Document:

Exhibit 10.18

                                                                       EXHIBIT A

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES  ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                                            Date of Issuance: _________ __, 2003

                                                                $_______________

                            6% CONVERTIBLE DEBENTURE
                           DUE __________ __, 2006/1/

            THIS  DEBENTURE is one of a series of duly  authorized and issued 6%
Convertible Debentures of QT 5, Inc., a Delaware corporation, having a principal
place of business at 5655 Lindero  Canyon Road,  Suite 120,  West Lake  Village,
California  91362 (the "Company"),  designated as its 6% Convertible  Debenture,
due __________ __, 2006 (the "Debentures").

         FOR   VALUE    RECEIVED,    the    Company    promises    to   pay   to
________________________ or its registered assigns (the "Holder"), the principal
sum of  $_______________  on  ___________  __, 2006 or such  earlier date as the
Debentures  are required or permitted  to be repaid as provided  hereunder  (the
"Maturity Date"), and to pay interest to the Holder on the aggregate unconverted
and then  outstanding  principal  amount of this Debenture at the rate of 6% per
annum,  payable  quarterly  on March 1,  June 1,  September  1 and  December  1,
beginning  on the first  such date  after the  Original  Issue  Date and on each
Conversion  Date (as to that principal  amount then being  converted) and on the
Maturity  Date (except  that,  if any such date is not a Business Day, then such

--------
/1/    36 months from the Original Issue Date.

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payment  shall be due on the next  succeeding  Business Day) (each such date, an
"Interest  Payment  Date"),  in cash or shares of Common  Stock at the  Interest
Conversion Rate, or a combination thereof; provided,  however, payment in shares
of Common Stock may only occur if: (i) there is an effective  Underlying  Shares
Registration  Statement pursuant to which the Holder is permitted to utilize the
prospectus  thereunder  to resell all of the shares of Common Stock to be issued
in  lieu  of  cash  (and  the  Company  believes,   in  good  faith,  that  such
effectiveness will continue  uninterrupted for the foreseeable future), (ii) the
Common  Stock is listed  for  trading on a  Principal  Market  (and the  Company
believes,  in good faith, that trading of the Common Stock on a Principal Market
will  continue  uninterrupted  for the  foreseeable  future),  (iii)  there is a
sufficient number of authorized but unissued and otherwise  unreserved shares of
Common  Stock for the  issuance  of all of the share  issuable  pursuant  to the
Transaction Documents, including the shares to be issued for interest in lieu of
cash and (iv) such  issuance  would be permitted in full without  violating  the
limitations set forth in Section  4(a)(ii).  Subject to the terms and conditions
herein, the decision whether to pay interest hereunder in shares of Common Stock
or cash shall be at the discretion of the Company. Not less than 20 Trading Days
prior to each Interest  Payment Date,  the Company shall provide the Holder with
written  notice of its  election  to pay  interest  hereunder  either in cash or
shares of Common  Stock  (the  Company  may  indicate  in such  notice  that the
election  contained  in such  notice  shall  continue  for later  periods  until
revised).  Within  20  Trading  Days  prior to an  Interest  Payment  Date,  the
Company's  election (whether specific to an Interest Payment Date or continuous)
shall  be  irrevocable  as  to  such  Interest  Payment  Date.  Subject  to  the
aforementioned  conditions,  failure to timely provide such written notice shall
be deemed an  election  by the  Company  to pay the  interest  on such  Interest
Payment Date in cash.  Interest  shall be  calculated  on the basis of a 360-day
year and shall accrue daily  commencing on the Original Issue Date until payment
in full of the principal sum,  together with all accrued and unpaid interest and
other amounts which may become due hereunder, has been made. Payment of interest
in shares of Common  Stock shall  otherwise  occur  pursuant to Section 4(b) and
only for  purposes of the payment of interest in shares,  the  Interest  Payment
Date shall be deemed the  Conversion  Date.  Interest shall cease to accrue with
respect to any  principal  amount  converted,  provided that the Company in fact
delivers  the  Underlying  Shares  within the time  period  required  by Section
4(b)(i).  Interest  hereunder  will be paid to the  Person  in whose  name  this
Debenture is registered on the records of the Company regarding registration and
transfers of Debentures (the "Debenture Register"). Except as otherwise provided
herein, if at anytime the Company pays interest  partially in cash and partially
in shares of Common Stock, then such payment shall be distributed  ratably among
the Holders based upon the principal  amount of Debentures  held by each Holder.
All overdue accrued and unpaid interest to be paid hereunder shall entail a late
fee at the rate of 15% per  annum (or such  lower  maximum  amount  of  interest
permitted  to be charged  under  applicable  law) ("Late Fee") which will accrue
daily,  from the date such interest is due  hereunder  through and including the
date of payment.  The Company may not prepay any portion of the principal amount
of this Debenture without the prior written consent of the Holder.

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         This Debenture is subject to the following additional provisions:

         Section  1.  This  Debenture  is  exchangeable  for an equal  aggregate
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested by the Holder  surrendering  the same. No service  charge will be made
for such registration of transfer or exchange.

         Section 2. This Debenture has been issued subject to certain investment
representations  of the original Holder set forth in the Purchase  Agreement and
may be transferred or exchanged only in compliance  with the Purchase  Agreement
and applicable  federal and state securities laws and regulations.  Prior to due
presentment to the Company for transfer of this  Debenture,  the Company and any
agent of the Company may treat the Person in whose name this  Debenture  is duly
registered  on the  Debenture  Register  as the owner  hereof for the purpose of
receiving payment as herein provided and for all other purposes,  whether or not
this  Debenture is overdue,  and neither the Company nor any such agent shall be
affected by notice to the contrary.

         Section 3.          Events of Default.

                  a) "Event of Default",  wherever used herein, means any one of
         the  following  events  (whatever  the reason  and  whether it shall be
         voluntary or involuntary or effected by operation of law or pursuant to
         any  judgment,  decree or order of any  court,  or any  order,  rule or
         regulation of any administrative or governmental body):

                           i) any  default in the payment of the  principal  of,
                  interest  on,  or  liquidated   damages  in  respect  of,  any
                  Debentures,  free of any claim of  subordination,  as and when
                  the same shall become due and payable (whether on a Conversion
                  Date or the Maturity  Date or by  acceleration  or  otherwise)
                  which  default is not cured,  if possible  to cure,  within 15
                  days of notice of such default sent by the Holder;

                           ii) the Company  shall fail to observe or perform any
                  other  covenant,   agreement  or  warranty  contained  in,  or
                  otherwise   commit  any  breach  of  any  of  the  Transaction
                  Documents   (other  than  a  breach  by  the  Company  of  its
                  obligations  to deliver  shares of Common  Stock to the Holder
                  upon conversion or interest  payment which breach is addressed
                  in clause (x) below) which is not cured,  if possible to cure,
                  within 10 days of notice of such default sent by the Holder;

                           iii) the  Company  or any of its  subsidiaries  shall
                  commence,  or there shall be commenced  against the Company or
                  any such subsidiary a case under any applicable  bankruptcy or
                  insolvency laws as now or hereafter in effect or any successor
                  thereto,  or the Company  commences any other proceeding under
                  any reorganization, arrangement, adjustment of debt, relief of
                  debtors, dissolution, insolvency or liquidation or similar law
                  of  any  jurisdiction  whether  now  or  hereafter  in  effect
                  relating to the Company or any subsidiary  thereof or there is
                  commenced  against the Company or any  subsidiary  thereof any
                  such bankruptcy,  insolvency or other proceeding which remains
                  undismissed  for a period of 60 days;  or the  Company  or any
                  subsidiary  thereof is adjudicated  insolvent or bankrupt;  or
                  any order of relief or other order  approving any such case or
                  proceeding  is  entered;  or the  Company  or  any  subsidiary
                  thereof  suffers any  appointment of any custodian or the like
                  for it or any substantial part of its property which continues
                  undischarged  or  unstayed  for a period  of 60  days;  or the

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                  Company or any subsidiary  thereof makes a general  assignment
                  for the benefit of  creditors;  or the  Company  shall fail to
                  pay,  or shall  state  that it is unable  to pay,  or shall be
                  unable to pay, its debts  generally as they become due; or the
                  Company or any subsidiary  thereof shall call a meeting of its
                  creditors with a view to arranging a  composition,  adjustment
                  or   restructuring  of  its  debts;  or  the  Company  or  any
                  subsidiary  thereof  shall  by  any  act  or  failure  to  act
                  expressly indicate its consent to, approval of or acquiescence
                  in any of the  foregoing;  or any corporate or other action is
                  taken by the Company or any subsidiary thereof for the purpose
                  of effecting any of the foregoing;

                           iv)  the  Company   shall   default  in  any  of  its
                  obligations under any other Debenture or any mortgage,  credit
                  agreement or other facility,  indenture  agreement,  factoring
                  agreement or other instrument under which there may be issued,
                  or by which there may be secured or evidenced any indebtedness
                  for borrowed money or money due under any long term leasing or
                  factoring  arrangement  of the Company in an amount  exceeding
                  $150,000,  whether  such  indebtedness  now  exists  or  shall
                  hereafter  be created and such  default  shall  result in such
                  indebtedness  becoming or being declared due and payable prior
                  to the  date  on  which  it  would  otherwise  become  due and
                  payable,  which  default is not cured,  if  possible  to cure,
                  within 15 days of notice of such default sent by the Holder;

                           v)  the  Common  Stock  shall  not  be  eligible  for
                  quotation  on or quoted for trading on a Principal  Market and
                  shall  not again be  eligible  for and  quoted  or listed  for
                  trading thereon within seven Trading Days;

                           vi) the  Company  shall be a party to any  Change  of
                  Control Transaction , shall agree to sell or dispose of all or
                  in  excess of 40% of its  assets  in one or more  transactions
                  (whether or not such sale would constitute a Change of Control
                  Transaction)  or shall  redeem  or  repurchase  more than a de
                  minimis  number of its  outstanding  shares of Common Stock or
                  other equity securities of the Company (other than redemptions
                  of Underlying Shares and repurchases of shares of Common Stock
                  or other equity securities of departing officers and directors
                  of the Company;  provided no repurchase  shall exceed $100,000
                  for any officer or director);

                           vii)  an  Underlying  Shares  Registration  Statement
                  shall not have been declared effective by the Commission on or
                  prior to the 150th calendar day after the Original Issue Date;

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                           viii) if, during the Effectiveness Period (as defined
                  in the Registration  Rights  Agreement),  the effectiveness of
                  the Underlying  Shares  Registration  Statement lapses for any
                  reason  or  the  Holder  shall  not  be  permitted  to  resell
                  Registrable  Securities (as defined in the Registration Rights
                  Agreement) under the Underlying Shares Registration Statement,
                  in either case, for more than 15  consecutive  Trading Days or
                  25 non-consecutive Trading Days during any 12 month period;

                           ix) an Event (as defined in the  Registration  Rights
                  Agreement)  shall not have been cured to the  satisfaction  of
                  the Holder  prior to the  expiration  of thirty  days from the
                  Event Date (as defined in the Registration  Rights  Agreement)
                  relating thereto (other than an Event resulting from a failure
                  of an Underlying Shares Registration  Statement to be declared
                  effective by the  Commission on or prior to the  Effectiveness
                  Date (as defined in the Registration Rights Agreement),  which
                  shall be covered by Section 3(a)(vii));

                           x) the  Company  shall fail for any reason to deliver
                  certificates  to a Holder  prior to the  seventh  Trading  Day
                  after a Conversion  Date  pursuant to and in  accordance  with
                  Section  4(b)  or the  Company  shall  provide  notice  to the
                  Holder, including by way of public announcement,  at any time,
                  of its intention  not to comply with requests for  conversions
                  of any Debentures in accordance with the terms hereof; or

                           (xi) the Company shall fail for any reason to deliver
                  the payment in cash  pursuant to a Buy-In (as defined  herein)
                  within five days after notice thereof is delivered hereunder.

                  b) If any Event of Default occurs and is continuing,  the full
         principal  amount of this  Debenture,  together with interest and other
         amounts owing in respect  thereof,  to the date of  acceleration  shall
         become at the Holder's  election,  immediately due and payable in cash.
         The aggregate amount payable upon an Event of Default shall be equal to
         the Mandatory Prepayment Amount. Interest shall accrue on the Mandatory
         Prepayment  Amount hereunder from the fifth (5th) day after such amount
         is due  (being  the date of an Event of  Default)  through  the date of
         prepayment  in full  thereof  in an amount  equal to the Late  Fee,  to
         accrue  daily from the date such payment is due  hereunder  through and
         including  the date of  payment.  All  Debentures  for  which  the full
         prepayment price hereunder shall have been paid in accordance  herewith
         shall  promptly be  surrendered  to or as directed by the Company.  The
         Holder need not provide and the Company hereby waives any  presentment,
         demand,  protest  or other  notice  of any  kind,  and the  Holder  may
         immediately and without  expiration of any grace period enforce any and
         all of its  rights  and  remedies  hereunder  and  all  other  remedies
         available to it under applicable law. Such declaration may be rescinded
         and annulled by Holder at any time prior to payment  hereunder  and the
         Holder shall have all rights as a Debenture  holder until such time, if

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         any, as the full payment under this Section shall have been received by
         it. No such rescission or annulment  shall affect any subsequent  Event
         of Default or impair any right consequent thereon.

         Section 4.          Conversion.

                  a) i) At any time  after the  Original  Issue  Date until this
                  Debenture is no longer  outstanding,  this Debenture  shall be
                  convertible  into shares of Common  Stock at the option of the
                  Holder,  in whole or in part at any time and from time to time
                  (subject to the limitations on conversion set forth in Section
                  4(a)(ii)  hereof).  The Holder  shall  effect  conversions  by
                  delivering  to the  Company  the form of Notice of  Conversion
                  attached  hereto  as  Annex  A  (a  "Notice  of  Conversion"),
                  specifying  therein the  principal  amount of Debentures to be
                  converted  and the  date on  which  such  conversion  is to be
                  effected  (a  "Conversion  Date").  If no  Conversion  Date is
                  specified in a Notice of Conversion, the Conversion Date shall
                  be the  date  that  such  Notice  of  Conversion  is  provided
                  hereunder.  To effect conversions hereunder,  the Holder shall
                  not be  required to  physically  surrender  Debentures  to the
                  Company unless the entire  principal  amount of this Debenture
                  plus all  accrued  and  unpaid  interest  thereon  has been so
                  converted.  Conversions  hereunder  shall  have the  effect of
                  lowering the outstanding principal amount of this Debenture in
                  an amount equal to the applicable  conversion.  The Holder and
                  the Company  shall  maintain  records  showing  the  principal
                  amount converted and the date of such conversions. The Company
                  shall deliver any objection to any Notice of Conversion within
                  1 Business Day of receipt of such notice.  In the event of any
                  dispute or  discrepancy,  the  records of the Holder  shall be
                  controlling  and  determinative  in the  absence  of  manifest
                  error.  The Holder and any  assignee,  by  acceptance  of this
                  Debenture,  acknowledge  and  agree  that,  by  reason  of the
                  provisions  of  this  paragraph,  following  conversion  of  a
                  portion  of  this   Debenture,   the  unpaid  and  unconverted
                  principal amount of this Debenture may be less than the amount
                  stated on the face hereof.

                           ii) The  Holder  shall not have the right to  convert
                  any portion of this  Debenture,  pursuant to Section  4(a)(i),
                  Section  5b) or  otherwise,  to the extent  that after  giving
                  effect  to such  conversion,  the  Holder  (together  with the
                  Holder's affiliates), as set forth on the applicable Notice of
                  Conversion,  would  beneficially own in excess of 4.99% of the
                  number of shares of the Common Stock  outstanding  immediately
                  after giving  effect to such  conversion.  For purposes of the
                  foregoing  sentence,  the  number of  shares  of Common  Stock
                  beneficially  owned by the  Holder  and its  affiliates  shall
                  include  the number of shares of Common  Stock  issuable  upon
                  conversion  of  this  Debenture  with  respect  to  which  the
                  determination  of such  sentence  is  being  made,  but  shall
                  exclude  the number of shares of Common  Stock  which would be
                  issuable upon (A)  conversion of the  remaining,  nonconverted
                  portion of this Debenture  beneficially owned by the Holder or
                  any of its  affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of

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                  the  Company  (including,   without   limitation,   any  other
                  Debentures  or  the  Warrants)  subject  to  a  limitation  on
                  conversion or exercise  analogous to the limitation  contained
                  herein  beneficially  owned  by  the  Holder  or  any  of  its
                  affiliates. Except as set forth in the preceding sentence, for
                  purposes of this Section 4(a)(ii),  beneficial ownership shall
                  be calculated in accordance with Section 13(d) of the Exchange
                  Act.  To the  extent  that the  limitation  contained  in this
                  section applies,  the  determination of whether this Debenture
                  is convertible (in relation to other  securities  owned by the
                  Holder)  and  of  which  a  portion  of  this   Debenture   is
                  convertible shall be in the sole discretion of such Holder. To
                  ensure  compliance with this  restriction,  the Holder will be
                  deemed to  represent  to the  Company  each time it delivers a
                  Notice of Conversion  that such Notice of  Conversion  has not
                  violated the  restrictions set forth in this paragraph and the
                  Company  shall have no  obligation  to verify or  confirm  the
                  accuracy of such  determination.  For purposes of this Section
                  4(a)(ii),  in determining the number of outstanding  shares of
                  Common Stock, the Holder may rely on the number of outstanding
                  shares of Common Stock as reflected in (x) the Company's  most
                  recent Form 10-Q or Form 10-K,  as the case may be, (y) a more
                  recent  public  announcement  by the  Company or (z) any other
                  notice by the Company or the Company's  Transfer Agent setting
                  forth the number of shares of Common Stock  outstanding.  Upon
                  the written or oral request of the Holder,  the Company  shall
                  within two Trading Days  confirm  orally and in writing to the
                  Holder the number of shares of Common Stock then  outstanding.
                  In any case, the number of outstanding  shares of Common Stock
                  shall be determined  after giving effect to the  conversion or
                  exercise  of  securities  of  the  Company,   including   this
                  Debenture,  by the Holder or its affiliates  since the date as
                  of which such number of outstanding shares of Common Stock was
                  reported.  The  provisions  of this  Section  4(a)(ii)  may be
                  waived by the Holder upon, at the election of the Holder,  not
                  less  than 61  days'  prior  notice  to the  Company,  and the
                  provisions  of this  Section  4(a)i)  shall  continue to apply
                  until such 61st day (or such later date,  as determined by the
                  Holder, as may be specified in such notice of waiver).

                           ii) Underlying  Shares  Issuable Upon  Conversion and
                  Pursuant to the Conversion of Principal Amount.  The number of
                  shares of Common Stock  issuable  upon a  conversion  shall be
                  determined  by the  quotient  obtained  by  dividing  (x)  the
                  outstanding principal amount of this Debenture to be converted
                  by (y) the Set Price.

