, in combination or in tandem so
that the  settlement  or payment  of one  automatically  reduces or cancels  the
other.  Awards may also be made in combination or in tandem with, in replacement
of, as  alternatives  to, or as the payment form for, grants or rights under any
other employee or compensation plan of the Company.

         6.2      Acquired Company Awards.

         Notwithstanding  anything  in  the  Plan  to  the  contrary,  the  Plan
Administrator  may grant Awards under the Plan in substitution for awards issued
under other plans,  or assume under the Plan awards issued under other plans, if
the  other  plans  are or were  plans  of  other  acquired  entities  ("Acquired
Entities")  (or  the  parent  of the  Acquired  Entity)  and the  new  Award  is
substituted, or the old Award is assumed, by reason of a merger,  consolidation,
acquisition  of  property  or  of  stock,   reorganization  or  liquidation  (an
"Acquisition  Transaction").  If  a  written  agreement  pursuant  to  which  an
Acquisition Transaction is completed is approved by the Board and said agreement

                                       6
<PAGE>

sets forth the terms and  conditions  of the  substitution  for or assumption of
outstanding  awards of the Acquired  Entity,  said terms and conditions shall be
deemed to be the action of the Plan Administrator  without any further action by
the Plan Administrator, except as may be required for compliance with Rule 16b-3
under the Exchange  Act, and the persons  holding such Awards shall be deemed to
be Participants and Holders.

7.       AWARDS OF OPTIONS

         7.1      Grant of Options.

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

         7.2      Option Exercise Price.

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

         7.3      Term of Options.

         The  term  of  each  Option  shall  be  as   established  by  the  Plan
Administrator or, if not so established,  shall be five (5) years from the Grant
Date.

         7.4      Exercise of Options.

         The Plan Administrator shall establish and set forth in each instrument
that  evidences  an Option  the time at which or the  installments  in which the
Option shall become  exercisable,  which provisions may be waived or modified by
the Plan  Administrator  at any time. If not so  established  in the  instrument
evidencing the Option or otherwise set at the time of grant,  the Option will be
subject  to  the  following:  (a)  25% of  the  Option  shall  vest  and  become
exercisable  one year after the Grant Date;  (b) the balance of the Option shall
vest and become  exercisable  in a series of twelve  (12)  successive  quarterly
installments for each additional quarter  thereafter;  (c) in no event shall any
additional  Option Shares vest after  termination  of Holder's  employment by or
service to the Company;  and (d) the Plan  Administrator may waive or modify the
foregoing schedule at any time.

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

         7.5      Payment of Exercise Price.

         The exercise price for shares  purchased  under an Option shall be paid
in full to the Company by delivery of consideration  equal to the product of the

                                       7
<PAGE>

Option  exercise price and the number of shares  purchased.  Such  consideration
must be paid  in cash or  check  (unless,  at the  time of  exercise,  the  Plan
Administrator  determines not to accept a personal check),  except that the Plan
Administrator,  in its sole  discretion,  may,  either at the time the Option is
granted or at any time before it is exercised and subject to such limitations as
the Plan  Administrator  may determine,  authorize payment in cash and/or one or
more of the following  alternative  forms: (a) tendering (either actually or, if
and so long as the Common Stock is  registered  under  Section 12(b) or 12(g) of
the Exchange Act, by  attestation)  Common Stock already owned by the Holder for
at least six months (or any shorter  period  necessary  to avoid a charge to the
Company's earnings for financial  reporting purposes) having a Fair Market Value
on the day prior to the exercise  date equal to the  aggregate  Option  exercise
price;  (b) a promissory  note  delivered  pursuant to Section 12; (c) if and so
long as the  Common  Stock is  registered  under  Section  12(b) or 12(g) of the
Exchange Act,  delivery of a properly  executed  exercise notice,  together with
irrevocable  instructions,  to (i) a third  party  designated  by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise and (ii) the Company to deliver the certificates
for such purchased  shares directly to such third party,  all in accordance with
the regulations of the Federal Reserve Board; or (d) such other consideration as
the Plan Administrator may permit.