                  (b) i) Not later than five Trading  Days after any  Conversion
                  Date,  the Company will deliver to the Holder a certificate or
                  certificates representing the Underlying Shares which shall be
                  free of restrictive  legends and trading  restrictions  (other
                  than those  required by the Purchase  Agreement)  representing
                  the number of shares of Common Stock being  acquired  upon the
                  conversion of Debentures  (including,  if so timely elected by
                  the Company,  shares of Common Stock  representing the payment
                  of  accrued  interest)  and (B) a bank  check in the amount of
                  accrued and unpaid interest (if the Company is required to pay

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                  accrued interest in cash). The Company shall, if available and
                  if allowed  under  applicable  securities  laws,  use its best
                  efforts to deliver any certificate or certificates required to
                  be delivered by the Company under this Section  electronically
                  through   the   Depository   Trust   Corporation   or  another
                  established clearing corporation performing similar functions.
                  If in the case of any Notice of Conversion such certificate or
                  certificates  are  not  delivered  to or as  directed  by  the
                  applicable  Holder by the fifth Trading Day after a Conversion
                  Date,  the Holder  shall be entitled by written  notice to the
                  Company  at  any  time  on  or  before  its  receipt  of  such
                  certificate  or  certificates  thereafter,   to  rescind  such
                  conversion,  in which  event  the  Company  shall  immediately
                  return the  certificates  representing the principal amount of
                  Debentures tendered for conversion.

                  ii) If the  Company  fails for any  reason to  deliver  to the
                  Holder such  certificate or  certificates  pursuant to Section
                  4(b)(i) by the fifth  Trading Day after the  Conversion  Date,
                  the Company  shall pay to such Holder,  in cash, as liquidated
                  damages  and not as a penalty,  for each  $5,000 of  principal
                  amount being  converted,  $50 per Trading Day  (increasing  to
                  $100 per Trading Day after 3 Trading  Days after such  damages
                  begin to accrue) for each Trading Day after such third Trading
                  Day until  such  certificates  are  delivered.  In the event a
                  Holder of this Debenture  shall elect to convert any or all of
                  the outstanding  principal amount hereof,  the Company may not
                  refuse  conversion  based on any claim  that the Holder or any
                  one  associated  or  affiliated  with the  Holder  of has been
                  engaged in any  violation  of law,  agreement or for any other
                  reason,  unless,  an  injunction  from  a  court,  on  notice,
                  restraining and or enjoining conversion of all or part of this
                  Debenture  shall have been sought and obtained and the Company
                  posts a  surety  bond for the  benefit  of the  Holder  in the
                  amount  of  150% of the  principal  amount  of this  Debenture
                  outstanding,  which is subject to the  injunction,  which bond
                  shall   remain   in   effect   until   the    completion    of
                  arbitration/litigation  of the  dispute  and the  proceeds  of
                  which shall be payable to such Holder to the extent it obtains
                  judgment. In the absence of an injunction precluding the same,
                  the Company shall issue  Conversion  Shares or, if applicable,
                  cash, upon a properly noticed conversion. Nothing herein shall
                  limit a Holder's  right to pursue actual damages or declare an
                  Event  of  Default  pursuant  to  Section  3  herein  for  the
                  Company's  failure to  deliver  Conversion  Shares  within the
                  period  specified  herein and such Holder shall have the right
                  to pursue  all  remedies  available  to it at law or in equity
                  including,   without   limitation,   a  decree   of   specific
                  performance and/or injunctive relief. The exercise of any such
                  rights  shall not prohibit the Holders from seeking to enforce
                  damages   pursuant  to  any  other  Section  hereof  or  under
                  applicable law.

                  (iii) In addition to any other rights available to the Holder,
                  if the  Company  fails for any reason to deliver to the Holder
                  such  certificate or certificates  pursuant to Section 4(b)(i)
                  by the third  Trading Day after the  Conversion  Date,  and if
                  after such third  Trading  Day the Holder is  required  by its

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                  brokerage  firm to purchase (in an open market  transaction or
                  otherwise)  Common Stock to deliver in  satisfaction of a sale
                  by such  Holder of the  Underlying  Shares  which  the  Holder
                  anticipated receiving upon such conversion (a "Buy-In"),  then
                  the Company  shall (A) pay in cash to the Holder (in  addition
                  to any  remedies  available  to or elected by the  Holder) the
                  amount  by  which  (x)  the  Holder's   total  purchase  price
                  (including brokerage commissions, if any) for the Common Stock
                  so  purchased  exceeds  (y) the  product of (1) the  aggregate
                  number of shares of Common Stock that such Holder  anticipated
                  receiving from the  conversion at issue  multiplied by (2) the
                  actual sale price of the Common  Stock at the time of the sale
                  (including brokerage commissions,  if any) giving rise to such
                  purchase  obligation  and  (B) at the  option  of the  Holder,
                  either  reissue  Debentures  in principal  amount equal to the
                  principal amount of the attempted conversion or deliver to the
                  Holder  the  number of shares of Common  Stock that would have
                  been issued had the Company timely  complied with its delivery
                  requirements under Section 4(b)(i). For example, if the Holder
                  purchases  Common  Stock  having  a total  purchase  price  of
                  $11,000  to  cover  a  Buy-In  with  respect  to an  attempted
                  conversion of Debentures with respect to which the actual sale
                  price  of the  Underlying  Shares  at  the  time  of the  sale
                  (including brokerage commissions,  if any) giving rise to such
                  purchase obligation was a total of $10,000 under clause (A) of
                  the  immediately  preceding  sentence,  the  Company  shall be
                  required to pay the Holder  $1,000.  The Holder shall  provide
                  the Company  written notice  indicating the amounts payable to
                  the Holder in respect of the Buy-In.  Notwithstanding anything
                  contained  herein to the  contrary,  if a Holder  requires the
                  Company to make payment in respect of a Buy-In for the failure
                  to  timely  deliver  certificates  hereunder  and the  Company
                  timely pays in full such  payment,  the  Company  shall not be
                  required to pay such Holder  liquidated  damages under Section
                  4(b)(ii)  in respect  of the  certificates  resulting  in such
                  Buy-In.

                  (iv) Notwithstanding anything herein to the contrary, if after
                  the  Effective  Date  each of the  Closing  Prices  for any 20
                  consecutive  Trading Days (such period  commencing  only after
                  the Effective Price) exceeds 200% of the Set Price (subject to
                  adjustment  for  reverse  and  forward  stock  splits,   stock
                  dividends,  stock combinations and other similar  transactions
                  of the  Common  Stock  that  occur  after  the  date  of  this
                  Agreement),  the Company may, within 2 Trading Days of the end
                  of any such period,  deliver a notice to the Holder (a "Forced
                  Conversion Notice" and the date such notice is received by the
                  Holder,  the  "Forced  Conversion  Notice  Date") to cause the
                  Holder  to  immediately  convert  all or part  (and  if  part,
                  pro-rata in proportion to each Holders initial purchase of the
                  Debentures)  of  the  then  outstanding  principal  amount  of
                  Debentures  pursuant to Section 4(a)(i).  The Company may only
                  effect a Forced  Conversion  Notice  if each of the  following
                  shall be true:  (i) the  Company  shall have duly  honored all
                  conversions  occurring  by  virtue  of one or more  Conversion
                  Notices prior to the Forced  Conversion Date, (ii) there is an
                  effective Underlying Shares Registration Statement pursuant to

                                       9
<PAGE>

                  which the  Holder  is  permitted  to  utilize  the  prospectus
                  thereunder  to resell all of the  Underlying  Shares issued to
                  the Holder and all of the Underlying Shares as are issuable to
                  the Holder upon  conversion in full of this Debenture  subject
                  to the Forced Conversion Notice (and the Company believes,  in
                  good   faith,   that   such    effectiveness   will   continue
                  uninterrupted  for the foreseeable  future),  (iii) the Common
                  Stock is listed for  trading on a  Principal  Market  (and the
                  Company  believes,  in good faith,  that trading of the Common
                  Stock on a Principal  Market will continue  uninterrupted  for
                  the foreseeable future), (iv) all liquidated damages and other
                  amounts  owing in respect  of the  Debentures  and  Underlying
                  Shares  shall  have been paid or will,  concurrently  with the
                  issuance of the Underlying  Shares, be paid in cash; (v) there
                  is  a  sufficient   number  of  authorized  but  unissued  and
                  otherwise  unreserved  shares of Common Stock for the issuance
                  of all the  Underlying  Shares as are  issuable  to the Holder
                  upon  conversion  in full  of the  Debentures  subject  to the
                  Forced  Conversion  Notice;  (vi) no Event of Default  nor any
                  event that with the passage of time would  constitute an Event
                  of Default has occurred and is continuing; (vii) such issuance
                  would be permitted in full without  violating the  limitations
                  set  forth  in   Section   4(a)(ii)   and   (viii)  no  public
                  announcement  of a  pending  or  proposed  Change  of  Control
                  Transaction or Fundamental  Transaction  has occurred that has
                  not been consummated.

                  (c) i) The conversion  price in effect on any Conversion  Date
                  shall be equal to $0.__/2/ (subject to adjustment  herein)(the
                  "Set Price"); provided, however, in the event that the Company
                  loses  its  patent  relating  to NICO  Water or  otherwise  is
                  legally unable to sell NICO Water,  the conversion price shall
                  thereafter  equal the  lesser of (A) the Set Price and (B) 60%
                  of the average of the 5 Closing  Prices for the 5 Trading Days
                  immediately prior to the applicable Conversion Date.

                  ii) If the  Company,  at any time  while  the  Debentures  are
                  outstanding:  (A) shall pay a stock dividend or otherwise make
                  a distribution or  distributions on shares of its Common Stock
                  or any other equity or equity equivalent securities payable in
                  shares of Common Stock (which,  for avoidance of doubt,  shall
                  not include any shares of Common  Stock  issued by the Company
                  pursuant to this Debenture,  including interest thereon),  (B)
                  subdivide  outstanding  shares of Common  Stock  into a larger
                  number of shares,  (C)  combine  (including  by way of reverse
                  stock split) outstanding shares of Common Stock into a smaller
                  number of shares, or (D) issue by  reclassification  of shares
                  of the  Common  Stock  any  shares  of  capital  stock  of the
                  Company,  then the Set Price shall be multiplied by a fraction
                  of which the numerator shall be the number of shares of Common
                  Stock (excluding  treasury shares, if any) outstanding  before
                  such event and of which the denominator shall be the number of
                  shares of Common  Stock  outstanding  after  such  event.  Any

---------------
/2/  As to the Debentures issued at the First Closing, $0.075 and as to the
Debentures issued at the Second Closing, the lesser of (1) $0.075 and (2) the
average of the 5 Closing Prices immediately prior to the Second Closing Date.

                                       10
<PAGE>

                  adjustment   made   pursuant  to  this  Section  shall  become
                  effective   immediately   after  the   record   date  for  the
                  determination   of  stockholders   entitled  to  receive  such
                  dividend   or   distribution   and  shall   become   effective
                  immediately  after  the  effective  date  in  the  case  of  a
                  subdivision, combination or re-classification.

                  iii)  If  the  Company,  at  any  time  while  Debentures  are
                  outstanding,  shall issue  rights,  options or warrants to all
                  holders of Common Stock (and not to Holders) entitling them to
                  subscribe  for or  purchase  shares of  Common  Stock or other
                  securities  exercisable,  convertible into or exchangeable for
                  Common Stock (the "Common Stock  Equivalents")  at a price per
                  share less than the Closing Price at the record date mentioned
                  below, then the Set Price shall be adjusted by multiplying the
                  Set Price in effect immediately prior to such record date by a
                  fraction,  of which  the  denominator  shall be the  number of
                  shares of the Common Stock (excluding treasury shares, if any)
                  outstanding on the date of issuance of such rights or warrants
                  plus the number of  additional  shares of Common Stock offered
                  for subscription or purchase, and of which the numerator shall
                  be the  number  of  shares  of  the  Common  Stock  (excluding
                  treasury  shares,  if any) outstanding on the date of issuance
                  of such rights or warrants plus the number of shares which the
                  aggregate  offering  price of the  total  number  of shares so
                  offered  would  purchase  at the  Closing  Price on the record
                  date.  Such  adjustment  shall be made  whenever  such rights,
                  options or warrants  are issued,  and shall  become  effective
                  immediately  after the record  date for the  determination  of
                  stockholders  entitled  to  receive  such  rights,  options or
                  warrants.

                  iv) If the Company or any subsidiary  thereof,  as applicable,
                  at any time while  Debentures  are  outstanding,  shall offer,
                  sell, grant any option to purchase or offer, sell or grant any
                  right to reprice its  securities,  or otherwise  dispose of or
                  issue (or  announce  any offer,  sale,  grant or any option to
                  purchase  or other  disposition)  any  Common  Stock or Common
                  Stock  Equivalent  entitling  any Person to acquire  shares of
                  Common  Stock,  at an effective  price per share less than the
                  then Set Price ("Dilutive  Issuance"),  as adjusted  hereunder
                  (if the holder of the Common Stock or Common Stock  Equivalent
                  so issued shall at any time,  whether by operation of purchase
                  price  adjustments,  reset  provisions,  floating  conversion,
                  exercise or exchange prices or otherwise,  or due to warrants,
                  options or rights per share which is issued in connection with
                  such  issuance,  be entitled to receive shares of Common Stock
                  at an  effective  price per  share  which is less than the Set
                  Price, such issuance shall be deemed to have occurred for less
                  than the Set  Price),  then the Set Price  shall be reduced to
                  equal the effective conversion, exchange or purchase price for
                  such Common Stock or Common Stock  Equivalents  (including any
                  reset provisions  thereof) at issue.  Such adjustment shall be
                  made  whenever  such Common Stock or Common Stock  Equivalents
                  are issued. The Company shall notify the Holder in writing, no
                  later than the 3rd business day  following the issuance of any
                  Common  Stock  or  Common  Stock  Equivalent  subject  to this

                                       11
<PAGE>

                  section,  indicating therein the applicable issuance price, or
                  of applicable  reset price,  exchange price,  conversion price
                  and other pricing terms.

                  v)  If  the  Company,   at  any  time  while   Debentures  are
                  outstanding,  shall  distribute to all holders of Common Stock
                  (and not to Holders)  evidences of its  indebtedness or assets
                  or  rights  or  warrants  to  subscribe  for or  purchase  any
                  security,  then in each  such  case  the Set  Price  shall  be
                  determined  by  multiplying  such price in effect  immediately
                  prior  to  the  record   date  fixed  for   determination   of
                  stockholders  entitled  to  receive  such  distribution  by  a
                  fraction of which the  denominator  shall be the Closing Price
                  determined as of the record date mentioned above, and of which
                  the numerator  shall be such Closing Price on such record date
                  less the then fair  market  value at such  record  date of the
                  portion  of  such  assets  or  evidence  of   indebtedness  so
                  distributed  applicable to one outstanding share of the Common
                  Stock as  determined  by the Board of Directors in good faith.
                  In  either  case  the  adjustments  shall  be  described  in a
                  statement  provided to the Holders of the portion of assets or
                  evidences of indebtedness so distributed or such  subscription
                  rights   applicable  to  one  share  of  Common  Stock.   Such
                  adjustment  shall be made  whenever any such  distribution  is
                  made and shall become effective  immediately  after the record
                  date mentioned above.

                  vi) All calculations under this Section 4 shall be made to the
                  nearest cent or the nearest 1/100th of a share, as the case
                  may be. For purposes of this Section 4, the number of shares
                  of Common Stock deemed to be outstanding as of a given date
                  shall be the sum of the number of shares of Common Stock
                  (excluding treasury shares, if any) outstanding on a fully
                  diluted basis.

                  vii) Whenever the Set Price is adjusted pursuant to any of
                  Section 4(c)(ii) - (v), the Company shall promptly mail to
                  each Holder a notice setting forth the Set Price after such
                  adjustment and setting forth a brief statement of the facts
                  requiring such adjustment.

                  viii) If (A) the Company shall declare a dividend (or any
                  other distribution) on the Common Stock; (B) the Company shall
                  declare a special nonrecurring cash dividend on or a
                  redemption of the Common Stock; (C) the Company shall
                  authorize the granting to all holders of the Common Stock
                  rights or warrants to subscribe for or purchase any shares of
                  capital stock of any class or of any rights; (D) the approval
                  of any stockholders of the Company shall be required in
                  connection with any reclassification of the Common Stock, any
                  consolidation or merger to which the Company is a party, any
                  sale or transfer of all or substantially all of the assets of
                  the Company, of any compulsory share exchange whereby the
                  Common Stock is converted into other securities, cash or
                  property; (E) the Company shall authorize the voluntary or
                  involuntary dissolution, liquidation or winding up of the
                  affairs of the Company; then, in each case, the Company shall
                  cause to be filed at each office or agency maintained for the
                  purpose of conversion of the Debentures, and shall cause to be

                                       12
<PAGE>

                  mailed to the Holders at their last addresses as they shall
                  appear upon the stock books of the Company, at least 20
                  calendar days prior to the applicable record or effective date
                  hereinafter specified, a notice stating (x) the date on which
                  a record is to be taken for the purpose of such dividend,
                  distribution, redemption, rights or warrants, or if a record
                  is not to be taken, the date as of which the holders of the
                  Common Stock of record to be entitled to such dividend,
                  distributions, redemption, rights or warrants are to be
                  determined or (y) the date on which such reclassification,
                  consolidation, merger, sale, transfer or share exchange is
                  expected to become effective or close, and the date as of
                  which it is expected that holders of the Common Stock of
                  record shall be entitled to exchange their shares of the
                  Common Stock for securities, cash or other property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange; provided, that the failure
                  to mail such notice or any defect therein or in the mailing
                  thereof shall not affect the validity of the corporate action
                  required to be specified in such notice. Holders are entitled
                  to convert Debentures during the 20-day period commencing the
                  date of such notice to the effective date of the event
                  triggering such notice.

                  ix) If, at any time while this Debenture is outstanding, (A)
                  the Company effects any merger or consolidation of the Company
                  with or into another Person, (B) the Company effects any sale
                  of all or substantially all of its assets in one or a series
                  of related transactions, (C) any tender offer or exchange
                  offer (whether by the Company or another Person) is completed
                  pursuant to which holders of Common Stock are permitted to
                  tender or exchange their shares for other securities, cash or
                  property, or (D) the Company effects any reclassification of
                  the Common Stock or any compulsory share exchange pursuant to
                  which the Common Stock is effectively converted into or
                  exchanged for other securities, cash or property (in any such
                  case, a "Fundamental Transaction"), then upon any subsequent
                  conversion of this Debenture, the Holder shall have the right
                  to receive, for each Underlying Share that would have been
                  issuable upon such conversion absent such Fundamental
                  Transaction, the same kind and amount of securities, cash or
                  property as it would have been entitled to receive upon the
                  occurrence of such Fundamental Transaction if it had been,
                  immediately prior to such Fundamental Transaction, the holder
                  of one share of Common Stock (the "Alternate Consideration").
                  For purposes of any such conversion, the determination of the
                  Set Price shall be appropriately adjusted to apply to such
                  Alternate Consideration based on the amount of Alternate
                  Consideration issuable in respect of one share of Common Stock
                  in such Fundamental Transaction, and the Company shall
                  apportion the Set Price among the Alternate Consideration in a
                  reasonable manner reflecting the relative value of any
                  different components of the Alternate Consideration. If
                  holders of Common Stock are given any choice as to the
                  securities, cash or property to be received in a Fundamental
                  Transaction, then the Holder shall be given the same choice as
                  to the Alternate Consideration it receives upon any conversion
                  of this Debenture following such Fundamental Transaction. To

                                       13
<PAGE>

                  the extent necessary to effectuate the foregoing provisions,
                  any successor to the Company or surviving entity in such
                  Fundamental Transaction shall issue to the Holder a new
                  Debenture consistent with the foregoing provisions and
                  evidencing the Holder's right to convert such Debenture into
                  Alternate Consideration. The terms of any agreement pursuant
                  to which a Fundamental Transaction is effected shall include
                  terms requiring any such successor or surviving entity to
                  comply with the provisions of this paragraph (c) and insuring
                  that this Debenture (or any such replacement security) will be
                  similarly adjusted upon any subsequent transaction analogous
                  to a Fundamental Transaction.

                  (x) Notwithstanding the foregoing, no adjustment will be made
                  under this paragraph (c) in respect of (A) the granting or
                  issuance of shares of capital stock or of options to
                  employees, officers, directors and consultants of the Company
                  pursuant to any stock option plan agreement or arrangement
                  duly adopted or approved by a majority of the non-employee
                  members of the Board of Directors of the Company or a majority
                  of the members of a committee of non-employee directors
                  established for such purpose, (B) upon the exercise of this
                  Debenture or any other Debenture of this series or of any
                  other series or security issued by the Company in connection
                  with the offer and sale of this Company's securities pursuant
                  to the Purchase Agreement, or (C) upon the exercise of or
                  conversion of any Common Stock Equivalents, rights, options or
                  warrants issued and outstanding on the Original Issue Date,
                  provided such securities have not been amended since the date
                  of the Purchase Agreement except as a result of the Purchase
                  Agreement, or (D) issuance of securities in connection with
                  acquisitions, strategic investments, or strategic partnering
                  arrangements, the primary purpose of which is not to raise
                  capital.