         7.6      Post-Termination Exercises.

         The Plan  Administrator  may establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time.

         If not so  established in the  instrument  evidencing  the Option,  the
Option will be  exercisable  according to the  following  terms and  conditions,
which may be waived or modified by the Plan Administrator at any time.

         In case of  termination  of the Holder's  employment or services  other
than by reason of death or Cause, the Option shall be exercisable, to the extent
of  the  number  of  shares  purchasable  by the  Holder  at the  date  of  such
termination,  only (a) within one (1) year if the  termination  of the  Holder's
employment or services are  coincident  with  Disability or (b) within three (3)
months after the date the Holder  ceases to be an employee,  director,  officer,
consultant,  agent,  advisor  or  independent  contractor  of the  Company  or a
Subsidiary  if  termination  of the Holder's  employment  or services is for any
reason other than death or Disability,  but in no event later than the remaining
term of the Option. Any Option exercisable at the time of the Holder's death may
be exercised, to the extent of the number of shares purchasable by the Holder at
the date of the Holder's death, by the personal  representative  of the Holder's
estate  entitled  thereto  at any time or from time to time  within one (1) year
after the date of death,  but in no event later than the  remaining  term of the
Option. In case of termination of the Holder's employment or services for Cause,
the Option shall automatically  terminate upon first discovery by the Company of
any reason for such  termination  and the Holder shall have no right to purchase
any Shares  pursuant to such Option,  unless the Plan  Administrator  determines
otherwise.  If a Holder's  employment or services with the Company are suspended
pending an  investigation  of whether the Holder shall be terminated  for Cause,

                                       8

<PAGE>

all the Holder's rights under any Option likewise shall be suspended  during the
period of investigation.

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

8.       INCENTIVE STOCK OPTION LIMITATIONS

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

         8.1      Dollar Limitation.

         To the extent the  aggregate  Fair Market Value  (determined  as of the
Grant Date) of Common Stock with respect to which  Incentive  Stock  Options are
exercisable  for the first time during any calendar year (under the Plan and all
other stock  option  plans of the  Company)  exceeds  $100,000,  such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event
the Participant  holds two (2) or more such Options that become  exercisable for
the first time in the same calendar year,  such  limitation  shall be applied on
the basis of the order in which such Options were granted.

         8.2      10% Shareholders.

         If a  Participant  owns more than 10% of the total  voting power of all
classes  of the  Company's  stock,  then  the  exercise  price  per  share of an
Incentive  Stock  Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five (5)
years.  The  determination  of 10% ownership  shall be made in  accordance  with
Section 422 of the Code.

         8.3      Eligible Employees.

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

         8.4      Term.

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

         8.5      Exercisability.

         To  qualify  for  Incentive  Stock  Option  tax  treatment,  an  Option
designated  as an  Incentive  Stock  Option must be  exercised  within three (3)
months after  termination  of employment  for reasons  other than death,  except

                                        9

<PAGE>

that, in the case of  termination of employment  due to total  Disability,  such
Option must be exercised within one (1) year after such termination.  Employment
shall not be deemed to  continue  beyond the first 90 days of a leave of absence
unless  the  Participant's  reemployment  rights  are  guaranteed  by statute or
contract.

         8.6      Taxation of Incentive Stock Options.

         In order to obtain  certain tax benefits  afforded to  Incentive  Stock
Options  under  Section 422 of the Code,  the  Participant  must hold the shares
issued upon the  exercise of an  Incentive  Stock Option for two (2) years after
the Grant Date of the Incentive  Stock Option and one (1) year from the date the
shares are transferred to the  Participant.  A Participant may be subject to the
alternative  minimum tax at the time of exercise of an Incentive  Stock  Option.
The  Participant  shall give the Company  prompt  notice of any  disposition  of
shares  acquired  by the  exercise of an  Incentive  Stock  Option  prior to the
expiration of such holding periods.