                  (d) The Company  covenants  that it will at all times  reserve
         and keep available out of its authorized and unissued  shares of Common
         Stock  solely  for the  purpose  of  issuance  upon  conversion  of the
         Debentures, each as herein provided, free from preemptive rights or any
         other  actual  contingent  purchase  rights of  persons  other than the
         Holders,  not less than such  number of shares of the  Common  Stock as
         shall  (subject  to any  additional  requirements  of the Company as to
         reservation  of such  shares set forth in the  Purchase  Agreement)  be
         issuable  (taking  into account the  adjustments  and  restrictions  of
         Section 4(b)) upon the conversion of the outstanding  principal  amount
         of the  Debentures  and  payment of  interest  hereunder.  The  Company
         covenants  that all shares of Common  Stock  that shall be so  issuable
         shall,  upon issue,  be duly and validly  authorized,  issued and fully
         paid,   nonassessable  and,  if  the  Underlying  Shares   Registration
         Statement  has  been  declared  effective  under  the  Securities  Act,
         registered for public sale in accordance  with such  Underlying  Shares
         Registration Statement.

                  (e) Upon a  conversion  hereunder  the  Company  shall  not be
         required to issue stock certificates  representing  fractions of shares
         of the  Common  Stock,  but  may if  otherwise  permitted,  make a cash
         payment  in  respect  of any  final  fraction  of a share  based on the

                                       14
<PAGE>

         Closing Price at such time. If the Company elects not, or is unable, to
         make such a cash payment,  the Holder shall be entitled to receive,  in
         lieu of the final fraction of a share, one whole share of Common Stock.

                  (f) The  issuance  of  certificates  for  shares of the Common
         Stock on conversion of the  Debentures  shall be made without charge to
         the Holders thereof for any documentary stamp or similar taxes that may
         be payable in respect  of the issue or  delivery  of such  certificate,
         provided that the Company shall not be required to pay any tax that may
         be payable in respect of any  transfer  involved  in the  issuance  and
         delivery of any such  certificate  upon conversion in a name other than
         that of the Holder of such  Debentures  so  converted  and the  Company
         shall not be required to issue or deliver such  certificates  unless or
         until the person or persons  requesting the issuance thereof shall have
         paid to the Company the amount of such tax or shall have established to
         the satisfaction of the Company that such tax has been paid.

                  (g) Any and all notices or other  communications or deliveries
         to be provided by the Holders hereunder, including, without limitation,
         any Notice of Conversion, shall be in writing and delivered personally,
         by  facsimile,  sent  by  a  nationally  recognized  overnight  courier
         service,  addressed  to the  Company,  at the address set forth  above,
         facsimile number (____) ___-_______,  Attn: _____________ or such other
         address  or  facsimile  number  as the  Company  may  specify  for such
         purposes by notice to the Holders  delivered  in  accordance  with this
         Section.  Any and all notices or other  communications or deliveries to
         be provided by the Company  hereunder shall be in writing and delivered
         personally,  by facsimile,  sent by a nationally  recognized  overnight
         courier  service  addressed to each Holder at the  facsimile  telephone
         number or address of such Holder appearing on the books of the Company,
         or if no such facsimile  telephone  number or address  appears,  at the
         principal  place  of  business  of the  Holder.  Any  notice  or  other
         communication  or  deliveries  hereunder  shall  be  deemed  given  and
         effective  on the  earliest  of (i) the date of  transmission,  if such
         notice or  communication  is delivered  via  facsimile at the facsimile
         telephone number specified in this Section prior to 5:30 p.m. (New York
         City  time),  (ii) the date  after  the date of  transmission,  if such
         notice or  communication  is delivered  via  facsimile at the facsimile
         telephone  number  specified in this Section  later than 5:30 p.m. (New
         York City time) on any date and earlier than 11:59 p.m.  (New York City
         time) on such date, (iii) the second Business Day following the date of
         mailing, if sent by nationally recognized overnight courier service, or
         (iv) upon  actual  receipt by the party to whom such notice is required
         to be given.

         Section 5. Reserved.

         Section 6. Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) the following terms shall have the following meanings:

                                       15
<PAGE>

                  "Business Day" means any day except  Saturday,  Sunday and any
         day which shall be a federal  legal  holiday in the United  States or a
         day on  which  banking  institutions  in the  State  of  New  York  are
         authorized or required by law or other government action to close.

                  "Change of Control Transaction" means the occurrence after the
         date  hereof of any of (i) an  acquisition  after the date hereof by an
         individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
         promulgated  under the  Exchange  Act) of  effective  control  (whether
         through legal or beneficial  ownership of capital stock of the Company,
         by contract or otherwise) of in excess of 40% of the voting  securities
         of the  Company,  or (ii) a  replacement  at one time or within a three
         year period of more than one-half of the members of the Company's board
         of directors  which is not approved by a majority of those  individuals
         who are  members of the board of  directors  on the date  hereof (or by
         those  individuals who are serving as members of the board of directors
         on any date whose  nomination to the board of directors was approved by
         a majority of the members of the board of directors  who are members on
         the date hereof), or (iii) the execution by the Company of an agreement
         to which the Company is a party or by which it is bound,  providing for
         any of the events set forth above in (i) or (ii).

                  "Commission" means the Securities and Exchange Commission.

                  "Common  Stock" means the common  stock,  $0.001 par value per
         share,  of the  Company  and stock of any other  class  into which such
         shares may hereafter have been reclassified or changed.

                  "Conversion Date" shall have the meaning set forth in Section
         4(a)(i) hereof.

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

                  "Interest  Conversion  Rate"  means the  lesser of (i) the Set
         Price and (ii) 90% of the  lesser of (a) the  average of the 20 Closing
         Prices immediately prior to the applicable Interest Payment Date or (b)
         the average of the 20 Closing Prices  immediately prior to the date the
         applicable  interest  payment  shares are issued and delivered if after
         the Interest Payment Date.

                  "Late Fees" shall have the meaning set forth in the second
         paragraph to this Debenture.

                  "Mandatory  Prepayment  Amount" for any Debentures shall equal
         the sum of (i) the  greater  of:  (A) 130% of the  principal  amount of
         Debentures to be prepaid,  plus all accrued and unpaid interest thereon
         and all other  accrued  and unpaid  amounts due  hereunder,  or (B) the
         principal  amount of Debentures  to be prepaid,  plus all other accrued
         and unpaid interest hereon and other amounts due hereunder,  divided by
         the Set  Price on (x) the  date  the  Mandatory  Prepayment  Amount  is
         demanded  or  otherwise  due or (y) the date the  Mandatory  Prepayment

                                       16
<PAGE>

         Amount is paid in full,  whichever is less,  multiplied  by the Closing
         Price on (x) the date the  Mandatory  Prepayment  Amount is demanded or
         otherwise due or (y) the date the Mandatory  Prepayment  Amount is paid
         in full,  whichever  is  greater,  and (ii) all other  amounts,  costs,
         expenses and liquidated damages due in respect of such Debentures.

                  "Original  Issue  Date"  shall  mean  the  date  of the  first
         issuance of the Debentures regardless of the number of transfers of any
         Debenture  and  regardless  of the number of  instruments  which may be
         issued to evidence such Debenture.

                  "Person" means a corporation,  an association,  a partnership,
         organization,  a business,  an  individual,  a government  or political
         subdivision thereof or a governmental agency.

                  "Purchase  Agreement" means the Securities Purchase Agreement,
         dated as of August __,  2003,  to which the  Company  and the  original
         Holder are parties,  as amended,  modified or supplemented from time to
         time in accordance with its terms.

                  "Registration  Rights Agreement" means the Registration Rights
         Agreement, dated as of the date of the Purchase Agreement, to which the
         Company and the original  Holder are parties,  as amended,  modified or
         supplemented from time to time in accordance with its terms.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.

                  "Set Price" shall have the meaning set forth in Section
         4(c)(i).

                  "Trading  Day"  means (a) a day on which the  shares of Common
         Stock are  traded on a  Principal  Market on which the shares of Common
         Stock are then listed or quoted,  or (b) if the shares of Common  Stock
         are not  quoted on a  Principal  Market,  a day on which the  shares of
         Common Stock are quoted in the  over-the-counter  market as reported by
         the National Quotation Bureau Incorporated (or any similar organization
         or agency succeeding its functions of reporting prices); provided, that
         in the event that the  shares of Common  Stock are not listed or quoted
         as set forth in (a), (b) and (c) hereof,  then Trading Day shall mean a
         Business Day.

                  "Transaction Documents" shall have the meaning set forth in
         the Purchase Agreement.

                  "Underlying  Shares" means the shares of Common Stock issuable
         upon  conversion  of Debentures or as payment of interest in accordance
         with the terms hereof.

                                       17
<PAGE>

                  "Underlying   Shares    Registration    Statement"   means   a
         registration  statement  meeting  the  requirements  set  forth  in the
         Registration  Rights Agreement,  covering among other things the resale
         of  the  Underlying   Shares  and  naming  the  Holder  as  a  "selling
         stockholder" thereunder.

      Section 7. Except as  expressly  provided  herein,  no  provision  of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional,  to pay the principal of, interest and liquidated damages (if
any) on,  this  Debenture  at the  time,  place,  and  rate,  and in the coin or
currency,  herein prescribed.  This Debenture is a direct debt obligation of the
Company.  This  Debenture  ranks  pari passu  with all other  Debentures  now or
hereafter issued under the terms set forth herein.  As long as this Debenture is
outstanding,  the  Company  shall not and shall  cause it  subsidiaries  not to,
without the consent of the Holders,  (a) amend its certificate of incorporation,
bylaws or other  charter  documents so as to adversely  affect any rights of the
Holders;  (b)  repay,  repurchase  or offer to repay,  repurchase  or  otherwise
acquire shares of its Common Stock or other equity  securities  other than as to
the Underlying  Shares to the extent permitted or required under the Transaction
Documents or as otherwise permitted by the Transaction  Documents;  or (c) enter
into any agreement with respect to any of the foregoing.

      Section  8.  If  this  Debenture  shall  be  mutilated,  lost,  stolen  or
destroyed,  the Company shall execute and deliver,  in exchange and substitution
for  and  upon  cancellation  of a  mutilated  Debenture,  or in  lieu  of or in
substitution for a lost, stolen or destroyed Debenture,  a new Debenture for the
principal amount of this Debenture so mutilated,  lost,  stolen or destroyed but
only upon  receipt  of  evidence  of such  loss,  theft or  destruction  of such
Debenture,  and of the  ownership  hereof,  and  indemnity,  if  requested,  all
reasonably satisfactory to the Company.

      Section  9.  Except as  provided  below in this  Section 9, so long as any
portion of this  Debenture  is  outstanding,  the Company  will not and will not
permit any of its subsidiaries to, directly or indirectly,  enter into,  create,
incur,  assume  or  suffer to exist  any  indebtedness  of any kind,  on or with
respect to any of its property or assets now owned or hereafter  acquired or any
interest  therein  or any  income  or  profits  therefrom  that is senior in any
respect to the  Company's  obligations  under the  Debentures  without the prior
consent of the Holder, which consent shall not be unreasonably withheld.

      Notwithstanding  the  foregoing  and anything else to the contrary in this
Debenture or any other Transaction Document, the Company shall have the right in
its sole and absolute discretion to enter into one or more factoring  agreements
and/or other type of  receivables  financing  with any party or parties on terms
acceptable  to the  Company  so long as it  shall  first  offer  such  factoring
agreement  and  terms  (the  "Factoring  Proposal")  on a pro rata  basis to the
Purchasers,  who shall have a right of first refusal with respect  thereto.  The
Company  shall send each  Factoring  Proposal,  if any,  to the  Purchasers  via
facsimile  and the  Purchasers  shall have 2 Business Days in which to deliver a
binding written commitment accepting such Factoring Proposal. Failure to respond
within  such  time  shall be deemed a waiver of such  right of  refusal  and the
Company shall have the right to enter into the  Factoring  Proposal with a party
or parties  other than the  Purchasers.  To the extent the  Purchasers  exercise
their  right  of  first  refusal,  they  may  apportion  the  factoring  amongst

                                       18
<PAGE>

themselves  in any manner,  so long as in the  aggregate the amount and terms of
factoring  provided  is  equal  to or more  favorable  to the  Company  than the
Factoring Proposal.

      Section  10.  All  questions   concerning  the   construction,   validity,
enforcement  and  interpretation  of this  Debenture  shall be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York,  without regard to the principles of conflicts of law thereof.  Each party
agrees that all legal proceedings  concerning the  interpretations,  enforcement
and defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts  sitting in the City of New York,  Borough of Manhattan (the "New
York  Courts").  Each party hereto hereby  irrevocably  submits to the exclusive
jurisdiction  of the  New  York  Courts  for  the  adjudication  of any  dispute
hereunder or in connection herewith or with any transaction  contemplated hereby
or discussed  herein  (including  with respect to the  enforcement of any of the
Transaction Documents),  and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding,  any claim that it is not personally  subject
to the  jurisdiction  of any such court, or such New York Courts are improper or
inconvenient  venue for such proceeding.  Each party hereby  irrevocably  waives
personal  service of process and  consents to process  being  served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or  overnight  delivery  (with  evidence of  delivery) to such party at the
address in effect for  notices to it under this  Debenture  and agrees that such
service  shall  constitute  good and  sufficient  service of process  and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any manner  permitted  by law.  Each  party  hereto  hereby
irrevocably  waives,  to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions  contemplated  hereby.  If either party shall
commence an action or  proceeding to enforce any  provisions of this  Debenture,
then the  prevailing  party in such action or proceeding  shall be reimbursed by
the other party for its reasonable  attorneys' fees and other costs and expenses
incurred with the  investigation,  preparation and prosecution of such action or
proceeding.

      Section  11.  Any  waiver by the  Company or the Holder of a breach of any
provision of this Debenture  shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this  Debenture.  The failure of the Company or the Holder to insist upon strict
adherence to any term of this  Debenture on one or more  occasions  shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict  adherence to that term or any other term of this  Debenture.  Any waiver
must be in writing.

      Section 12. If any  provision  of this  Debenture  is invalid,  illegal or
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance,  it shall  nevertheless
remain applicable to all other persons and  circumstances.  If it shall be found
that any  interest  or other  amount  deemed  interest  due  hereunder  violates
applicable laws governing  usury,  the applicable rate of interest due hereunder

                                       19
<PAGE>

shall  automatically be lowered to equal the maximum permitted rate of interest.
The Company  covenants  (to the extent that it may lawfully do so) that it shall
not at any time insist upon,  plead, or in any manner  whatsoever  claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would  prohibit  or forgive  the  Company  from paying all or any portion of the
principal of or interest on the  Debentures  as  contemplated  herein,  wherever
enacted,  now or at any time  hereafter  in  force,  or  which  may  affect  the
covenants or the performance of this  indenture,  and the Company (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

      Section 13.  Whenever any payment or other  obligation  hereunder shall be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding Business Day.

                              *********************

                                       20
<PAGE>

         IN WITNESS WHEREOF,  the Company has caused this Convertible  Debenture
to be duly  executed  by a duly  authorized  officer as of the date first  above
indicated.

                                    QT 5, INC.

                                    By:_________________________________________
                                        Name:
                                        Title:

                                       21

<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

The  undersigned  hereby elects to convert  principal  under the 6%  Convertible
Debenture of QT 5, Inc. (the "Company"), due on __________ __, 2008, into shares
of common stock, $0.001 par value per share (the "Common Stock"), of the Company
according to the conditions  hereof, as of the date written below. If shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all  transfer  taxes  payable with  respect  thereto and is  delivering
herewith such  certificates and opinions as reasonably  requested by the Company
in  accordance  therewith.  No fee  will  be  charged  to  the  holder  for  any
conversion, except for such transfer taxes, if any.

By the delivery of this Notice of  Conversion  the  undersigned  represents  and
warrants to the Company that its  ownership of the  Company's  Common Stock does
not exceed the  amounts  determined  in  accordance  with  Section  13(d) of the
Exchange Act, specified under Section 4 of this Debenture.

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable  securities laws in connection with any transfer of the aforesaid
shares of Common Stock.

Conversion calculations:
                    Date to Effect Conversion:

                    Principal Amount of Debentures to be Converted:

                    Payment of Interest in Common Stock __ yes  __ no
                             If yes,  $_____ of Interest  Accrued on Account of
                             Conversion at Issue.

                    Number of shares of Common  Stock to be issued:

                    Signature:

                    Name:

                    Address:

                                       22

<PAGE>

                                   Schedule 1

                               CONVERSION SCHEDULE

6%  Convertible  Debentures  due  on  ____________________  ___,  2008,  in  the
aggregate principal amount of $____________ issued by QT 5, Inc. This Conversion
Schedule  reflects  conversions  made  under  Section 4 of the above  referenced
Debenture.

                                     Dated:

<TABLE>
<CAPTION>
=============================== ------------------------- ======================= ------------------------------

                                                           Aggregate Principal
                                                             Amount Remaining
      Date of Conversion                                      Subsequent to
(or for first entry, Original                                   Conversion
         Issue Date)              Amount of Conversion         (or original              Company Attest
                                                            Principal Amount)
------------------------------- ------------------------- ----------------------- ------------------------------
<S>                             <C>                       <C>                     <C>

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

------------------------------- ------------------------- ----------------------- ------------------------------

=============================== ========================= ======================= ------------------------------
</TABLE>

                                       23Exhibit 10(h)(4)

                      THE COMTECH TELECOMMUNICATIONS CORP.

                            2000 STOCK INCENTIVE PLAN

                              AMENDED AND RESTATED

                          (EFFECTIVE OCTOBER 15, 2002)

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I PURPOSE..............................................................1
ARTICLE II DEFINITIONS.........................................................1
   2.1      "Acquisition Event"................................................1
   2.2      "Affiliate"........................................................1
   2.3      "Award"............................................................1
   2.4      "Board"............................................................2
   2.5      "Cause"............................................................2
   2.6      "Change in Control"................................................2
   2.7      "Code".............................................................2
   2.8      "Committee"........................................................2
   2.9      "Common Stock".....................................................2
   2.10     "Company"..........................................................3
   2.11     "Consultant".......................................................3
   2.12     "Detrimental Activity".............................................3
   2.13     "Disparagement"....................................................3
   2.14     "Disability".......................................................4
   2.15     "Effective Date"...................................................4
   2.16     "Eligible Employee"................................................4
   2.17     "Exchange Act".....................................................4
   2.18     "Family Member"....................................................4
   2.19     "Fair Market Value"................................................4
   2.20     "Foreign Jurisdiction".............................................5
   2.21     "Incentive Stock Option"...........................................5
   2.22     "Limited Stock Appreciation Right".................................5
   2.23     "Non-Employee Director"............................................5
   2.24     "Non-Qualified Stock Option".......................................5
   2.25     "Non-Tandem Stock Appreciation Right"..............................5
   2.26     "Other Stock-Based Award"..........................................5
   2.27     "Parent"...........................................................5
   2.28     "Participant"......................................................5
   2.29     "Performance Criteria".............................................5
   2.30     "Performance Cycle"................................................5
   2.31     "Performance Goal".................................................5
   2.32     "Performance Period"...............................................6
   2.33     "Performance Share"................................................6
   2.34     "Performance Unit".................................................6
   2.35     "Plan".............................................................6
   2.36     "Reference Stock Option"...........................................6
   2.37     "Restricted Stock".................................................6
   2.38     "Restriction Period"...............................................6
   2.39     "Retirement".......................................................6
   2.40     "Rule 16b-3".......................................................6