         8.7      Promissory Notes.

         The amount of any promissory  note delivered  pursuant to Section 12 in
connection  with  an  Incentive  Stock  Option  shall  bear  interest  at a rate
specified by the Plan  Administrator  but in no case less than the rate required
to avoid  imputation  of interest  (taking  into account any  exceptions  to the
imputed interest rules) for federal income tax purposes.

         8.8      Incorporation of Other Provisions.

         With respect to Incentive Stock Options,  if this Plan does not contain
any provision required to be included herein under Section 422 of the Code, such
provision  shall be deemed to be  incorporated  herein  with the same  force and
effect as if such provision had been set out in full herein; provided,  however,
that to the extent any Option that is intended to qualify as an Incentive  Stock
Option cannot so qualify,  the Option,  to that extent,  shall be deemed to be a
Nonqualified Stock Option for all purposes of this Plan.

9.       STOCK APPRECIATION RIGHTS

         9.1      Grant of Stock Appreciation Rights.

         The Plan  Administrator may grant a Stock Appreciation Right separately
or in tandem with a related Option.

         9.2      Tandem Stock Appreciation Rights.

         A Stock Appreciation Right granted in tandem with a related Option will
give the Holder the right to  surrender  to the  Company all or a portion of the
related Option and to receive an appreciation  distribution (in shares of Common
Stock or cash or any combination of shares and cash, as the Plan  Administrator,
in its sole  discretion,  shall determine at any time) in an amount equal to the
excess of the Fair  Market  Value for the date the Stock  Appreciation  Right is
exercised  over the  exercise  price per share of the right,  which shall be the
same as the exercise price of the related  Option.  A tandem Stock  Appreciation
Right will have the same other terms and provisions as the related Option.  Upon

                                       10

<PAGE>

and to the extent a tandem Stock  Appreciation  Right is exercised,  the related
Option will terminate.

         9.3      Stand-Alone Stock Appreciation Rights.

         A Stock Appreciation Right granted separately and not in tandem with an
Option will give the Holder the right to receive an appreciation distribution in
an amount  equal to the excess of the Fair  Market  Value for the date the Stock
Appreciation  Right is exercised over the exercise price per share of the right.
A  stand-alone  Stock  Appreciation  Right  will  have  such  terms  as the Plan
Administrator may determine, except that the term of the right, if not otherwise
established  by the Plan  Administrator,  shall be ten (10) years from the Grant
Date.

         9.4      Exercise of Stock Appreciation Rights.

         Unless otherwise  provided by the Plan  Administrator in the instrument
that  evidences  the Stock  Appreciation  Right,  the  provisions of Section 7.6
relating to the  termination  of a Holder's  employment or services  shall apply
equally, to the extent applicable, to the Holder of a Stock Appreciation Right.

10.      STOCK AWARDS

         10.1     Grant of Stock Awards.

         The Plan  Administrator is authorized to make Awards of Common Stock or
of rights to receive  shares of Common Stock to  Participants  on such terms and
conditions  and  subject  to such  restrictions,  if any  (which may be based on
continuous  service with the Company or the  achievement  of  performance  goals
related to (i) sales, gross margin, operating profits or profits, (ii) growth in
sales, gross margin,  operating profits or profits,  (iii) return ratios related
to sales, gross margin,  operating profits or profits, (iv) cash flow, (v) asset
management (including inventory  management),  or (vi) total shareholder return,
where such  goals may be stated in  absolute  terms or  relative  to  comparison
companies),  as the Plan Administrator shall determine,  in its sole discretion,
which terms,  conditions and  restrictions  shall be set forth in the instrument
evidencing  the Award.  The terms,  conditions  and  restrictions  that the Plan
Administrator  shall  have  the  power  to  determine  shall  include,   without
limitation,  the manner in which shares  subject to Stock Awards are held during
the periods they are subject to restrictions and the  circumstances  under which
forfeiture  of  Restricted  Stock  shall occur by reason of  termination  of the
Holder's services or upon the occurrence of other events.