<PAGE>

   2.41     "Section 162(m) of the Code".......................................6
   2.42     "Securities Act"...................................................6
   2.43     "Stock Appreciation Right" or "SAR"................................6
   2.44     "Stock Option" or "Option".........................................6
   2.45     "Subsidiary".......................................................6
   2.46     "Tandem Stock Appreciation Right"..................................7
   2.47     "Ten Percent Stockholder"..........................................7
   2.48     "Termination of Consultancy".......................................7
   2.49     "Termination of Directorship"......................................7
   2.50     "Termination of Employment"........................................7
   2.51     "Transfer".........................................................7
ARTICLE III ADMINISTRATION.....................................................7
   3.1      The Committee......................................................7
   3.2      Grants of Awards...................................................8
   3.3      Guidelines.........................................................9
   3.4      Decisions Final....................................................9
   3.5      Reliance on Counsel................................................9
   3.6      Procedures.........................................................9
   3.7      Designation of Consultants/Liability..............................10
ARTICLE IV SHARE AND OTHER LIMITATIONS........................................11
   4.1      Shares............................................................11
   4.2      Changes...........................................................12
   4.3      Minimum Purchase Price............................................14
   4.4      Assumption of Awards..............................................14
ARTICLE V ELIGIBILITY.........................................................14
   5.1      General Eligibility...............................................14
   5.2      Incentive Stock Options...........................................14
   5.3      Non-Employee Directors............................................14
ARTICLE VI STOCK OPTIONS......................................................14
   6.1      Stock Options.....................................................14
   6.2      Grants............................................................14
   6.3      Terms of Stock Options............................................15
ARTICLE VII STOCK APPRECIATION RIGHTS.........................................17
   7.1      Tandem Stock Appreciation Rights..................................17
   7.2      Terms and Conditions of Tandem Stock Appreciation Rights..........17
   7.3      Non-Tandem Stock Appreciation Rights..............................19
   7.4      Terms and Conditions of Non-Tandem Stock Appreciation Rights......19
   7.5      Limited Stock Appreciation Rights.................................20
ARTICLE VIII RESTRICTED STOCK.................................................20
   8.1      Awards of Restricted Stock........................................20
   8.2      Awards and Certificates...........................................21
   8.3      Restrictions and Conditions on Restricted Stock Awards............21
ARTICLE IX PERFORMANCE SHARES.................................................23
   9.1      Award of Performance Shares.......................................23
   9.2      Terms and Conditions..............................................23
ARTICLE X PERFORMANCE UNITS...................................................24

<PAGE>

   10.1     Awards of Performance Units.......................................24
   10.2     Terms and Conditions..............................................25
ARTICLE XI OTHER STOCK-BASED AWARDS...........................................27
   11.1     Other Awards......................................................27
   11.2     Terms and Conditions..............................................27
ARTICLE XII NON-TRANSFERABILITY AND TERMINATION  OF EMPLOYMENT/CONSULTANCY....28
   12.1     Non-Transferability...............................................28
   12.2     Termination of Employment or Termination of Consultancy...........28
ARTICLE XIII NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS........................30
   13.1     Stock Options.....................................................30
   13.2     Grants............................................................30
   13.3     Non-Qualified Stock Options.......................................31
   13.4     Terms of Stock Options............................................31
   13.5     Termination of Directorship.......................................32
   13.6     Acceleration of Exercisability....................................32
   13.7     Changes...........................................................32
ARTICLE XIV CHANGE IN CONTROL PROVISIONS......................................33
   14.1     Benefits..........................................................33
   14.2     Change in Control.................................................34
ARTICLE XV TERMINATION OR AMENDMENT OF PLAN...................................35
ARTICLE XVI UNFUNDED PLAN.....................................................36
   16.1     Unfunded Status of Plan...........................................36
ARTICLE XVII GENERAL PROVISIONS...............................................36
   17.1     Legend............................................................36
   17.2     Other Plans.......................................................36
   17.3     Right to Employment/Consultancy...................................37
   17.4     Withholding of Taxes..............................................37
   17.5     Listing and Other Conditions......................................37
   17.6     Governing Law.....................................................38
   17.7     Construction......................................................38
   17.8     Other Benefits....................................................38
   17.9     Costs.............................................................38
   17.10       No Right to Same Benefits......................................38
   17.11       Death/Disability...............................................38
   17.12       Section 16(b) of the Exchange Act..............................38
   17.13       Severability of Provisions.....................................38
   17.14       Headings and Captions..........................................38
ARTICLE XVIII EFFECTIVE DATE OF PLAN..........................................39
ARTICLE XIX TERM OF PLAN......................................................39

<PAGE>

                      THE COMTECH TELECOMMUNICATIONS CORP.

                           ---------------------------
                            2000 STOCK INCENTIVE PLAN
                           ---------------------------

                              AMENDED AND RESTATED

                          (EFFECTIVE OCTOBER 15, 2002)

                                   ARTICLE I

                                     PURPOSE

      The purpose of The Comtech Telecommunications Corp. 2000 Stock Incentive
Plan is to enhance the profitability and value of the Company for the benefit of
its stockholders by enabling the Company: (i) to offer employees of and
Consultants to the Company and its Affiliates stock-based incentives and other
equity interests in the Company, thereby creating a means to raise the level of
stock ownership by employees and Consultants in order to attract, retain and
reward such individuals and strengthen the mutuality of interests between such
individuals and the Company's stockholders; and (ii) to make equity based awards
to Non-Employee Directors, thereby creating a means to attract, retain and
reward such Non-Employee Directors and strengthen the mutuality of interests
between Non-Employee Directors and the Company's stockholders.

                                   ARTICLE II

                                   DEFINITIONS

      For purposes of this Plan, the following terms shall have the following
meanings:

            2.1 "Acquisition Event" has the meaning set forth in Section 4.2(d).

            2.2 "Affiliate" means each of the following: (i) any Subsidiary;
      (ii) any Parent; (iii) any corporation, trade or business (including,
      without limitation, a partnership or limited liability company) which is
      directly or indirectly controlled 50% or more (whether by ownership of
      stock, assets or an equivalent ownership interest or voting interest) by
      the Company or one of its Affiliates; and (iv) any other entity in which
      the Company or any of its Affiliates has a material equity interest and
      which is designated as an "Affiliate" by resolution of the Committee.

            2.3 "Award" means any award under this Plan of any: (i) Stock
      Option; (ii) Stock Appreciation Right; (iii) Restricted Stock; (iv)
      Performance Share;

                                       1
<PAGE>

      (v) Performance Unit; (vi) Other Stock-Based Award; or (vii) other award
      providing benefits similar to (i) through (vi) designed to meet the
      requirements of a Foreign Jurisdiction.

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

            2.5 "Cause" means, with respect to a Participant's Termination of
      Employment or Termination of Consultancy: (i) in the case where there is
      no employment agreement, consulting agreement, change in control agreement
      or similar agreement in effect between the Company or an Affiliate and the
      Participant at the time of the grant of the Award (or where there is such
      an agreement but it does not define "cause" (or words of like import)),
      termination due to a Participant's commission of a fraud or a felony in
      connection with his or her duties as an employee of the Company or an
      Affiliate, willful misconduct or any act of disloyalty, dishonesty, fraud,
      breach of trust or confidentiality as to the Company or an Affiliate or
      any other act which is intended to cause or may reasonably be expected to
      cause economic or reputational injury to the Company or an Affiliate; or
      (ii) in the case where there is an employment agreement, consulting
      agreement, change in control agreement or similar agreement in effect
      between the Company or an Affiliate and the Participant at the time of the
      grant of the Award that defines "cause" (or words of like import), as
      defined under such agreement; provided, however, that with regard to any
      agreement that conditions "cause" on occurrence of a change in control,
      such definition of "cause" shall not apply until a change in control
      actually takes place and then only with regard to a termination
      thereafter. With respect to a Participant's Termination of Directorship,
      "cause" shall mean an act or failure to act that constitutes cause for
      removal of a director under applicable Delaware law.

            2.6 "Change in Control" has the meaning set forth in Article XIII or
      Article XIV, as applicable.

            2.7 "Code" means the Internal Revenue Code of 1986, as amended. Any
      reference to any section of the Code shall also be a reference to any
      successor provision.

            2.8 "Committee" means: (a) with respect to the application of this
      Plan to Eligible Employees and Consultants, a committee or subcommittee of
      the Board appointed from time to time by the Board, which committee or
      subcommittee shall consist of two or more non-employee directors, each of
      whom is intended to be, to the extent required by Rule 16b-3, a
      "non-employee director" as defined in Rule 16b-3 and, to the extent
      required by Section 162(m) of the Code and any regulations thereunder, an
      "outside director" as defined under Section 162(m) of the Code; provided,
      however, that if and to the extent that no Committee exists which has the
      authority to administer this Plan, the functions of the Committee shall be
      exercised by the Board and all references herein to the Committee shall be
      deemed to be references to the Board; and (b) with respect to the
      application of this Plan to Non-Employee Directors, the Board.

            2.9 "Common Stock" means the common stock, $.10 par value per share,
      of the Company.

                                       2
<PAGE>

            2.10 "Company" means Comtech Telecommunications Corp., a Delaware
      corporation, and its successors by operation of law.

            2.11 "Consultant" means any advisor or consultant to the Company or
      its Affiliates.

            2.12 "Detrimental Activity" means (a) the disclosure to anyone
      outside the Company or its Affiliates, or the use in any manner other than
      in the furtherance of the Company's or its Affiliate's business, without
      written authorization from the Company, of any confidential information or
      proprietary information, relating to the business of the Company or its
      Affiliates, acquired by a Participant prior to the Participant's
      Termination; (b) activity while employed that results, or if known could
      result, in the Participant's Termination that is classified by the Company
      as a Termination for Cause; (c) any attempt, directly or indirectly, to
      solicit, induce or hire (or the identification for solicitation,
      inducement or hire) any non-clerical employee of the Company or its
      Affiliates to be employed by, or to perform services for, the Participant
      or any person or entity with which the Participant is associated
      (including, but not limited to, due to the Participant's employment by,
      consultancy for, equity interest in, or creditor relationship with such
      person or entity) or any person or entity from which the Participant
      receives direct or indirect compensation or fees as a result of such
      solicitation, inducement or hire (or the identification for solicitation,
      inducement or hire) without, in all cases, written authorization from the
      Company; (d) any attempt, directly or indirectly, to solicit in a
      competitive manner any current or prospective customer of the Company or
      its Affiliates without, in all cases, written authorization from the
      Company; (e) the Participant's Disparagement, or inducement of others to
      do so, of the Company or its Affiliates or their past and present
      officers, directors, employees or products; (f) without written
      authorization from the Company, the rendering of services for any
      organization, or engaging, directly or indirectly, in any business, which
      is competitive with the Company or its Affiliates, or which organization
      or business, or the rendering of services to such organization or
      business, is otherwise prejudicial to or in conflict with the interests of
      the Company or its Affiliates, or (g) breach of any agreement between the
      Participant and the Company or an Affiliate (including, without
      limitation, any employment agreement or non-competition or
      non-solicitation agreement). Unless otherwise determined by the Committee
      at grant, Detrimental Activity shall not be deemed to occur after the end
      of the one-year period following the Participant's Termination. For
      purposes of subsections (a), (c), (d) and (f) above, the Chief Executive
      Officer and the General Counsel of the Company shall each have authority
      to provide the Participant with written authorization to engage in the
      activities contemplated thereby and no other person shall have authority
      to provide the Participant with such authorization.

            2.13 "Disparagement" means making comments or statements to the
      press, the Company's or its Affiliates' employees, consultants or any
      individual or entity with whom the Company or its Affiliates has a
      business relationship which would adversely affect in any manner: the
      conduct of the business of the Company or its Affiliates (including,
      without limitation, any products or business plans or prospects), or the
      business reputation of the Company or its Affiliates, or any of their
      products, or their past or present officers, directors or employees.

                                       3
<PAGE>

            2.14 "Disability" means, with respect to an Eligible Employee,
      Consultant or Non-Employee Director, a permanent and total disability, as
      determined by the Committee in its sole discretion, provided that in no
      event shall any disability that is not a permanent and total disability,
      as defined in Section 22(e)(3) of the Code, shall be treated as a
      Disability. A Disability shall only be deemed to occur at the time of the
      determination by the Committee of the Disability.

            2.15 "Effective Date" means the effective date of this Plan as
      defined in Article XVIII.

            2.16 "Eligible Employee" means each employee of the Company or an
      Affiliate.

            2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
      amended. Any references to any section of the Exchange Act shall also be a
      reference to any successor provision.

            2.18 "Family Member" shall mean any child, stepchild, grandchild,
      parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
      nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
      brother-in-law, or sister-in-law, including adoptive relationships, any
      person sharing the employee's household (other than a tenant or employee),
      a trust in which these persons have more than 50% of the beneficial
      interest, a foundation in which these persons (or the employee) control
      the management of assets, and any other entity in which these persons (or
      the employee) own more than 50% of the voting interests.

            2.19 "Fair Market Value" means, unless otherwise required by any
      applicable provision of the Code or any regulations issued thereunder, as
      of any date, the last sales price for the Common Stock on the applicable
      date: (i) as reported on the principal national securities exchange on
      which it is then traded or the Nasdaq Stock Market, Inc. or (ii) if not
      traded on any such national securities exchange or the Nasdaq Stock
      Market, Inc. as quoted on an automated quotation system sponsored by the
      National Association of Securities Dealers, Inc. If the Common Stock is
      not readily tradable on a national securities exchange, the Nasdaq Stock
      Market, Inc. or any automated quotation system sponsored by the National
      Association of Securities Dealers, Inc., its Fair Market Value shall be
      set in good faith by the Committee. Notwithstanding anything herein to the
      contrary, "Fair Market Value" means the price for Common Stock set by the
      Committee in good faith based on reasonable methods set forth under
      Section 422 of the Code and the regulations thereunder including, without
      limitation, a method utilizing the average of prices of the Common Stock
      reported on the principal national securities exchange on which it is then
      traded during a reasonable period designated by the Committee. For
      purposes of the grant of any Stock Option, the applicable date shall be
      the date for which the last sales price is available at the time of grant.
      For purposes of the conversion of a Performance Unit to shares of Common
      Stock for reference purposes, the applicable date shall be the date
      determined by the Committee in accordance with Section 10.1. For purposes
      of the exercise of any Stock Appreciation Right, the applicable date shall
      be the

                                       4
<PAGE>

      date a notice of exercise is received by the Committee or, if not a day on
      which the applicable market is open, the next day that it is open.

            2.20 "Foreign Jurisdiction" means any jurisdiction outside of the
      United States including, without limitation, countries, states, provinces
      and localities.

            2.21 "Incentive Stock Option" means any Stock Option awarded to an
      Eligible Employee under this Plan intended to be and designated as an
      "Incentive Stock Option" within the meaning of Section 422 of the Code.

            2.22 "Limited Stock Appreciation Right" means an Award of a limited
      Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right
      made pursuant to Section 7.5 of this Plan.

            2.23 "Non-Employee Director" means a director of the Company who is
      not an active employee of the Company or an Affiliate and who is not an
      officer, director or employee of the Company or any Affiliate.

            2.24 "Non-Qualified Stock Option" means any Stock Option awarded
      under this Plan that is not an Incentive Stock Option.

            2.25 "Non-Tandem Stock Appreciation Right" means a Stock
      Appreciation Right entitling a Participant to receive an amount in cash or
      Common Stock (as determined by the Committee in its sole discretion) equal
      to the excess of: (i) the Fair Market Value of a share of Common Stock as
      of the date such right is exercised, over (ii) the aggregate exercise
      price of such right.

            2.26 "Other Stock-Based Award" means an Award of Common Stock and
      other Awards made pursuant to Article XI that are valued in whole or in
      part by reference to, or are payable in or otherwise based on, Common
      Stock, including, without limitation, an Award valued by reference to
      performance of an Affiliate.

            2.27 "Parent" means any parent corporation of the Company within the
      meaning of Section 424(e) of the Code.

            2.28 "Participant" means any Eligible Employee or Consultant to whom
      an Award has been made under this Plan and each Non-Employee Director of
      the Company; provided, however, that a Non-Employee Director shall be a
      Participant for purposes of the Plan solely with respect to awards of
      Stock Options pursuant to Article XIII.

            2.29 "Performance Criteria" has the meaning set forth in Exhibit A.

            2.30 "Performance Cycle" has the meaning set forth in Section 10.1.

            2.31 "Performance Goal" means the objective performance goals
      established by the Committee in accordance with Section 162(m) of the Code
      and based on one or more Performance Criteria.

                                       5
<PAGE>

            2.32 "Performance Period" has the meaning set forth in Section 9.1.

            2.33 "Performance Share" means an Award made pursuant to Article IX
      of this Plan of the right to receive Common Stock or, as determined by the
      Committee in its sole discretion, cash of an equivalent value at the end
      of the Performance Period or thereafter.

            2.34 "Performance Unit" means an Award made pursuant to Article X of
      this Plan of the right to receive a fixed dollar amount, payable in cash
      or Common Stock (or a combination of both) as determined by the Committee
      in its sole discretion, at the end of a specified Performance Cycle or
      thereafter.

            2.35 "Plan" means The Comtech Telecommunications Corp. 2000 Stock
      Incentive Plan.

            2.36 "Reference Stock Option" has the meaning set forth in Section
      7.1.

            2.37 "Restricted Stock" means an Award of shares of Common Stock
      under this Plan that is subject to restrictions under Article VIII.

            2.38 "Restriction Period" has the meaning set forth in Section
      8.3(a) with respect to Restricted Stock.

            2.39 "Retirement" means a Termination of Employment or Termination
      of Consultancy without Cause by a Participant at or after age 65 or such
      earlier date after age 50 as may be approved by the Committee with regard
      to such Participant. With respect to a Participant's Termination of
      Directorship, Retirement shall mean the failure to stand for reelection or
      the failure to be reelected at or after a Participant has attained age 65
      or, with the consent of the Board, before age 65 but after age 50.

            2.40 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
      Exchange Act as then in effect or any successor provisions.

            2.41 "Section 162(m) of the Code" means Section 162(m) of the Code
      and any Treasury regulations thereunder.

            2.42 "Securities Act" means the Securities Act of 1933, as amended.
      Any reference to any section of the Securities Act shall also be a
      reference to any successor provision.

            2.43 "Stock Appreciation Right" or "SAR" means the right pursuant to
      an Award granted under Article VII.

            2.44 "Stock Option" or "Option" means any option to purchase shares
      of Common Stock granted to Eligible Employees or Consultants under Article
      VI or to Non-Employee Directors under Article XIII.

            2.45 "Subsidiary" means any subsidiary corporation of the Company
      within the meaning of Section 424(f) of the Code.

                                       6
<PAGE>

            2.46 "Tandem Stock Appreciation Right" means a Stock Appreciation
      Right entitling the holder to surrender to the Company all (or a portion)
      of a Stock Option in exchange for an amount in cash or Common Stock (as
      determined by the Committee in its sole discretion) equal to the excess
      of: (i) the Fair Market Value, on the date such Stock Option (or such
      portion thereof) is surrendered, of the Common Stock covered by such Stock
      Option (or such portion thereof), over (ii) the aggregate exercise price
      of such Stock Option (or such portion thereof).

            2.47 "Ten Percent Stockholder" means a person owning stock
      possessing more than 10% of the total combined voting power of all classes
      of stock of the Company, its Subsidiaries or its Parent.

            2.48 "Termination of Consultancy" means, with respect to a
      Consultant, that the Consultant is no longer acting as a consultant to the
      Company or an Affiliate. In the event an entity shall cease to be an
      Affiliate, there shall be deemed a Termination of Consultancy of any
      individual who is not otherwise a Consultant to the Company or another
      Affiliate at the time the entity ceases to be an Affiliate. In the event
      that a Consultant becomes an Eligible Employee upon the termination of his
      consultancy, the Committee, in its sole and absolute discretion, may
      determine that no Termination of Consultancy shall be deemed to occur
      until such time as such Consultant is no longer a Consultant or an
      Eligible Employee.

            2.49 "Termination of Directorship" means, with respect to a
      Non-Employee Director, that the Non-Employee Director has ceased to be a
      director of the Company.

            2.50 "Termination of Employment" means: (i) a termination of
      employment (for reasons other than a military or personal leave of absence
      granted by the Company) of a Participant from the Company and its
      Affiliates; or (ii) when an entity which is employing a Participant ceases
      to be an Affiliate, unless the Participant otherwise is, or thereupon
      becomes, employed by the Company or another Affiliate. In the event that
      an Eligible Employee becomes a Consultant upon the termination of his
      employment, the Committee, in its sole and absolute discretion, may
      determine that no Termination of Employment shall be deemed to occur until
      such time as such Eligible Employee is no longer an Eligible Employee or a
      Consultant.

            2.51 "Transfer" means anticipate, alienate, attach, sell, assign,
      pledge, encumber, charge, hypothecate or otherwise transfer and
      "Transferred" has a correlative meaning.

                                  ARTICLE III

                                 ADMINISTRATION

            3.1 The Committee. The Plan shall be administered and interpreted by
      the Committee. If for any reason the appointed Committee does not meet the
      requirements of Rule 16b-3 or Section 162(m) of the Code, such
      noncompliance with the requirements

                                       7
<PAGE>

      of Rule 16b-3 and Section 162(m) of the Code shall not affect the validity
      of Awards, grants, interpretations or other actions of the Committee.