         10.2     Issuance of Shares.

         Upon  the  satisfaction  of  any  terms,  conditions  and  restrictions
prescribed with respect to a Stock Award, or upon the Holder's  release from any
terms,  conditions and  restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall transfer, as soon as practicable, to the Holder
or, in the case of the Holder's  death,  to the personal  representative  of the
Holder's estate or as the appropriate court directs,  the appropriate  number of
shares of Common Stock covered by the Award.

                                       11

<PAGE>

         10.3     Waiver of Restrictions.

         Notwithstanding   any  other   provisions   of  the   Plan,   the  Plan
Administrator  may, in its sole discretion,  waive the forfeiture period and any
other terms,  conditions  or  restrictions  on any  Restricted  Stock under such
circumstances and subject to such terms and conditions as the Plan Administrator
shall deem appropriate.

11.      OTHER STOCK-BASED AWARDS

         The Plan  Administrator  may grant other Awards under the Plan pursuant
to which  shares  of  Common  Stock  (which  may,  but need  not,  be  shares of
Restricted  Stock  pursuant to Section 10) are or may in the future be acquired,
or Awards denominated in stock units, including ones valued using measures other
than market  value.  Such Other  Stock-Based  Awards may be granted  alone or in
addition to or in tandem with any Award of any type  granted  under the Plan and
must be consistent with the Plan's purpose.

12.      LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES

         To assist a Holder (including a Holder who is an officer or director of
the Company) in acquiring  shares of Common Stock  pursuant to an Award  granted
under the Plan, the Plan Administrator,  in its sole discretion,  may authorize,
either at the Grant Date or at any time before the  acquisition  of Common Stock
pursuant to the Award, (a) the extension of a loan to the Holder by the Company,
(b) the payment by the Holder of the purchase price, if any, of the Common Stock
in  installments,  or (c) the guarantee by the Company of a loan obtained by the
grantee from a third party. The terms of any loans, installment payments or loan
guarantees, including the interest rate and terms of and security for repayment,
will be subject to the Plan Administrator's discretion;  provided, however, that
repayment  of any Company  loan to the Holder  shall be secured by delivery of a
full-recourse  promissory  note  for the loan  amount  executed  by the  Holder,
together with any other form of security  determined by the Plan  Administrator.
The maximum credit  available is the purchase price, if any, of the Common Stock
acquired, plus the maximum federal and state income and employment tax liability
that may be incurred in connection with the acquisition.

13.      ASSIGNABILITY

         Except as otherwise  specified or approved by the Plan Administrator at
the  time of grant of an  Award  or any  time  prior to its  exercise,  no Award
granted  under the Plan may be assigned,  pledged or  transferred  by the Holder
other than by will or by the laws of descent  and  distribution,  and during the
Holder's   lifetime,   such  Awards  may  be  exercised   only  by  the  Holder.
Notwithstanding the foregoing, and to the extent permitted by Section 422 of the
Code,  the  Plan  Administrator,   in  its  sole  discretion,  may  permit  such
assignment,  transfer and  exercisability and may permit a Holder of such Awards
to designate a  beneficiary  who may exercise the Award or receive  compensation
under the Award after the Holder's death; provided,  however, that (i) any Award
so assigned or transferred shall be subject to all the same terms and conditions
contained in the instrument evidencing the Award, (ii) the original Holder shall
remain subject to withholding taxes upon exercise, (iii) any subsequent transfer
of an Award shall be prohibited and (iv) the events of termination of employment

                                       12

<PAGE>

or contractual  relationship set forth in subsection 7.6 shall continue to apply
with respect to the original transferor-Holder.

14.      ADJUSTMENTS

         14.1     Adjustment of Shares.

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

         14.2     Dissolution, Liquidation or Change in Control Transactions.

         (a) In the event of the  proposed  dissolution  or  liquidation  of the
Company,  the Company  shall notify each Holder at least fifteen (15) days prior
to such proposed action. To the extent not previously exercised, all Awards will
terminate immediately prior to the consummation of such proposed action.

         (b) If, in  connection  with a Change in  Control,  an Option  does not
remain outstanding and either such Option is not assumed by the surviving entity
or its parent, or the surviving entity or its parent does not substitute options
with substantially the same terms for such Option, such Option shall, unless the
applicable  agreement  representing an Option provides otherwise,  or unless the
Plan  Administrator  determines  otherwise in its sole and absolute  discretion,
become exercisable in full, whether or not the vesting requirements set forth in
the Option  Agreement have been  satisfied,  for a period prior to the effective
date  of  such  Change  in  Control  of  a  duration   specified   by  the  Plan
Administrator, and thereafter the Option shall terminate.

         (c) Unless the  applicable  agreement  representing  an Award  provides
otherwise, or unless the Plan Administrator determines otherwise in its sole and
absolute  discretion  in connection  with any Change in Control,  the vesting of
Shares shall be accelerated,  and the Company's repurchase right with respect to
such shares shall lapse,  in  connection  with a Change in Control which becomes
effective before such Holder's service to the Company terminates as follows:

                                       13

<PAGE>

              (i) If  Options  were  outstanding  at the  effective  time of the
Change in Control and they are  accelerated  in full pursuant to Subsection  (b)
above or otherwise,  the vesting of all Shares shall be accelerated in full, and
the  Company's  repurchase  right with respect to all such shares shall lapse in
full, whether or not the vesting  requirements set forth in the applicable Award
agreement have been satisfied.

         (d)  Notwithstanding  Subsections (b) and (c) above, if the Company and
the other party to the  transaction  constituting a Change in Control agree that
such  transaction  is to be treated as a "pooling of  interests"  for  financial
reporting purposes, and if the Company's independent public accountants and such
other party's independent public accountants  separately determine in good faith
that the  transaction  constituting  a  Change  in  Control  would  qualify  for
treatment  as a  "pooling  of  interests"  but for the  acceleration  of vesting
provided  for in  Subsections  (b) and  (c)  above,  then  the  acceleration  of
exercisability or the lapse of the Company's right to repurchase shall not occur
to the extent that the Company's  independent  public accountants and such other
party's independent public accountants  separately  determine in good faith that
such  acceleration  would preclude the use of "pooling of interests"  accounting
for such transaction.

         14.3     Further Adjustment of Awards.

         Subject to the preceding  Section 14.2,  the Plan  Administrator  shall
have  the   discretion,   exercisable  at  any  time  before  a  sale,   merger,
consolidation,  reorganization, dissolution, liquidation or Change in Control of
the Company, as defined by the Plan  Administrator,  to take such further action
as it  determines  to be  necessary  or  advisable,  and fair and  equitable  to
Participants,  with respect to Awards.  Such authorized  action may include (but
shall not be limited to)  establishing,  amending  or waiving  the type,  terms,
conditions  or  duration  of, or  restrictions  on,  Awards so as to provide for
earlier, later, extended or additional time for exercise,  payment or settlement
or  lifting   restrictions,   differing  methods  for  calculating  payments  or
settlements,  alternate  forms and amounts of payments and settlements and other
modifications,  and the Plan Administrator may take such actions with respect to
all  Participants,  to certain  categories of Participants or only to individual
Participants.  The Plan  Administrator  may take  such  actions  before or after
granting  Awards to which the  action  relates  and  before or after any  public
announcement with respect to such sale, merger,  consolidation,  reorganization,
dissolution,  liquidation  or  Change in  Control  that is the  reason  for such
action.  Without  limiting the generality of the foregoing,  if the Company is a
party to a merger or consolidation,  outstanding  Awards shall be subject to the
agreement  of merger or  consolidation.  Such  agreement,  without the  Holder's
consent, may provide for:

         (a) the continuation of such  outstanding  Award by the Company (if the
Company is the surviving corporation);

         (b) the  assumption of the Plan and some or all  outstanding  Awards by
the surviving corporation or its parent;

         (c) the  substitution  by the  surviving  corporation  or its parent of
Awards with substantially the same terms for such outstanding Awards; or

                                       14

<PAGE>

         (d) the cancellation of such outstanding Awards with or without payment
of any consideration.