            3.2 Grants of Awards. The Committee shall have full authority to
      grant to Eligible Employees and Consultants, pursuant to the terms of this
      Plan: (i) Stock Options; (ii) Tandem Stock Appreciation Rights and
      Non-Tandem Stock Appreciation Rights; (iii) Restricted Stock; (iv)
      Performance Shares; (v) Performance Units; (vi) Other Stock-Based Awards;
      and (vii) other awards providing benefits similar to (i) through (vi)
      designed to meet the requirements of Foreign Jurisdictions. All Awards
      shall be granted by, confirmed by, and subject to the terms of, a written
      agreement executed by the Company and the Participant. In particular, the
      Committee shall have the authority:

                  (a) to select the Eligible Employees and Consultants to whom
            Awards may from time to time be granted hereunder;

                  (b) to determine whether and to what extent Awards, including
            any combination of two or more Awards, are to be granted hereunder
            to one or more Eligible Employees or Consultants;

                  (c) to determine, in accordance with the terms of this Plan,
            the number of shares of Common Stock to be covered by each Award
            granted hereunder;

                  (d) to determine the terms and conditions, not inconsistent
            with the terms of this Plan, of any Award granted hereunder
            (including, but not limited to, the exercise or purchase price (if
            any), any restriction or limitation, any vesting schedule or
            acceleration thereof and any forfeiture restrictions or waiver
            thereof, regarding any Award and the shares of Common Stock relating
            thereto, based on such factors, if any, as the Committee shall
            determine, in its sole discretion);

                  (e) to determine whether and under what circumstances a Stock
            Option may be settled in cash, Common Stock and/or Restricted Stock
            under Section 6.3(d) or, with respect to Stock Options granted to
            Non-Employee Directors, Section 13.4(d);

                  (f) to determine whether, to what extent and under what
            circumstances to provide loans (which shall bear interest at the
            rate the Committee shall provide) to Eligible Employees and
            Consultants in order to exercise Stock Options under this Plan or to
            purchase Awards under this Plan (including shares of Common Stock);

                  (g) to determine whether a Stock Option is an Incentive Stock
            Option or Non-Qualified Stock Option, whether a Stock Appreciation
            Right is a Tandem Stock Appreciation Right or Non-Tandem Stock
            Appreciation Right or whether an Award is intended to satisfy
            Section 162(m) of the Code;

                  (h) to determine whether to require an Eligible Employee or
            Consultant, as a condition of the granting of any Award, not to sell
            or otherwise dispose of shares of Common Stock acquired pursuant to
            the exercise of an

                                       8
<PAGE>

            Option or an Award for a period of time as determined by the
            Committee, in its sole discretion, following the date of the
            acquisition of such Option or Award;

                  (i) to modify, extend or renew an Award, subject to Article XV
            herein, provided, however, that if an Award is modified, extended or
            renewed and thereby deemed to be the issuance of a new Award under
            the Code or the applicable accounting rules, the exercise price of
            an Award may continue to be the original exercise price even if less
            than the Fair Market Value of the Common Stock at the time of such
            modification, extension or renewal; and

                  (j) to offer to buy out an Option previously granted, based on
            such terms and conditions as the Committee shall establish and
            communicate to the Participant at the time such offer is made.

            3.3 Guidelines. Subject to Article XV hereof, the Committee shall
      have the authority to adopt, alter and repeal such administrative rules,
      guidelines and practices governing this Plan and perform all acts,
      including the delegation of its administrative responsibilities, as it
      shall, from time to time, deem advisable; to construe and interpret the
      terms and provisions of this Plan and any Award issued under this Plan
      (and any agreements relating thereto); and to otherwise supervise the
      administration of this Plan. The Committee may correct any defect, supply
      any omission or reconcile any inconsistency in this Plan or in any
      agreement relating thereto in the manner and to the extent it shall deem
      necessary to effectuate the purpose and intent of this Plan. The Committee
      may adopt special guidelines and provisions for persons who are residing
      in, or subject to, the taxes of, Foreign Jurisdictions to comply with
      applicable tax and securities laws and may impose any limitations and
      restrictions that it deems necessary to comply with the applicable tax and
      securities laws of such Foreign Jurisdictions. To the extent applicable,
      this Plan is intended to comply with Section 162(m) of the Code and the
      applicable requirements of Rule 16b-3 and shall be limited, construed and
      interpreted in a manner so as to comply therewith.

            3.4 Decisions Final. Any decision, interpretation or other action
      made or taken in good faith by or at the direction of the Company, the
      Board or the Committee (or any of its members) arising out of or in
      connection with this Plan shall be within the absolute discretion of all
      and each of them, as the case may be, and shall be final, binding and
      conclusive on the Company and all employees and Participants and their
      respective heirs, executors, administrators, successors and assigns.

            3.5 Reliance on Counsel. The Company, the Board or the Committee may
      consult with legal counsel, who may be counsel for the Company or other
      counsel, with respect to its obligations or duties hereunder, or with
      respect to any action or proceeding or any question of law, and shall not
      be liable with respect to any action taken or omitted by it in good faith
      pursuant to the advice of such counsel.

            3.6 Procedures. If the Committee is appointed, the Board shall
      designate one of the members of the Committee as chairman and the
      Committee shall hold meetings, subject to the By-Laws of the Company, at
      such times and places as it shall deem

                                       9
<PAGE>

      advisable. A majority of the Committee members shall constitute a quorum.
      All determinations of the Committee shall be made by a majority of its
      members. Any decision or determination reduced to writing and signed by
      all the Committee members in accordance with the By-Laws of the Company,
      shall be fully as effective as if it had been made by a vote at a meeting
      duly called and held. The Committee shall keep minutes of its meetings and
      shall make such rules and regulations for the conduct of its business as
      it shall deem advisable.

            3.7 Designation of Consultants/Liability.

                  (a) The Committee may designate employees of the Company and
            professional advisors to assist the Committee in the administration
            of this Plan and may grant authority to officers to execute
            agreements or other documents on behalf of the Committee.

                  (b) The Committee may employ such legal counsel, consultants
            and agents as it may deem desirable for the administration of this
            Plan and may rely upon any opinion received from any such counsel or
            consultant and any computation received from any such consultant or
            agent. Expenses incurred by the Committee in the engagement of any
            such counsel, consultant or agent shall be paid by the Company. The
            Committee, its members and any employee of the Company designated
            pursuant to paragraph (a) above shall not be liable for any action
            or determination made in good faith with respect to this Plan. To
            the maximum extent permitted by applicable law, no officer of the
            Company or member or former member of the Committee shall be liable
            for any action or determination made in good faith with respect to
            this Plan or any Award granted under it. To the maximum extent
            permitted by applicable law or the Certificate of Incorporation or
            By-Laws of the Company and to the extent not covered by insurance,
            each officer and member or former member of the Committee shall be
            indemnified and held harmless by the Company against any cost or
            expense (including reasonable fees of counsel reasonably acceptable
            to the Company) or liability (including any sum paid in settlement
            of a claim with the approval of the Company), and advanced amounts
            necessary to pay the foregoing at the earliest time and to the
            fullest extent permitted, arising out of any act or omission to act
            in connection with this Plan, except to the extent arising out of
            such officer's, member's or former member's own fraud or bad faith.
            Such indemnification shall be in addition to any rights of
            indemnification the officers, directors or members or former
            officers, directors or members may have under applicable law or
            under the Certificate of Incorporation or By-Laws of the Company or
            any Affiliate. Notwithstanding anything else herein, this
            indemnification will not apply to the actions or determinations made
            by an individual with regard to Awards granted to him or her under
            this Plan.

                                       10
<PAGE>

                                   ARTICLE IV

                           SHARE AND OTHER LIMITATIONS

            4.1 Shares.

                  (a) General Limitation. The aggregate number of shares of
            Common Stock which may be issued or used for reference purposes
            under this Plan or with respect to which Awards may be granted shall
            not exceed 1,350,000 shares of Common Stock (subject to any increase
            or decrease pursuant to Section 4.2) with respect to all types of
            Awards, plus 882,935 shares of Common Stock relating to outstanding
            awards assumed by this Plan under Section 4.4 for a total of
            2,232,935 shares of Common Stock. The shares of Common Stock
            available under this Plan may be either authorized and unissued
            Common Stock or Common Stock held in or acquired for the treasury of
            the Company. If any Stock Option or Stock Appreciation Right granted
            under this Plan expires, terminates or is canceled for any reason
            without having been exercised in full or, with respect to Stock
            Options, the Company repurchases any Stock Option, the number of
            shares of Common Stock underlying such unexercised or repurchased
            Stock Option or any unexercised Stock Appreciation Right shall again
            be available for the purposes of Awards under this Plan. If any
            shares of Restricted Stock, Performance Shares or Performance Units
            awarded under this Plan to a Participant are forfeited or
            repurchased by the Company for any reason, the number of forfeited
            or repurchased shares of Restricted Stock, Performance Shares or
            Performance Units shall again be available for the purposes of
            Awards under this Plan. If a Tandem Stock Appreciation Right is
            granted or a Limited Stock Appreciation Right is granted in tandem
            with a Stock Option, such grant shall only apply once against the
            maximum number of shares of Common Stock which may be issued under
            this Plan. In determining the number of shares of Common Stock
            available for Awards other than Awards of Incentive Stock Options,
            if Common Stock has been exchanged by a Participant as full or
            partial payment of exercise price or withholding taxes, or if the
            number shares of Common Stock otherwise deliverable has been reduced
            for the payment of exercise price or withholding taxes, the number
            of shares of Common Stock exchanged as payment for the payment of
            exercise price or withholding taxes, or reduced, shall again be
            available for purposes of Awards under this Plan.

                  (b) Individual Participant Limitations. (i) The maximum number
            of shares of Common Stock subject to any Award of Stock Options,
            Stock Appreciation Rights, Performance Shares or shares of
            Restricted Stock for which the grant of such Award or the lapse of
            the relevant Restriction Period is subject to the attainment of
            Performance Goals in accordance with Section 8.3(a)(ii) herein which
            may be granted under this Plan during any fiscal year of the Company
            to each Eligible Employee or Consultant shall be 100,000 shares per
            type of Award (subject to any increase or decrease pursuant to
            Section 4.2), provided that the maximum number of shares of Common
            Stock for all types of

                                       11
<PAGE>

            Awards does not exceed 100,000 during any fiscal year of the
            Company. If a Tandem Stock Appreciation Right is granted or a
            Limited Stock Appreciation Right is granted in tandem with a Stock
            Option, it shall apply against the Eligible Employee's or
            Consultant's individual share limitations for both Stock
            Appreciation Rights and Stock Options.

                        (ii) There are no annual individual Eligible Employee or
                  Consultant share limitations on Restricted Stock for which the
                  grant of such Award or the lapse of the relevant Restriction
                  Period is not subject to attainment of Performance Goals in
                  accordance with Section 8.3(a)(ii) hereof.

                        (iii) The maximum value at grant of Performance Units
                  which may be granted under this Plan during any fiscal year of
                  the Company to each Eligible Employee or Consultant shall be
                  $100,000. Each Performance Unit shall be referenced to one
                  share of Common Stock and shall be charged against the
                  available shares under this Plan at the time the unit value
                  measurement is converted to a referenced number of shares of
                  Common Stock in accordance with Section 10.1.

                        (iv) The individual Participant limitations set forth in
                  this Section 4.1(b) shall be cumulative; that is, to the
                  extent that shares of Common Stock for which Awards are
                  permitted to be granted to an Eligible Employee or a
                  Consultant during a fiscal year are not covered by an Award to
                  such Eligible Employee or Consultant in a fiscal year, the
                  number of shares of Common Stock available for Awards to such
                  Eligible Employee or Consultant shall automatically increase
                  in the subsequent fiscal years during the term of the Plan
                  until used.

            4.2 Changes.

                  (a) The existence of this Plan and the Awards granted
            hereunder shall not affect in any way the right or power of the
            Board or the stockholders of the Company to make or authorize any
            adjustment, recapitalization, reorganization or other change in the
            Company's capital structure or its business, any merger or
            consolidation of the Company or any Affiliate, any issue of bonds,
            debentures, preferred or prior preference stock ahead of or
            affecting Common Stock, the dissolution or liquidation of the
            Company or any Affiliate, any sale or transfer of all or part of the
            assets or business of the Company or any Affiliate or any other
            corporate act or proceeding.

                  (b) Subject to the provisions of Section 4.2(d), in the event
            of any such change in the capital structure or business of the
            Company by reason of any stock split, reverse stock split, stock
            dividend, combination or reclassification of shares,
            recapitalization, or other change in the capital structure of the
            Company, merger, consolidation, spin-off, reorganization, partial or
            complete liquidation, issuance of rights or warrants to purchase any
            Common Stock or securities convertible into

                                       12
<PAGE>

            Common Stock, or any other corporate transaction or event having an
            effect similar to any of the foregoing and effected without receipt
            of consideration by the Company, then the aggregate number and kind
            of shares which thereafter may be issued under this Plan, the number
            and kind of shares or other property (including cash) to be issued
            upon exercise of an outstanding Stock Option or other Awards granted
            under this Plan and the purchase price thereof shall be
            appropriately adjusted consistent with such change in such manner as
            the Committee may deem equitable to prevent substantial dilution or
            enlargement of the rights granted to, or available for, Participants
            under this Plan, and any such adjustment determined by the Committee
            in good faith shall be final, binding and conclusive on the Company
            and all Participants and employees and their respective heirs,
            executors, administrators, successors and assigns.

                  (c) Fractional shares of Common Stock resulting from any
            adjustment in Options or Awards pursuant to Section 4.2(a) or (b)
            shall be aggregated until, and eliminated at, the time of exercise
            by rounding-down for fractions less than one-half and rounding-up
            for fractions equal to or greater than one-half. No cash settlements
            shall be made with respect to fractional shares eliminated by
            rounding. Notice of any adjustment shall be given by the Committee
            to each Participant whose Award has been adjusted and such
            adjustment (whether or not such notice is given) shall be effective
            and binding for all purposes of this Plan.

                  (d) In the event of a merger or consolidation in which the
            Company is not the surviving entity or in the event of any
            transaction that results in the acquisition of substantially all of
            the Company's outstanding Common Stock by a single person or entity
            or by a group of persons and/or entities acting in concert, or in
            the event of the sale or transfer of all or substantially all of the
            Company's assets (all of the foregoing being referred to as
            "Acquisition Events"), then the Committee may, in its sole
            discretion, terminate all outstanding Stock Options and Stock
            Appreciation Rights, effective as of the date of the Acquisition
            Event, by delivering notice of termination to each Participant at
            least 30 days prior to the date of consummation of the Acquisition
            Event, in which case during the period from the date on which such
            notice of termination is delivered to the consummation of the
            Acquisition Event, each such Participant shall have the right to
            exercise in full all of his or her Stock Options and Stock
            Appreciation Rights that are then outstanding (without regard to any
            limitations on exercisability otherwise contained in the Stock
            Option or Award Agreements), but any such exercise shall be
            contingent upon and subject to the occurrence of the Acquisition
            Event, and, provided that, if the Acquisition Event does not take
            place within a specified period after giving such notice for any
            reason whatsoever, the notice and exercise pursuant thereto shall be
            null and void.

            If an Acquisition Event occurs but the Committee does not terminate
      the outstanding Stock Options and Stock Appreciation Rights pursuant to
      this Section 4.2(d), then the provisions of Section 4.2(b) shall apply.

                                       13
<PAGE>

            4.3 Minimum Purchase Price. Notwithstanding any provision of this
      Plan to the contrary, if authorized but previously unissued shares of
      Common Stock are issued under this Plan, such shares shall not be issued
      for a consideration which is less than as permitted under applicable law.

            4.4 Assumption of Awards. Awards that were granted prior to the
      Effective Date under the (i) Comtech Telecommunications Corp. 1982
      Incentive Stock Option Plan (the "1982 Plan"), and (ii) Comtech
      Telecommunications Corp. 1993 Incentive Stock Option Plan, as amended (the
      "1993 Plan"), shall be transferred and assumed by this Plan as of the
      Effective Date. Notwithstanding the foregoing, such Awards shall continue
      to be governed by the terms of the applicable agreement in effect prior to
      the Effective Date.

                                   ARTICLE V

                                   ELIGIBILITY

            5.1 General Eligibility. All Eligible Employees and Consultants and
      prospective employees of and Consultants to the Company and its Affiliates
      are eligible to be granted Non-Qualified Stock Options, Stock Appreciation
      Rights, Restricted Stock, Performance Shares, Performance Units, Other
      Stock-Based Awards and awards providing benefits similar to each of the
      foregoing designed to meet the requirements of Foreign Jurisdictions under
      this Plan. Eligibility for the grant of an Award and actual participation
      in this Plan shall be determined by the Committee in its sole discretion.
      The vesting and exercise of Awards granted to a prospective employee or
      Consultant are conditioned upon such individual actually becoming an
      Eligible Employee or Consultant.

            5.2 Incentive Stock Options. All Eligible Employees of the Company,
      its Subsidiaries and its Parent (if any) are eligible to be granted
      Incentive Stock Options under this Plan. Eligibility for the grant of an
      Award and actual participation in this Plan shall be determined by the
      Committee in its sole discretion.

            5.3 Non-Employee Directors. Non-Employee Directors are only eligible
      to receive an Award of Stock Options in accordance with Article XIII of
      the Plan.

                                   ARTICLE VI

                                  STOCK OPTIONS

            6.1 Stock Options. Each Stock Option granted hereunder shall be one
      of two types: (i) an Incentive Stock Option intended to satisfy the
      requirements of Section 422 of the Code; or (ii) a Non-Qualified Stock
      Option.

            6.2 Grants. The Committee shall have the authority to grant to any
      Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
      Options or both types of Stock Options (in each case with or without Stock
      Appreciation Rights). To the extent that any Stock Option does not qualify
      as an Incentive Stock Option (whether

                                       14
<PAGE>

      because of its provisions or the time or manner of its exercise or
      otherwise), such Stock Option or the portion thereof which does not
      qualify, shall constitute a separate Non-Qualified Stock Option. The
      Committee shall have the authority to grant any Consultant one or more
      Non-Qualified Stock Options (with or without Stock Appreciation Rights).
      Notwithstanding any other provision of this Plan to the contrary or any
      provision in an agreement evidencing the grant of a Stock Option to the
      contrary, any Stock Option granted to an Eligible Employee of an Affiliate
      (other than an Affiliate which is a Parent or a Subsidiary) shall be a
      Non-Qualified Stock Option.

            6.3 Terms of Stock Options. Stock Options granted under this Plan
      shall be subject to the following terms and conditions, and shall be in
      such form and contain such additional terms and conditions, not
      inconsistent with the terms of this Plan, as the Committee shall deem
      desirable:

                  (a) Exercise Price. The exercise price per share of Common
            Stock purchasable under an Incentive Stock Option or a Stock Option
            intended to be "performance-based" for purposes of Section 162(m) of
            the Code shall be determined by the Committee at the time of grant,
            but shall not be less than 100% of the Fair Market Value of the
            share of Common Stock at the time of grant; provided, however, that
            if an Incentive Stock Option is granted to a Ten Percent
            Stockholder, the exercise price shall be no less than 110% of the
            Fair Market Value of the Common Stock. The exercise price per share
            of Common Stock purchasable under a Non-Qualified Stock Option shall
            be determined by the Committee.

                  (b) Stock Option Term. The term of each Stock Option shall be
            fixed by the Committee; provided, however, that no Stock Option
            shall be exercisable more than 10 years after the date such Stock
            Option is granted; and further provided that the term of an
            Incentive Stock Option granted to a Ten Percent Stockholder shall
            not exceed 5 years.

                  (c) Exercisability. Stock Options shall be exercisable at such
            time or times and subject to such terms and conditions as shall be
            determined by the Committee at grant. If the Committee provides, in
            its discretion, that any Stock Option is exercisable subject to
            certain limitations (including, without limitation, that such Stock
            Option is exercisable only in installments or within certain time
            periods), the Committee may waive such limitations on the
            exercisability at any time at or after grant in whole or in part
            (including, without limitation, waiver of the installment exercise
            provisions or acceleration of the time at which such Stock Option
            may be exercised), based on such factors, if any, as the Committee
            shall determine, in its sole discretion.

                  (d) Method of Exercise. Subject to whatever installment
            exercise and waiting period provisions apply under subsection (c)
            above, Stock Options may be exercised in whole or in part at any
            time and from time to time during the Stock Option term by giving
            written notice of exercise to the Committee specifying the number of
            shares to be purchased. Such notice shall be

                                       15
<PAGE>

            accompanied by payment in full of the purchase price as follows: (i)
            in cash or by check, bank draft or money order payable to the order
            of the Company; (ii) if the Common Stock is traded on a national
            securities exchange, the Nasdaq Stock Market, Inc. or quoted on a
            national quotation system sponsored by the National Association of
            Securities Dealers, through a "cashless exercise" procedure whereby
            the Participant delivers irrevocable instructions to a broker to
            deliver promptly to the Company an amount equal to the purchase
            price; or (iii) on such other terms and conditions as may be
            acceptable to the Committee (including, without limitation, the
            relinquishment of Stock Options or by payment in full or in part in
            the form of Common Stock owned by the Participant for a period of at
            least 6 months or such other period as may be required to avoid an
            accounting charge against the Company's earnings (and for which the
            Participant has good title free and clear of any liens and
            encumbrances) based on the Fair Market Value of the Common Stock on
            the payment date as determined by the Committee). No shares of
            Common Stock shall be issued until payment therefor, as provided
            herein, has been made or provided for.

                  (e) Incentive Stock Option Limitations. To the extent that the
            aggregate Fair Market Value (determined as of the time of grant) of
            the Common Stock with respect to which Incentive Stock Options are
            exercisable for the first time by an Eligible Employee during any
            calendar year under this Plan and/or any other stock option plan of
            the Company, any Subsidiary or any Parent exceeds $100,000, such
            Options shall be treated as Non-Qualified Stock Options. In
            addition, if an Eligible Employee does not remain employed by the
            Company, any Subsidiary or any Parent at all times from the time an
            Incentive Stock Option is granted until 3 months prior to the date
            of exercise thereof (or such other period as required by applicable
            law), such Stock Option shall be treated as a Non-Qualified Stock
            Option. Should any provision of this Plan not be necessary in order
            for the Stock Options to qualify as Incentive Stock Options, or
            should any additional provisions be required, the Committee may
            amend this Plan accordingly, without the necessity of obtaining the
            approval of the stockholders of the Company.

                  (f) Form, Modification, Extension and Renewal of Stock
            Options. Subject to the terms and conditions and within the
            limitations of this Plan, Stock Options shall be evidenced by such
            form of agreement or grant as is approved by the Committee, and the
            Committee may (i) modify, extend or renew outstanding Stock Options
            granted under this Plan (provided that the rights of a Participant
            are not reduced without his consent), and (ii) accept the surrender
            of outstanding Stock Options (up to the extent not theretofore
            exercised) and authorize the granting of new Stock Options in
            substitution therefor (to the extent not theretofore exercised).

                  (g) Other Terms and Conditions. Stock Options may contain such
            other provisions, which shall not be inconsistent with any of the
            terms of this Plan, as the Committee shall deem appropriate
            including, without limitation, permitting "reloads" such that the
            same number of Stock Options are granted as

                                       16
<PAGE>

            the number of Stock Options exercised, shares used to pay for the
            exercise price of Stock Options or shares used to pay withholding
            taxes ("Reloads"). With respect to Reloads, the exercise price of
            the new Stock Option shall be the Fair Market Value on the date of
            the "reload" and the term of the Stock Option shall be the same as
            the remaining term of the Stock Options that are exercised, if
            applicable, or such other exercise price and term as determined by
            the Committee.

                  (h) Detrimental Activity. Unless otherwise determined by the
            Committee at grant, (i) in the event the Participant engages in
            Detrimental Activity prior to any exercise of the Stock Option, all
            Stock Options (whether vested or unvested) held by the Participant
            shall thereupon terminate and expire, (ii) as a condition of the
            exercise of a Stock Option, the Participant shall be required to
            certify (or shall be deemed to have certified) at the time of
            exercise in a manner acceptable to the Company that the Participant
            is in compliance with the terms and conditions of the Plan and that
            the Participant has not engaged in, and does not intend to engage
            in, any Detrimental Activity, and (iii) in the event the Participant
            engages in Detrimental Activity during the one year period following
            the later of (x) Participant's Termination of Employment or (y) the
            date the Stock Option is exercised, that any Stock Options shall be
            immediately forfeited (whether or not then vested) and the Company
            shall be entitled to recover from the Participant at any time within
            one year after the later of (x) or (y), and the Participant shall
            pay over to the Company, an amount equal to any gain realized as a
            result of the exercise of any Stock Options (whether at the time of
            exercise or thereafter).

                                  ARTICLE VII

                            STOCK APPRECIATION RIGHTS

            7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights may
      be granted in conjunction with all or part of any Stock Option (a
      "Reference Stock Option") granted under this Plan ("Tandem Stock
      Appreciation Rights"). In the case of a Non-Qualified Stock Option, such
      rights may be granted either at or after the time of the grant of such
      Reference Stock Option. In the case of an Incentive Stock Option, such
      rights may be granted only at the time of the grant of such Reference
      Stock Option. Consultants shall not be eligible for a grant of Tandem
      Stock Appreciation Rights granted in conjunction with all or part of an
      Incentive Stock Option.

            7.2 Terms and Conditions of Tandem Stock Appreciation Rights. Tandem
      Stock Appreciation Rights shall be subject to such terms and conditions,
      not inconsistent with the provisions of this Plan, as shall be determined
      from time to time by the Committee, including Article XII and the
      following:

                  (a) Term. A Tandem Stock Appreciation Right or applicable
            portion thereof granted with respect to a Reference Stock Option
            shall terminate and no longer be exercisable upon the termination or
            exercise of the Reference Stock

                                       17
<PAGE>

            Option, except that, unless otherwise determined by the Committee,
            in its sole discretion, at the time of grant, a Tandem Stock
            Appreciation Right granted with respect to less than the full number
            of shares covered by the Reference Stock Option shall not be reduced
            until and then only to the extent the exercise or termination of the
            Reference Stock Option causes the number of shares covered by the
            Tandem Stock Appreciation Right to exceed the number of shares
            remaining available and unexercised under the Reference Stock
            Option.

                  (b) Exercisability. Tandem Stock Appreciation Rights shall be
            exercisable only at such time or times and to the extent that the
            Reference Stock Options to which they relate shall be exercisable in
            accordance with the provisions of Article VI and this Article VII.

                  (c) Method of Exercise. A Tandem Stock Appreciation Right may
            be exercised by a Participant by surrendering the applicable portion
            of the Reference Stock Option. Upon such exercise and surrender, the
            Participant shall be entitled to receive an amount determined in the
            manner prescribed in this Section 7.2. Stock Options which have been
            so surrendered, in whole or in part, shall no longer be exercisable
            to the extent the related Tandem Stock Appreciation Rights have been
            exercised.

                  (d) Payment. Upon the exercise of a Tandem Stock Appreciation
            Right, a Participant shall be entitled to receive up to, but no more
            than, an amount in cash and/or Common Stock (as chosen by the
            Committee in its sole discretion at grant, or thereafter if no
            rights of a Participant are reduced) equal in value to the excess of
            the Fair Market Value of one share of Common Stock over the option
            price per share specified in the Reference Stock Option, multiplied
            by the number of shares in respect of which the Tandem Stock
            Appreciation Right shall have been exercised.

                  (e) Deemed Exercise of Reference Stock Option. Upon the
            exercise of a Tandem Stock Appreciation Right, the Reference Stock
            Option or part thereof to which such Stock Appreciation Right is
            related shall be deemed to have been exercised for the purpose of
            the limitation set forth in Article IV of this Plan on the number of
            shares of Common Stock to be issued under this Plan.

                  (f) Detrimental Activity. Unless otherwise determined by the
            Committee at grant, (i) in the event the Participant engages in
            Detrimental Activity prior to any exercise of Tandem Stock
            Appreciation Rights, all Tandem Stock Appreciation Rights (whether
            vested or unvested) held by the Participant shall thereupon
            terminate and expire, (ii) as a condition of the exercise of a
            Tandem Stock Appreciation Right, the Participant shall be required
            to certify (or shall be deemed to have certified) at the time of
            exercise in a manner acceptable to the Company that the Participant
            is in compliance with the terms and conditions of the Plan and that
            the Participant has not engaged in, and does not intend to engage
            in, any Detrimental Activity, and (iii) in the event the Participant
            engages in Detrimental Activity during the one year period following
            the later of

                                       18
<PAGE>

            (x) Participant's Termination of Employment or (y) the date the
            Tandem Stock Appreciation Right is exercised, that any Tandem Stock
            Appreciation Rights shall be immediately forfeited (whether or not
            then vested) and the Company shall be entitled to recover from the
            Participant at any time within one year after the later of (x) or
            (y), and the Participant shall pay over to the Company, an amount
            equal to any gain realized as a result of the exercise (whether at
            the time of exercise or thereafter).

            7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
      Appreciation Rights may also be granted without reference to any Stock
      Option granted under this Plan.

            7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights.
      Non-Tandem Stock Appreciation Rights shall be subject to such terms and
      conditions, not inconsistent with the provisions of this Plan, as shall be
      determined from time to time by the Committee, including Article XII and
      the following:

                  (a) Term. The term of each Non-Tandem Stock Appreciation Right
            shall be fixed by the Committee, but shall not be greater than ten
            (10) years after the date the right is granted.

                  (b) Exercisability. Non-Tandem Stock Appreciation Rights shall
            be exercisable at such time or times and subject to such terms and
            conditions as shall be determined by the Committee at grant. If the
            Committee provides, in its discretion, that any such right is
            exercisable subject to certain limitations (including, without
            limitation, that it is exercisable only in installments or within
            certain time periods), the Committee may waive such limitation on
            the exercisability at any time at or after grant in whole or in part
            (including, without limitation, waiver of the installment exercise
            provisions or acceleration of the time at which rights may be
            exercised), based on such factors, if any, as the Committee shall
            determine, in its sole discretion.

                  (c) Method of Exercise. Subject to whatever installment
            exercise and waiting period provisions apply under subsection (b)
            above, Non-Tandem Stock Appreciation Rights may be exercised in
            whole or in part at any time and from time to time during the option
            term, by giving written notice of exercise to the Company specifying
            the number of Non-Tandem Stock Appreciation Rights to be exercised.

                  (d) Payment. Upon the exercise of a Non-Tandem Stock
            Appreciation Right a Participant shall be entitled to receive, for
            each right exercised, up to, but no more than, an amount in cash
            and/or Common Stock (as chosen by the Committee in its sole
            discretion at grant, or thereafter if no rights of a Participant are
            reduced) equal in value to the excess of the Fair Market Value of
            one share of Common Stock on the date the right is exercised over
            the Fair Market Value of one share of Common Stock on the date the
            right was awarded to the Participant.

                                       19
<PAGE>

                  (e) Detrimental Activity. Unless otherwise determined by the
            Committee at grant, (i) in the event the Participant engages in
            Detrimental Activity prior to any exercise of Non-Tandem Stock
            Appreciation Rights, all Non-Tandem Stock Appreciation Rights
            (whether vested or unvested) held by the Participant shall thereupon
            terminate and expire, (ii) as a condition of the exercise of a
            Tandem Stock Appreciation Right, the Participant shall be required
            to certify (or shall be deemed to have certified) at the time of
            exercise in a manner acceptable to the Company that the Participant
            is in compliance with the terms and conditions of the Plan and that
            the Participant has not engaged in, and does not intend to engage
            in, any Detrimental Activity, and (iii) in the event the Participant
            engages in Detrimental Activity during the one year period following
            the later of (x) Participant's Termination of Employment or (y) the
            date the Non-Tandem Stock Appreciation Right is exercised, that any
            Non-Tandem Stock Appreciation Rights shall be immediately forfeited
            (whether or not then vested) and the Company shall be entitled to
            recover from the Participant at any time within one year after the
            later of (x) or (y), and the Participant shall pay over to the
            Company, an amount equal to any gain realized as a result of the
            exercise (whether at the time of exercise or thereafter).

            7.5 Limited Stock Appreciation Rights. The Committee may, in its
      sole discretion, grant a Tandem Stock Appreciation Right or a Non-Tandem
      Stock Appreciation Right as a Limited Stock Appreciation Right. Limited
      Stock Appreciation Rights may be exercised only upon the occurrence of a
      Change in Control or such other event as the Committee may, in its sole
      discretion, designate at the time of grant or thereafter. Upon the
      exercise of limited Stock Appreciation Rights, except as otherwise
      provided in an Award agreement, the Participant shall receive in cash or
      Common Stock, as determined by the Committee, an amount equal to the
      amount (i) set forth in Section 7.2(d) with respect to Tandem Stock
      Appreciation Rights, or (ii) set forth in Section 7.4(d) with respect to
      Non-Tandem Stock Appreciation Rights, as applicable.

                                  ARTICLE VIII

                                RESTRICTED STOCK

            8.1 Awards of Restricted Stock. Shares of Restricted Stock may be
      issued to Eligible Employees or Consultants either alone or in addition to
      other Awards granted under this Plan. The Committee shall determine the
      eligible persons to whom, and the time or times at which, grants of
      Restricted Stock will be made, the number of shares to be awarded, the
      price (if any) to be paid by the recipient (subject to Section 8.2), the
      time or times within which such Awards may be subject to forfeiture, the
      vesting schedule and rights to acceleration thereof, and all other terms
      and conditions of the Awards. The Committee may condition the grant or
      vesting of Restricted Stock upon the attainment of specified performance
      goals, including established Performance Goals in accordance with Section
      162(m) of the Code, or such other factors as the Committee may determine,
      in its sole discretion.

                                       20
<PAGE>

            8.2 Awards and Certificates. An Eligible Employee or Consultant
      selected to receive Restricted Stock shall not have any rights with
      respect to such Award, unless and until such Participant has delivered to
      the Company a fully executed copy of the applicable Award agreement
      relating thereto and has otherwise complied with the applicable terms and
      conditions of such Award. Further, such Award shall be subject to the
      following conditions:

                  (a) Purchase Price. The purchase price of Restricted Stock
            shall be fixed by the Committee. Subject to Section 4.3, the
            purchase price for shares of Restricted Stock may be zero to the
            extent permitted by applicable law, and, to the extent not so
            permitted, such purchase price may not be less than par value.

                  (b) Acceptance. Awards of Restricted Stock must be accepted
            within a period of 90 days (or such shorter period as the Committee
            may specify at grant) after the Award date by executing a Restricted
            Stock Award agreement and by paying whatever price (if any) the
            Committee has designated thereunder.

                  (c) Legend. Each Participant receiving shares of Restricted
            Stock shall be issued a stock certificate in respect of such shares
            of Restricted Stock, unless the Committee elects to use another
            system, such as book entries by the transfer agent, as evidencing
            ownership of shares of Restricted Stock. Such certificate shall be
            registered in the name of such Participant, and shall bear an
            appropriate legend referring to the terms, conditions, and
            restrictions applicable to such Award, substantially in the
            following form:

                  "The anticipation, alienation, attachment, sale, transfer,
            assignment, pledge, encumbrance or charge of the shares of stock
            represented hereby are subject to the terms and conditions
            (including forfeiture) of The Comtech Telecommunications Corp. 2000
            Stock Incentive Plan (the "Plan") and an Agreement entered into
            between the registered owner and the Company dated _______. Copies
            of such Plan and Agreement are on file at the principal office of
            the Company."

                  (d) Custody. The Committee may require that any stock
            certificates evidencing such shares be held in custody by the
            Company until the restrictions thereon shall have lapsed and that,
            as a condition to the grant of such Award of Restricted Stock, the
            Participant shall have delivered a duly signed stock power, endorsed
            in blank, relating to the Common Stock covered by such Award.

            8.3 Restrictions and Conditions on Restricted Stock Awards. Shares
      of Restricted Stock awarded pursuant to this Plan shall be subject to
      Article XII and the following restrictions and conditions:

                  (a) Restriction Period; Vesting and Acceleration of Vesting.
            (i) The Participant shall not be permitted to Transfer shares of
            Restricted Stock awarded under this Plan during the period or
            periods set by the Committee (the "Restriction Period") commencing
            on the date of such Award, as set forth in the

                                       21
<PAGE>

            Restricted Stock Award agreement and such agreement shall set forth
            a vesting schedule and any events which would accelerate vesting of
            the shares of Restricted Stock. Within these limits, based on
            service, attainment of Performance Goals pursuant to Section
            8.3(a)(ii) below and/or such other factors or criteria as the
            Committee may determine in its sole discretion, the Committee may
            provide for the lapse of such restrictions in installments in whole
            or in part, or may accelerate the vesting of all or any part of any
            Restricted Stock Award and/or waive the deferral limitations for all
            or any part of any Restricted Stock Award.

                        (ii) Objective Performance Goals, Formulae or Standards.
            If the grant of shares of Restricted Stock or the lapse of
            restrictions is based on the attainment of Performance Goals, the
            Committee shall establish the Performance Goals and the applicable
            vesting percentage of the Restricted Stock Award applicable to each
            Participant or class of Participants in writing prior to the
            beginning of the applicable fiscal year or at such later date as
            otherwise determined by the Committee and while the outcome of the
            Performance Goals are substantially uncertain. Such Performance
            Goals may incorporate provisions for disregarding (or adjusting for)
            changes in accounting methods, corporate transactions (including,
            without limitation, dispositions and acquisitions) and other similar
            type events or circumstances. With regard to a Restricted Stock
            Award that is intended to comply with Section 162(m) of the Code, to
            the extent any such provision would create impermissible discretion
            under Section 162(m) of the Code or otherwise violate Section 162(m)
            of the Code, such provision shall be of no force or effect. The
            applicable Performance Goals shall be based on one or more of the
            Performance Criteria set forth in Exhibit A hereto.

                  (b) Rights as Stockholder. Except as provided in this
            subsection (b) and subsection (a) above and as otherwise determined
            by the Committee, the Participant shall have, with respect to the
            shares of Restricted Stock, all of the rights of a holder of shares
            of Common Stock of the Company including, without limitation, the
            right to receive any dividends, the right to vote such shares and,
            subject to and conditioned upon the full vesting of shares of
            Restricted Stock, the right to tender such shares. The Committee
            may, in its sole discretion, determine at the time of grant that the
            payment of dividends shall be deferred until, and conditioned upon,
            the expiration of the applicable Restriction Period.

                  (c) Lapse of Restrictions. If and when the Restriction Period
            expires without a prior forfeiture of the Restricted Stock subject
            to such Restriction Period, the certificates for such shares shall
            be delivered to the Participant. All legends shall be removed from
            said certificates at the time of delivery to the Participant except
            as otherwise required by applicable law.

                  (d) Detrimental Activity. Unless otherwise determined by the
            Committee at grant, each Award of Restricted Stock shall provide
            that in the event the Participant engages in Detrimental Activity
            prior to, or during the one year period following the later of
            Termination of Employment or any vesting of

                                       22
<PAGE>

            Restricted Stock, the Committee may direct (at any time within one
            year thereafter) that all unvested Restricted Stock shall be
            immediately forfeited to the Company and that the Participant shall
            pay over to the Company an amount equal to the gain realized at the
            time of vesting of any Restricted Stock.

                                   ARTICLE IX

                               PERFORMANCE SHARES

            9.1 Award of Performance Shares. Performance Shares may be awarded
      either alone or in addition to other Awards granted under this Plan. The
      Committee shall, in its sole discretion, determine the Eligible Employees
      and Consultants to whom and the time or times at which such Performance
      Shares shall be awarded, the duration of the period (the "Performance
      Period") during which, and the conditions under which, a Participant's
      right to Performance Shares will be vested and the other terms and
      conditions of the Award in addition to those set forth in Section 9.2.

            Each Performance Share awarded shall be referenced to one share of
      Common Stock. Except as otherwise provided herein, the Committee shall
      condition the right to payment of any Performance Share Award upon the
      attainment of objective Performance Goals established pursuant to Section
      9.2(c) below and such other non-performance based factors or criteria as
      the Committee may determine in its sole discretion.