         14.4     Limitations.

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

         14.5     Fractional Shares.

         In the event of any  adjustment in the number of shares  covered by any
Option,   any  fractional   shares  resulting  from  such  adjustment  shall  be
disregarded  and each such  Option  shall  cover only the number of full  shares
resulting from such adjustment.

15.      WITHHOLDING

         The  Company  may  require the Holder to pay to the Company in cash the
amount of any  withholding  taxes that the Company is required to withhold  with
respect to the grant, exercise,  payment or settlement of any Award. The Company
shall have the right to  withhold  from any Award or any shares of Common  Stock
issuable  pursuant  to an Award or from any  cash  amounts  otherwise  due or to
become due from the Company to the  Participant  an amount  equal to such taxes.
The  Company  may also  deduct  from any Award any  other  amounts  due from the
Participant to the Company or a Subsidiary.

16.      AMENDMENT AND TERMINATION OF PLAN

         16.1     Amendment of Plan.

         The Plan may be amended by the Board in such  respects as it shall deem
advisable including, without limitation, such modifications or amendments as are
necessary to maintain compliance with applicable statutes, rules or regulations;
however,  to the extent  required for compliance with Section 422 of the Code or
any applicable law or regulation,  shareholder approval will be required for any
amendment  that  will  increase  the  aggregate  number  of  shares  as to which
Incentive  Stock Options may be granted or change the class of persons  eligible
to   participate.   Amendments   made  to  the  Plan  which   would   constitute
"modifications"  to  Incentive  Stock  Options  outstanding  on the date of such
Amendments shall not be applicable to such  outstanding  Incentive Stock Options
but  shall  have   prospective   effect  only.   The  Board  may  condition  the
effectiveness  of any amendment on the receipt of  shareholder  approval at such
time and in such manner as the Board may consider  necessary  for the Company to
comply with or to avail the Company,  the Holders or both of the benefits of any
securities,   tax,  market  listing  or  other   administrative   or  regulatory
requirement  which the Board  determines to be desirable.  Whenever  shareholder
approval is sought,  and unless required otherwise by applicable law or exchange
requirements,  the proposed action shall require the affirmative vote of holders
of a majority of the shares  present,  entitled to vote and voting on the matter
without including abstentions or broker non-votes in the denominator.

                                       15

<PAGE>

         16.2     Termination Of Plan.

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

17.      GENERAL

         17.1     Award Agreements.

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

         17.2     Continued Employment or Services; Rights In Awards.

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

         17.3     Registration; Certificates For Shares.

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

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

         17.4     No Rights As A Shareholder.

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

                                       16

<PAGE>

         17.5     Compliance With Laws And Regulations.

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

         17.6     No Trust Or Fund.

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

         17.7     Severability.

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

18.      EFFECTIVE DATE

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

         Original Plan adopted by the Board on November 23, 1999 and approved by
the Company's shareholders on February 15, 2000.

                                       17

<PAGE>

                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                    ----------------------------------------
<TABLE>
<CAPTION>
           Date of                                                                                    Date of
          Adoption/                                                                                Shareholder
          Amendment/                                                                                 Approval
          Adjustment                      Section                  Effect of Amendment            (if applicable)
          ----------                      -------                  -------------------            ---------------
          <S>                             <C>                      <C>                            <C>

                                             --                              --                      ------, ----

</TABLE>

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