            9.2 Terms and Conditions. A Participant selected to receive
      Performance Shares shall not have any rights with respect to such Awards,
      unless and until such Participant has delivered a fully executed copy of a
      Performance Share Award agreement evidencing the Award to the Company and
      has otherwise complied with the following terms and conditions:

                  (a) Earning of Performance Share Award. At the expiration of
            the applicable Performance Period, the Committee shall determine the
            extent to which the Performance Goals established pursuant to
            Section 9.2(c) are achieved and the percentage of each Performance
            Share Award that has been earned.

                  (b) Payment. Following the Committee's determination in
            accordance with subsection (a) above, shares of Common Stock or, as
            determined by the Committee in its sole discretion, the cash
            equivalent of such shares shall be delivered to the Participant, in
            an amount equal to such Participant's earned Performance Share
            Award. Notwithstanding the foregoing, except as may be set forth in
            the agreement covering the Award, the Committee may, in its sole
            discretion and in accordance with Section 162(m) of the Code, award
            an amount less than the earned Performance Share Award and/or
            subject the payment of all or part of any Performance Share Award to
            additional vesting and forfeiture conditions as it deems
            appropriate.

                  (c) Objective Performance Goals, Formulae or Standards. The
            Committee shall establish the objective Performance Goals for the
            earning of

                                       23
<PAGE>

            Performance Shares based on a Performance Period applicable to each
            Participant or class of Participants in writing prior to the
            beginning of the applicable Performance Period or at such later date
            as permitted under Section 162(m) of the Code and while the outcome
            of the Performance Goals are substantially uncertain. Such
            Performance Goals may incorporate, if and only to the extent
            permitted under Section 162(m) of the Code, provisions for
            disregarding (or adjusting for) changes in accounting methods,
            corporate transactions (including, without limitation, dispositions
            and acquisitions) and other similar type events or circumstances. To
            the extent any such provision would create impermissible discretion
            under Section 162(m) of the Code or otherwise violate Section 162(m)
            of the Code, such provision shall be of no force or effect. The
            applicable Performance Goals shall be based on one or more of the
            Performance Criteria set forth in Exhibit A hereto.

                  (d) Dividends and Other Distributions. At the time of any
            Award of Performance Shares, the Committee may, in its sole
            discretion, award an Eligible Employee or Consultant the right to
            receive the cash value of any dividends and other distributions that
            would have been received as though the Eligible Employee or
            Consultant had held each share of Common Stock referenced by the
            earned Performance Share Award from the last day of the first year
            of the Performance Period until the actual distribution to such
            Participant of the related share of Common Stock or cash value
            thereof. Such amounts, if awarded, shall be paid to the Participant
            as and when the shares of Common Stock or cash value thereof are
            distributed to such Participant and, at the discretion of the
            Committee, may be paid with interest from the first day of the
            second year of the Performance Period until such amounts and any
            earnings thereon are distributed. The applicable rate of interest
            shall be determined by the Committee in its sole discretion;
            provided, however, that for each fiscal year or part thereof, the
            applicable interest rate shall not be greater than a rate equal to
            the four-year U.S. Government Treasury rate on the first day of each
            applicable fiscal year.

                  (e) Detrimental Activity. Unless otherwise determined by the
            Committee at grant, each Award of Performance Shares shall provide
            that in the event the Participant engages in Detrimental Activity
            prior to, or during the one year period following the later of
            Termination of Employment or any vesting of Performance Shares, the
            Committee may direct (at any time within one year thereafter) that
            all unvested Performance Shares shall be immediately forfeited to
            the Company and that the Participant shall pay over to the Company
            an amount equal to the gain realized at the time of vesting of any
            Performance Shares.

                                   ARTICLE X

                                PERFORMANCE UNITS

            10.1 Awards of Performance Units. Performance Units may be awarded
      either alone or in addition to other Awards granted under this Plan. The
      Committee shall, in its

                                       24
<PAGE>

      sole discretion, determine the Eligible Employees to whom and the time or
      times at which such Performance Units shall be awarded, the duration of
      the period (the "Performance Cycle") during which, and the conditions
      under which, a Participant's right to Performance Units will be vested and
      the other terms and conditions of the Award in addition to those set forth
      in Section 10.2.

            Performance Units shall be awarded in a dollar amount determined by
      the Committee and shall be converted for purposes of calculating growth in
      value to a referenced number of shares of Common Stock based on the Fair
      Market Value of shares of Common Stock at the close of trading on the
      first business day following the announcement of the annual financial
      results of the Company for the fiscal year of the Company immediately
      preceding the fiscal year of the commencement of the relevant Performance
      Cycle, provided that the Committee may provide that the minimum price for
      such conversion shall be the Fair Market Value on the date of grant.

            Each Performance Unit shall be referenced to one share of Common
      Stock. Except as otherwise provided herein, the Committee shall condition
      the right to payment of any Performance Unit Award upon the attainment of
      objective Performance Goals established pursuant to Section 10.2(a) and
      such other non-performance based factors or criteria as the Committee may
      determine in its sole discretion. The cash value of any fractional
      Performance Unit Award subsequent to conversion to shares of Common Stock
      shall be treated as a dividend or other distribution under Section 10.2(e)
      to the extent any portion of the Performance Unit Award is earned.

            10.2 Terms and Conditions. The Performance Units awarded pursuant to
      this Article 10 shall be subject to the following terms and conditions:

                  (a) Performance Goals. The Committee shall establish the
            objective Performance Goals for the earnings of Performance Units
            based on a Performance Cycle applicable to each Participant or class
            of Participants in writing prior to the beginning of the applicable
            Performance Cycle or at such later date as permitted under Section
            162(m) of the Code and while the outcome of the Performance Goals
            are substantially uncertain. Such Performance Goals may incorporate,
            if and only to the extent permitted under Section 162(m) of the
            Code, provisions for disregarding (or adjusting for) changes in
            accounting methods, corporate transactions (including, without
            limitation, dispositions and acquisitions) and other similar type
            events or circumstances. To the extent any such provision would
            create impermissible discretion under Section 162(m) of the Code or
            otherwise violate Section 162(m) of the Code, such provision shall
            be of no force or effect. The applicable Performance Goals shall be
            based on one or more of the Performance Criteria set forth in
            Exhibit A hereto.

                  (b) Vesting. At the expiration of the Performance Cycle, the
            Committee shall determine and certify in writing the extent to which
            the Performance Goals have been achieved, and the percentage of the
            Performance Units of each Participant that have vested.

                                       25
<PAGE>

                  (c) Payment. Subject to the applicable provisions of the Award
            agreement and this Plan, at the expiration of the Performance Cycle,
            cash and/or shares of Common Stock (as the Committee may determine
            in its sole discretion at grant, or thereafter if no rights of a
            Participant are reduced) shall be delivered to the Participant in
            payment of the vested Performance Units covered by the Performance
            Unit Award. Notwithstanding the foregoing, except as may be set
            forth in the agreement covering the Award, the Committee may, in its
            sole discretion, and to the extent applicable and permitted under
            Section 162(m) of the Code, award an amount less than the earned
            Performance Unit Award and/or subject the payment of all or part of
            any Performance Unit Award to additional vesting and forfeiture
            conditions as it deems appropriate.

                  (d) Accelerated Vesting. Based on service, performance and/or
            such other factors or criteria, if any, as the Committee may
            determine, the Committee may, at or after grant, accelerate the
            vesting of all or any part of any Performance Unit Award and/or
            waive the deferral limitations for all or any part of such Award.

                  (e) Dividends and Other Distributions. At the time of any
            Award of Performance Units, the Committee may, in its sole
            discretion, award an Eligible Employee or Consultant the right to
            receive the cash value of any dividends and other distributions that
            would have been received as though the Eligible Employee or
            Consultant had held each share of Common Stock referenced by the
            earned Performance Unit Award from the last day of the first year of
            the Performance Cycle until the actual distribution to such
            Participant of the related share of Common Stock or cash value
            thereof. Such amounts, if awarded, shall be paid to the Participant
            as and when the shares of Common Stock or cash value thereof are
            distributed to such Participant and, at the discretion of the
            Committee, may be paid with interest from the first day of the
            second year of the Performance Cycle until such amounts and any
            earnings thereon are distributed. The applicable rate of interest
            shall be determined by the Committee in its sole discretion;
            provided, however, that for each fiscal year or part thereof, the
            applicable interest rate shall not be greater than a rate equal to
            the four-year U.S. Government Treasury rate on the first day of each
            applicable fiscal year.

                  (f) Detrimental Activity. Unless otherwise determined by the
            Committee at grant, each Award of Performance Units shall provide
            that in the event the Participant engages in Detrimental Activity
            prior to, or during the one year period following the later of
            Termination of Employment or any vesting of Performance Units, the
            Committee may direct (at any time within one year thereafter) that
            all unvested Performance Units shall be immediately forfeited to the
            Company and that the Participant shall pay over to the Company an
            amount equal to the gain realized at the time of vesting of any
            Performance Units which had vested in the period referred to above.

                                       26
<PAGE>

                                   ARTICLE XI

                            OTHER STOCK-BASED AWARDS

            11.1 Other Awards. Other Stock-Based Awards may be granted either
      alone or in addition to or in tandem with Stock Options, Stock
      Appreciation Rights, Restricted Stock, Performance Shares or Performance
      Units.

            Subject to the provisions of this Plan, the Committee shall have
      authority to determine the persons to whom and the time or times at which
      such Awards shall be made, the number of shares of Common Stock to be
      awarded pursuant to such Awards, and all other conditions of the Awards.
      The Committee may also provide for the grant of Common Stock under such
      Awards upon the completion of a specified performance period.

            11.2 Terms and Conditions. Other Stock-Based Awards made pursuant to
      this Article XI shall be subject to the following terms and conditions:

                  (a) Non-Transferability. Subject to the applicable provisions
            of the Award agreement and this Plan, shares of Common Stock subject
            to Awards made under this Article XI may not be Transferred prior to
            the date on which the shares are issued, or, if later, the date on
            which any applicable restriction, performance or deferral period
            lapses.

                  (b) Dividends. Unless otherwise determined by the Committee at
            the time of Award, subject to the provisions of the Award agreement
            and this Plan, the recipient of an Award under this Article XI shall
            be entitled to receive, currently or on a deferred basis, dividends
            or dividend equivalents with respect to the number of shares of
            Common Stock covered by the Award, as determined at the time of the
            Award by the Committee, in its sole discretion.

                  (c) Vesting. Any Award under this Article XI and any Common
            Stock covered by any such Award shall vest or be forfeited to the
            extent so provided in the Award agreement, as determined by the
            Committee, in its sole discretion.

                  (d) Waiver of Limitation. The Committee may, in its sole
            discretion, waive in whole or in part any or all of the limitations
            imposed hereunder (if any) with respect to any or all of an Award
            under this Article XI.

                  (e) Price. Common Stock or Other Stock-Based Awards issued on
            a bonus basis under this Article XI may be issued for no cash
            consideration; Common Stock or Other Stock-Based Awards purchased
            pursuant to a purchase right awarded under this Article XI shall be
            priced as determined by the Committee. Subject to Section 4.3, the
            purchase price of shares of Common Stock or Other Stock-Based Awards
            may be zero to the extent permitted by applicable law, and, to the
            extent not so permitted, such purchase price may not be less than
            par value. The purchase of shares of Common Stock or Other
            Stock-

                                       27
<PAGE>

            Based Awards may be made on either an after-tax or pre-tax basis, as
            determined by the Committee; provided, however, that if the purchase
            is made on a pre-tax basis, such purchase shall be made pursuant to
            a deferred compensation program established by the Committee, which
            will be deemed a part of this Plan.

                  (f) Detrimental Activity. Other Stock-Based Awards under this
            Article XI and any Common Stock covered by any such Award shall be
            forfeited in the event the Participant engages in Detrimental
            Activity under such conditions set forth by the Committee in the
            Award agreement.

                                  ARTICLE XII

                       NON-TRANSFERABILITY AND TERMINATION
                            OF EMPLOYMENT/CONSULTANCY

            12.1 Non-Transferability. No Stock Option, Stock Appreciation Right,
      Performance Unit, Performance Share or Other Stock-Based Award shall be
      Transferable by the Participant otherwise than by will or by the laws of
      descent and distribution. All Stock Options and all Stock Appreciation
      Rights shall be exercisable, during the Participant's lifetime, only by
      the Participant. Tandem Stock Appreciation Rights shall be Transferable,
      to the extent permitted above, only with the underlying Stock Option.
      Shares of Restricted Stock under Article VIII may not be Transferred prior
      to the date on which shares are issued, or, if later, the date on which
      any applicable restriction, performance or deferral period lapses. No
      Award shall, except as otherwise specifically provided by law or herein,
      be Transferable in any manner, and any attempt to Transfer any such Award
      shall be void, and no such Award shall in any manner be liable for or
      subject to the debts, contracts, liabilities, engagements or torts of any
      person who shall be entitled to such Award, nor shall it be subject to
      attachment or legal process for or against such person. Notwithstanding
      the foregoing, the Committee may determine at the time of grant or
      thereafter, that a Non-Qualified Stock Option that is otherwise not
      transferable pursuant to this Section 12.1 is transferable to a Family
      Member in whole or in part and in such circumstances, and under such
      conditions, as specified by the Committee. A Non-Qualified Stock Option
      that is transferred to a Family Member pursuant to the preceding sentence
      may not be subsequently transferred otherwise than by will or by the laws
      of descent and distribution.

            12.2 Termination of Employment or Termination of Consultancy. The
      following rules apply with regard to the Termination of Employment or
      Termination of Consultancy of a Participant:

                  (a) Rules Applicable to Stock Options and Stock Appreciation
            Rights. Unless otherwise determined by the Committee at grant or, if
            no rights of the Participant are reduced, thereafter:

                        (i) Termination by Reason of Death, Disability or
            Retirement. If a Participant's Termination of Employment or
            Termination of Consultancy is by

                                       28
<PAGE>

            reason of death, Disability or Retirement, all Stock Options and
            Stock Appreciation Rights held by such Participant may be exercised,
            to the extent exercisable at the Participant's Termination of
            Employment or Termination of Consultancy, by the Participant (or, in
            the case of death, by the legal representative of the Participant's
            estate) at any time within a period of one year from the date of
            such Termination of Employment or Termination of Consultancy, but in
            no event beyond the expiration of the stated terms of such Stock
            Options and Stock Appreciation Rights; provided, however, that, in
            the case of Retirement, if the Participant dies within such exercise
            period, all unexercised Stock Options and Non-Tandem Stock
            Appreciation Rights held by such Participant shall thereafter be
            exercisable, to the extent to which they were exercisable at the
            time of death, for a period of one year from the date of such death,
            but in no event beyond the expiration of the stated term of such
            Stock Options and Non-Tandem Stock Appreciation Rights.

                        (ii) Involuntary Termination Without Cause. If a
            Participant's Termination of Employment or Termination of
            Consultancy is by involuntary termination without Cause, all Stock
            Options and Stock Appreciation Rights held by such Participant may
            be exercised, to the extent exercisable at Termination of Employment
            or Termination of Consultancy, by the Participant at any time within
            a period of 90 days from the date of such Termination of Employment
            or Termination of Consultancy, but in no event beyond the expiration
            of the stated term of such Stock Options and Stock Appreciation
            Rights.

                        (iii) Voluntary Termination. If a Participant's
            Termination of Employment or Termination of Consultancy is voluntary
            (other than a voluntary termination described in Section
            12.2(a)(iv)(B) below), all Stock Options and Stock Appreciation
            Rights held by such Participant may be exercised, to the extent
            exercisable at Termination of Employment or Termination of
            Consultancy, by the Participant at any time within a period of 30
            days from the date of such Termination of Employment or Termination
            of Consultancy, but in no event beyond the expiration of the stated
            terms of such Stock Options and Stock Appreciation Rights.
            Notwithstanding the foregoing, effective for Stock Options and Stock
            Appreciation Rights granted on or after October 19, 2000, if a
            Participant's Termination of Employment or Termination of
            Consultancy is voluntary, all Stock Options and Stock Appreciation
            Rights held by such Participant shall thereupon terminate and expire
            as of the date of such Termination of Employment or Termination of
            Consultancy.

                        (iv) Termination for Cause. If a Participant's
            Termination of Employment or Termination of Consultancy (A) is for
            Cause or (B) is a voluntary termination (as provided in subsection
            (iii) above) within 90 days after an event which would be grounds
            for a Termination of Employment or Termination of Consultancy for
            Cause, all Stock Options and Stock Appreciation Rights held by such
            Participant shall thereupon terminate and expire as of the date of
            such Termination of Employment or Termination of Consultancy.

                                       29
<PAGE>

                  (b) Rules Applicable to Restricted Stock. Subject to the
            applicable provisions of the Restricted Stock Award agreement and
            this Plan, upon a Participant's Termination of Employment or
            Termination of Consultancy for any reason during the relevant
            Restriction Period, all Restricted Stock still subject to
            restriction will vest or be forfeited in accordance with the terms
            and conditions established by the Committee at grant or thereafter.

                  (c) Rules Applicable to Performance Shares and Performance
            Units. Subject to the applicable provisions of the Award agreement
            and this Plan, upon a Participant's Termination of Employment or
            Termination of Consultancy for any reason during the Performance
            Period, the Performance Cycle or other period or restriction as may
            be applicable for a given Award, the Performance Shares or
            Performance Units in question will vest (to the extent applicable
            and to the extent permissible under Section 162(m) of the Code) or
            be forfeited in accordance with the terms and conditions established
            by the Committee at grant or thereafter.

                  (d) Rules Applicable to Other Stock-Based Awards. Subject to
            the applicable provisions of the Award agreement and this Plan, upon
            a Participant's Termination of Employment or Termination of
            Consultancy for any reason during any period or restriction as may
            be applicable for a given Award, the Other Stock-Based Awards in
            question will vest or be forfeited in accordance with the terms and
            conditions established by the Committee at grant or thereafter.

                                  ARTICLE XIII

                    NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS

            13.1 Stock Options. The terms of this Article XIII shall apply only
      to Stock Options granted to Non-Employee Directors.

            13.2 Grants. Without further action by the Board or the stockholders
      of the Company, each Non-Employee Director shall, subject to the terms of
      the Plan, be granted:

                  (a) Stock Options to purchase 3,000 shares of Common Stock as
            of the date the Non-Employee Director begins service as a
            Non-Employee Director on the Board, provided that the Non-Employee
            Director began service on or after the Effective Date; and

                  (b) In addition to Stock Options granted pursuant to (a)
            above, Stock Options: (i) to purchase 5,000 shares of Common Stock
            as of the August 1 of each year, commencing August 1, 2002, provided
            he or she has not, as of such day, experienced a Termination of
            Directorship and provided further that he or she has been a
            Non-Employee Director for at least six months as of such August 1
            date; and (ii) to purchase 1,500 shares of Common Stock as of
            November 1, 2001.

                                       30
<PAGE>

            13.3 Non-Qualified Stock Options. Stock Options granted under this
      Article XIII shall be Non-Qualified Stock Options.

            13.4 Terms of Stock Options. Stock Options granted under this
      Article XIII shall be subject to the following terms and conditions, and
      shall be in such form and contain such additional terms and conditions,
      not inconsistent with the terms of this Plan, as the Board shall deem
      desirable:

                  (a) Stock Option Price. The Stock Option price per share of
            Common Stock purchasable under a Stock Option shall equal 100% of
            the Fair Market Value of the share of Common Stock at the time of
            grant.

                  (b) Stock Option Term. The term of each Stock Option shall be
            ten (10) years.

                  (c) Exercisability. Stock Options granted to Non-Employee
            Directors pursuant to Section 13.2 shall vest and become exercisable
            on the first anniversary of date of grant, provided that the Stock
            Option may become vested only during the continuance of his or her
            service as a director of the Company.

                  (d) Method of Exercise. Subject to whatever waiting period
            provisions apply under subsection (c) above, Stock Options may be
            exercised in whole or in part at any time and from time to time
            during the Stock Option term, by giving written notice of exercise
            to the Company specifying the number of shares to be purchased. Such
            notice shall be accompanied by payment in full of the purchase price
            as follows: (i) in cash or by check, bank draft or money order
            payable to the Company; (ii) if the Common Stock is traded on a
            national securities exchange, through a "cashless exercise"
            procedure whereby the Participant delivers irrevocable instructions
            to a broker to deliver promptly to the Company an amount equal to
            the purchase price; or (iii) such other arrangement for the
            satisfaction of the purchase price, as the Board may accept. If and
            to the extent determined by the Board in its sole discretion at or
            after grant, payment in full or in part may also be made in the form
            of Common Stock owned by the Participant for at least 6 months (or
            such other period as may be required to avoid an accounting charge
            against the Company's earnings) (and for which the Participant has
            good title free and clear of any liens and encumbrances) based on
            the Fair Market Value of the Common Stock on the payment date. No
            shares of Common Stock shall be issued until payment, as provided
            herein, therefor has been made or provided for.

                  (e) Form, Modification, Extension and Renewal of Stock
            Options. Subject to the terms and conditions and within the
            limitations of the Plan, a Stock Option shall be evidenced by such
            form of agreement or grant as is approved by the Board, and the
            Board may modify, extend or renew outstanding Stock Options granted
            under the Plan (provided that the rights of a Participant are not
            reduced without his consent).

                                       31
<PAGE>

            13.5 Termination of Directorship. The following rules apply with
      regard to Stock Options upon the Termination of Directorship:

                  (a) Termination of Directorship by Reason of Death, Disability
            or Otherwise Ceasing to be a Director. Except as otherwise provided
            herein, upon the Termination of Directorship by reason of death,
            disability, resignation, failure to stand for reelection or failure
            to be reelected or otherwise, all outstanding Stock Options
            exercisable and not exercised shall remain exercisable to the extent
            exercisable on such date of Termination of Directorship by the
            Participant or, in the case of death, by the Participant's estate or
            by the person given authority to exercise such Stock Options by his
            or her will or by operation of law, at any time prior to the
            expiration of the stated term of such Stock Option.

                  (b) Cancellation of Options. Except as provided in Section
            13.6, no Stock Options that were not exercisable as of the date of
            Termination of Directorship shall thereafter become exercisable upon
            a Termination of Directorship for any reason or no reason
            whatsoever, and such Stock Options shall terminate and become null
            and void upon a Termination of Directorship. If a Non-Employee
            Director's Termination of Directorship is for Cause, all Stock
            Options held by the Non-Employee Director shall thereupon terminate
            and expire as of the date of termination.

            13.6 Acceleration of Exercisability. All Stock Options granted to a
      Non-Employee Director and not previously exercisable shall become fully
      exercisable upon such Director's death, and all Stock Options granted to
      Non-Employee Directors and not previously exercisable shall become fully
      exercisable immediately upon a Change in Control (as defined in Section
      14.2).

            13.7 Changes.

                  (a) The Awards to a Non-Employee Director shall be subject to
            Sections 4.2(a), (b) and (c) of the Plan and this Section 13.7, but
            shall not be subject to Section 4.2(d).

                  (b) If the Company shall not be the surviving corporation in
            any merger or consolidation, or if the Company is to be dissolved or
            liquidated, then, unless the surviving corporation assumes the Stock
            Options or substitutes new Stock Options which are determined by the
            Board in its sole discretion to be substantially similar in nature
            and equivalent in terms and value for Stock Options then
            outstanding, upon the effective date of such merger, consolidation,
            liquidation or dissolution, any unexercised Stock Options shall
            expire without additional compensation to the holder thereof;
            provided, that, the Board shall deliver notice to each Non-Employee
            Director at least 30 days prior to the date of consummation of such
            merger, consolidation, dissolution or liquidation which would result
            in the expiration of the Stock Options and during the period from
            the date on which such notice of termination is delivered to the
            consummation of the merger, consolidation, dissolution or
            liquidation, such Participant shall have the

                                       32
<PAGE>

            right to exercise in full, effective as of such consummation, all
            Stock Options that are then outstanding (without regard to
            limitations on exercise otherwise contained in the Stock Options)
            but contingent on occurrence of the merger, consolidation,
            dissolution or liquidation, and, provided that, if the contemplated
            transaction does not take place within a 90 day period after giving
            such notice for any reason whatsoever, the notice, accelerated
            vesting and exercise shall be null and void and, if and when
            appropriate, new notice shall be given as aforesaid.

                                  ARTICLE XIV

                          CHANGE IN CONTROL PROVISIONS

            14.1 Benefits. In the event of a Change in Control of the Company,
      except as otherwise provided by the Committee upon the grant of an Award,
      the Participant shall be entitled to the following benefits:

                  (a) Except to the extent provided in the applicable Award
            agreement, the Participant's employment agreement with the Company
            or an Affiliate, as approved by the Committee, or other written
            agreement approved by the Committee (as such agreement may be
            amended from time to time), (i) Awards granted and not previously
            exercisable shall become exercisable upon a Change in Control, (ii)
            restrictions to which any shares of Restricted Stock granted prior
            to the Change in Control are subject shall lapse upon a Change in
            Control, and (iii) the conditions required for vesting of any
            unvested Performance Units and/or Performance Shares shall be deemed
            to be satisfied upon a Change in Control.

                  (b) The Committee, in its sole discretion, may provide for the
            purchase of any Stock Option by the Company or an Affiliate for an
            amount of cash equal to the excess of the Change in Control Price
            (as defined below) of the shares of Common Stock covered by such
            Stock Options, over the aggregate exercise price of such Stock
            Options. For purposes of this Section 14.1, Change in Control Price
            shall mean the higher of (i) the highest price per share of Common
            Stock paid in any transaction related to a Change in Control of the
            Company, or (ii) the highest Fair Market Value per share of Common
            Stock at any time during the sixty (60) day period preceding a
            Change in Control.

                  (c) Notwithstanding anything to the contrary herein, unless
            the Committee provides otherwise at the time a Stock Option is
            granted hereunder or thereafter, no acceleration of exercisability
            shall occur with respect to such Stock Options if the Committee
            reasonably determines in good faith, prior to the occurrence of the
            Change in Control, that the Stock Options shall be honored or
            assumed, or new rights substituted therefor (each such honored,
            assumed or substituted stock option hereinafter called an
            "Alternative Option"), by a Participant's employer (or the parent or
            a subsidiary of such employer) immediately following the Change in
            Control, provided that any such Alternative Option must meet the
            following criteria:

                                       33
<PAGE>

                        (i) the Alternative Option must be based on stock which
                  is traded on an established securities market, or which will
                  be so traded within 30 days of the Change in Control;

                        (ii) the Alternative Option must provide such
                  Participant with rights and entitlements substantially
                  equivalent to or better than the rights, terms and conditions
                  applicable under such Stock Option, including, but not limited
                  to, an identical or better exercise schedule; and

                        (iii) the Alternative Option must have economic value
                  substantially equivalent to the value of such Stock Option
                  (determined at the time of the Change in Control).

                  For purposes of Incentive Stock Options, any assumed or
            substituted Stock Option shall comply with the requirements of
            Treasury Regulation ss. 1.425-1 (and any amendments thereto).

                  (d) Notwithstanding anything else herein, the Committee may,
            in its sole discretion, provide for accelerated vesting of an Award
            or accelerated lapsing of restrictions on shares of Restricted Stock
            at any time.

            14.2 Change in Control. A "Change in Control" shall be deemed to
      have occurred:

                  (a) upon any "person" as such term is used in Sections 13(d)
            and 14(d) of the Exchange Act (other than the Company, any trustee
            or other fiduciary holding securities under any employee benefit
            plan of the Company, or any company owned, directly or indirectly,
            by the stockholders of the Company in substantially the same
            proportions as their ownership of Common Stock of the Company),
            becoming the owner (as defined in Rule 13d-3 under the Exchange
            Act), directly or indirectly, of securities of the Company
            representing 30% or more of the combined voting power of the
            Company's then outstanding securities;

                  (b) during any period of two (2) consecutive years,
            individuals who at the beginning of such period constitute the Board
            of Directors, and any new director (other than a director designated
            by a person who has entered into an agreement with the Company to
            effect a transaction described in paragraph (a), (c), or (d) of this
            section) or a director whose initial assumption of office occurs as
            a result of either an actual or threatened election contest (as such
            term is used in Rule 14a-11 of Regulation 14A promulgated under the
            Exchange Act) or other actual or threatened solicitation of proxies
            or consents by or on behalf of a person other than the Board of
            Directors of the Company whose election by the Board of Directors or
            nomination for election by the Company's stockholders was approved
            by a vote of at least two-thirds of the directors then still in
            office who either were directors at the beginning of the two-year
            period or whose election or nomination for election was previously
            so approved, cease for any reason to constitute at least a majority
            of the Board of Directors;

                                       34
<PAGE>

                  (c) upon a merger or consolidation of the Company with any
            other corporation, other than a merger or consolidation which would
            result in the voting securities of the Company outstanding
            immediately prior thereto continuing to represent (either by
            remaining outstanding or by being converted into voting securities
            of the surviving entity) more than 50% of the combined voting power
            of the voting securities of the Company or such surviving entity
            outstanding immediately after such merger or consolidation;
            provided, however, that a merger or consolidation effected to
            implement a recapitalization of the Company (or similar transaction)
            in which no person (other than those covered by the exceptions in
            (a) above) acquires more than 50% of the combined voting power of
            the Company's then outstanding securities shall not constitute a
            Change in Control of the Company; or

                  (d) upon the stockholders of the Company approval of a plan of
            complete liquidation of the Company or an agreement for the sale or
            disposition by the Company of all or substantially all of the
            Company's assets other than the sale or disposition of all or
            substantially all of the assets of the Company to a person or
            persons who beneficially own, directly or indirectly, at least 50%
            or more of the combined voting power of the outstanding voting
            securities of the Company at the time of the sale.

                                   ARTICLE XV

                        TERMINATION OR AMENDMENT OF PLAN

      Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XVII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the shareholders of the Company in accordance with the laws of the
State of Delaware, to the extent required by the applicable provisions of Rule
16b-3 or Section 162(m) of the Code, or, to the extent applicable to Incentive
Stock Options, Section 422 of the Code, no amendment may be made which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) increase the maximum individual Participant limitations for a
fiscal year under Section 4.1(b); (iii) change the classification of employees
or Consultants eligible to receive Awards under this Plan; (iv) decrease the
minimum option price of any Stock Option or Stock Appreciation Right; (v) extend
the maximum option period under Section 6.3; (vi) materially alter the
Performance Criteria for the Award of Restricted Stock, Performance Units or
Performance Shares as set forth in Exhibit A; or (vii) require stockholder
approval in order for this Plan to continue to comply with the applicable
provisions of Section 162(m) of the Code or, to the extent applicable to
Incentive Stock Options, Section 422 of the Code. In no event may this Plan be
amended without the approval of the stockholders of the Company in accordance

                                       35
<PAGE>

with the applicable laws of the State of Delaware to increase the aggregate
number of shares of Common Stock that may be issued under this Plan, decrease
the minimum exercise price of any Stock Option or Stock Appreciation Right, or
to make any other amendment that would require stockholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company.

      The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.

                                  ARTICLE XVI

                                  UNFUNDED PLAN

            16.1 Unfunded Status of Plan. This Plan is intended to constitute an
      "unfunded" plan for incentive and deferred compensation. With respect to
      any payments as to which a Participant has a fixed and vested interest but
      which are not yet made to a Participant by the Company, nothing contained
      herein shall give any such Participant any rights that are greater than
      those of a general creditor of the Company.

                                  ARTICLE XVII

                               GENERAL PROVISIONS

            17.1 Legend. The Committee may require each person receiving shares
      pursuant to an Award under this Plan to represent to and agree with the
      Company in writing that the Participant is acquiring the shares without a
      view to distribution thereof. In addition to any legend required by this
      Plan, the certificates for such shares may include any legend which the
      Committee deems appropriate to reflect any restrictions on Transfer.

            All certificates for shares of Common Stock delivered under this
      Plan shall be subject to such stock transfer orders and other restrictions
      as the Committee may deem advisable under the rules, regulations and other
      requirements of the Securities and Exchange Commission, any stock exchange
      upon which the Stock is then listed or any national securities association
      system upon whose system the Stock is then quoted, any applicable Federal
      or state securities law, and any applicable corporate law, and the
      Committee may cause a legend or legends to be put on any such certificates
      to make appropriate reference to such restrictions.

            17.2 Other Plans. Nothing contained in this Plan shall prevent the
      Board from adopting other or additional compensation arrangements, subject
      to stockholder approval if such approval is required; and such
      arrangements may be either generally applicable or applicable only in
      specific cases.

                                       36
<PAGE>

            17.3 Right to Employment/Consultancy. Neither this Plan nor the
      grant of any Award hereunder shall give any Participant or other employee
      or Consultant any right with respect to continuance of employment or
      Consultancy by the Company or any Affiliate, nor shall they be a
      limitation in any way on the right of the Company or any Affiliate by
      which an employee is employed or a Consultant is retained to terminate his
      employment or Consultancy at any time.

            17.4 Withholding of Taxes. The Company shall have the right to
      deduct from any payment to be made to a Participant, or to otherwise
      require, prior to the issuance or delivery of any shares of Common Stock
      or the payment of any cash hereunder, payment by the Participant of, any
      Federal, state or local taxes required by law to be withheld. Upon the
      vesting of Restricted Stock, or upon making an election under Code Section
      83(b), a Participant shall pay all required withholding to the Company.

            Any such withholding obligation with regard to any Participant may
      be satisfied, subject to the consent of the Committee, by reducing the
      number of shares of Common Stock otherwise deliverable or by delivering
      shares of Common Stock already owned. Any fraction of a share of Common
      Stock required to satisfy such tax obligations shall be disregarded and
      the amount due shall be paid instead in cash by the Participant.

            17.5 Listing and Other Conditions.

                  (a) As long as the Common Stock is listed on a national
            securities exchange or system sponsored by a national securities
            association, the issue of any shares of Common Stock pursuant to an
            Award shall be conditioned upon such shares being listed on such
            exchange or system. The Company shall have no obligation to issue
            such shares unless and until such shares are so listed, and the
            right to exercise any Stock Option with respect to such shares shall
            be suspended until such listing has been effected.

                  (b) If at any time counsel to the Company shall be of the
            opinion that any sale or delivery of shares of Common Stock pursuant
            to an Award is or may in the circumstances be unlawful or result in
            the imposition of excise taxes on the Company under the statutes,
            rules or regulations of any applicable jurisdiction, the Company
            shall have no obligation to make such sale or delivery, or to make
            any application or to effect or to maintain any qualification or
            registration under the Securities Act or otherwise with respect to
            shares of Common Stock or Awards, and the right to exercise any
            Stock Option shall be suspended until, in the opinion of said
            counsel, such sale or delivery shall be lawful or will not result in
            the imposition of excise taxes on the Company.

                  (c) Upon termination of any period of suspension under this
            Section 17.5, any Award affected by such suspension which shall not
            then have expired or terminated shall be reinstated as to all shares
            available before such suspension and as to shares which would
            otherwise have become available during the period of such
            suspension, but no such suspension shall extend the term of any
            Stock Option.

                                       37
<PAGE>

            17.6 Governing Law. This Plan shall be governed and construed in
      accordance with the laws of the State of Delaware (regardless of the law
      that might otherwise govern under applicable Delaware principles of
      conflict of laws).

            17.7 Construction. Wherever any words are used in this Plan in the
      masculine gender they shall be construed as though they were also used in
      the feminine gender in all cases where they would so apply, and wherever
      any words are used herein in the singular form they shall be construed as
      though they were also used in the plural form in all cases where they
      would so apply.

            17.8 Other Benefits. No Award payment under this Plan shall be
      deemed compensation for purposes of computing benefits under any
      retirement plan of the Company or its subsidiaries nor affect any benefits
      under any other benefit plan now or subsequently in effect under which the
      availability or amount of benefits is related to the level of
      compensation.

            17.9 Costs. The Company shall bear all expenses included in
      administering this Plan, including expenses of issuing Common Stock
      pursuant to any Awards hereunder.

            17.10 No Right to Same Benefits. The provisions of Awards need not
      be the same with respect to each Participant, and such Awards to
      individual Participants need not be the same in subsequent years.

            17.11 Death/Disability. The Committee may in its discretion require
      the transferee of a Participant to supply it with written notice of the
      Participant's death or Disability and to supply it with a copy of the will
      (in the case of the Participant's death) or such other evidence as the
      Committee deems necessary to establish the validity of the transfer of an
      Award. The Committee may also require that the agreement of the transferee
      to be bound by all of the terms and conditions of this Plan.

            17.12 Section 16(b) of the Exchange Act. All elections and
      transactions under this Plan by persons subject to Section 16 of the
      Exchange Act involving shares of Common Stock are intended to comply with
      any applicable exemptive condition under Rule 16b-3. The Committee may
      establish and adopt written administrative guidelines, designed to
      facilitate compliance with Section 16(b) of the Exchange Act, as it may
      deem necessary or proper for the administration and operation of this Plan
      and the transaction of business thereunder.

            17.13 Severability of Provisions. If any provision of this Plan
      shall be held invalid or unenforceable, such invalidity or
      unenforceability shall not affect any other provisions hereof, and this
      Plan shall be construed and enforced as if such provisions had not been
      included.

            17.14 Headings and Captions. The headings and captions herein are
      provided for reference and convenience only, shall not be considered part
      of this Plan, and shall not be employed in the construction of this Plan.

                                       38
<PAGE>

                                  ARTICLE XVIII

                             EFFECTIVE DATE OF PLAN

      The Plan shall become effective upon adoption by the Board (i.e., October
19, 1999), subject to the approval of this Plan by the stockholders of the
Company in accordance with the requirements of the laws of the State of Delaware
or such later date as provided in the adopting resolution.

                                  ARTICLE XIX

                                  TERM OF PLAN

      No Award shall be granted pursuant to this Plan on or after the tenth
anniversary of the earlier of the date this Plan is adopted or the date of
stockholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.

                                       39
<PAGE>

                                    EXHIBIT A

                              PERFORMANCE CRITERIA

      Performance Goals established for purposes of conditioning the grant of an
Award of Restricted Stock based on performance or the vesting of
performance-based Awards of Restricted Stock, Performance Units and/or
Performance Shares shall be based on one or more of the following performance
criteria ("Performance Criteria"): (i) the attainment of certain target levels
of, or a specified percentage increase in, revenues, income before income taxes
and extraordinary items, net income, earnings before income tax, earnings before
interest, taxes, depreciation and amortization or a combination of any or all of
the foregoing; (ii) the attainment of certain target levels of, or a percentage
increase in, after-tax or pre-tax profits including, without limitation, that
attributable to continuing and/or other operations; (iii) the attainment of
certain target levels of, or a specified increase in, operational cash flow;
(iv) the achievement of a certain level of, reduction of, or other specified
objectives with regard to limiting the level of increase in, all or a portion
of, the Company's bank debt or other long-term or short-term public or private
debt or other similar financial obligations of the Company, which may be
calculated net of such cash balances and/or other offsets and adjustments as may
be established by the Committee; (v) the attainment of a specified percentage
increase in earnings per share or earnings per share from continuing operations;
(vi) the attainment of certain target levels of, or a specified increase in
return on capital employed or return on invested capital; (vii) the attainment
of certain target levels of, or a percentage increase in, after-tax or pre-tax
return on stockholders' equity; (viii) the attainment of certain target levels
of, or a specified increase in, economic value added targets based on a cash
flow return on investment formula; (ix) the attainment of certain target levels
in the fair market value of the shares of the Company's common stock; and (x)
the growth in the value of an investment in the Company's common stock assuming
the reinvestment of dividends. For purposes of item (i) above, "extraordinary
items" shall mean all items of gain, loss or expense for the fiscal year
determined to be extraordinary or unusual in nature or infrequent in occurrence
or related to a corporate transaction (including, without limitation, a
disposition or acquisition) or related to a change in accounting principle, all
as determined in accordance with standards established by Opinion No. 30 of the
Accounting Principles Board.

      In addition, such Performance Criteria may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted under
Code Section 162(m), but only to the extent permitted under Code Section 162(m)
(including, without limitation, compliance with any requirements for stockholder
approval), the Committee may: (i) designate additional business criteria on
which the Performance Criteria may be based or (ii) adjust, modify or amend the
aforementioned business criteria.

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