Document:

exv10w2

Table of Contents

Exhibit 10.2

 
 
 
 
 
 

2005 Rohm and Haas
Company

Non-Qualified Savings Plan

(As Amended and Restated May 2, 2005)

 
 
 
 
 
 

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TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	PAGE
	ARTICLE I

	 	INTRODUCTION
	 	1
	ARTICLE II

	 	PURPOSE
	 	1
	ARTICLE III

	 	DEFINITIONS
	 	1
	ARTICLE IV

	 	ELIGIBILITY
	 	5
	ARTICLE V

	 	EMPLOYEE PARTICIPATION
	 	5
	ARTICLE VI

	 	CONTRIBUTIONS TO THE PLAN
	 	8
	ARTICLE VII

	 	INVESTMENT OF PARTICIPANT CONTRIBUTIONS
	 	8
	ARTICLE VIII

	 	PARTICIPANT ACCOUNTS AND TRUST FUND
	 	9
	ARTICLE IX

	 	VESTING
	 	10
	ARTICLE X

	 	DISTRIBUTION OF ACCOUNTS
	 	10
	ARTICLE XI

	 	REEMPLOYMENT
	 	12
	ARTICLE XII

	 	ADMINISTRATION OF THE PLAN
	 	12
	ARTICLE XIII

	 	PLAN AMENDMENT; FUTURE OF THE PLAN
	 	13
	ARTICLE XIV

	 	GENERAL PROVISIONS
	 	14
	APPENDIX A

	 	INVESTMENT FUNDS
	 	A-1

 

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ARTICLE I

INTRODUCTION

     1.1 This is the Rohm and Haas Company 2005 Non-Qualified Savings Plan (the
“Plan”), adopted by the Company effective January 1, 2005. This Plan is
intended to comply with the applicable provisions of the American Jobs Creation
Act of 2004 (“AJCA”) and is to be construed in accordance with AJCA and the
regulations and other guidance issued thereunder. Without affecting the
validity of any other provision of the Plan, to the extent that any Plan
provision does not meet the requirements of ACJA and the regulations issued
thereunder, it shall be void ab initio and have no effect.

     The Plan constitutes an amendment and restatement of the Rohm and Haas
Company Non-Qualified Savings Plan, as amended and restated effective January
1, 2003 (the “2003 NQSP”) and shall apply only to deferrals of compensation on
or after January 1, 2005. Amounts considered “deferred” (under AJCA and the
regulations and other guidance issued thereunder) prior to January 1, 2005
shall continue to be subject to the terms of the 2003 NQSP.

ARTICLE II

PURPOSE

     2.1 The purpose of the Plan is to provide additional retirement savings
benefits beyond the otherwise determined savings benefits provided by the Rohm
and Haas Company Employee Stock Ownership and Savings Plan (the “Savings Plan”)
for a select group of management and highly compensated employees of the Rohm
and Haas Company.

     In addition, to the extent not provided for in the preceding paragraph,
the Plan also provides additional savings benefits for eligible employees of
the Company whose otherwise determined savings benefits from the Savings Plan
are limited by section 415 or section 401(a)(17) of the Internal Revenue Code
of 1986, as amended.

ARTICLE III

DEFINITIONS

The terms used herein shall have the following meanings, unless a different
meaning is clearly required by the context:

     3.1
“Account” means a Participant’s account under the Plan including the
following sub-accounts:

          3.1.1
“Rohm and Haas Stock Account” shall mean that portion of a Participant’s
Account maintained to record all amounts notionally invested in the Rohm and
Haas Stock Fund in the form of Stock Units, pursuant to Section 6.1 and Section
6.2.

          3.1.2
“Tax-Deferred Account” shall mean that portion of a Participant’s Account
maintained to record all amounts notionally invested in the Savings Fund(s),
pursuant to Section 6.1.

     3.2
“Administrative Committee” means the Rohm and Haas Benefits Administrative
Committee. The Company has designated the Administrative Committee to be the
named fiduciary with respect to administrative matters of the Plan. The duties
of the Administrative Committee are outlined in Article XII of the Plan.

     3.3
“Affiliated Company” means Rohm and Haas Company and any other entity
required to be aggregated with the Rohm and Haas Company pursuant to
regulations and other guidance issued under section 409A of the Code.

 

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     3.4 “Base Pay” shall include short term disability or sick pay, vacation pay,
holiday pay, jury duty pay, bereavement pay, salary reductions under a
Company-sponsored Code section 401(k) or Code section 125 plan, personal time
pay, military pay, expatriate split salary pay, and supplemental workers’
compensation payments, but shall exclude any workers’ compensation payments,
long-term disability payments and unused vacation payments.

     3.5 “Beneficiary” means the person, trust or institution designated to receive
benefits in accordance with Article X. The Beneficiary of a Participant who
has not effectively designated a beneficiary shall be the Participant’s estate.

     3.6 “Board of Directors” means the Board of Directors of the Rohm and Haas
Company.

     3.7 “Bonus” includes the annual incentive awards granted in March of each Plan
Year (the “Annual Bonus”), and amounts granted under certain sales incentive
programs, as well as any “extra wages” earned while holding a temporary job.
The term “Bonus” excludes all other bonuses and special awards.

     3.8 “Change in Control” means one of the events described in Sections 3.8.1,
3.8.2 or 3.8.3 below. Whether a Change in Control has occurred shall be
objectively determinable and not subject to the discretion of the Plan
Administrator, the Board of Directors or any other person.

          3.8.1 Change in Ownership of the Company. The acquisition by any person,
entity or group of stock of the Company that, together with the stock already
held by such person, entity or group, constitutes more than 50% of the total
fair market value or total voting power of the stock of the Company; provided
that if any one person, entity or group is considered to own more than 50% of
the total fair market value or total voting power of the stock of the Company,
the acquisition of additional stock by the same person, entity or group shall
not be considered to cause a change in ownership of the Company under this
Section 3.8.1, or a change in effective control of the Company under Section
3.8.2 below. An increase in the percentage of stock owned by any person,
entity or group, as a result of a transaction in which the Company acquires its
stock in exchange for property shall be treated as an acquisition of stock for
purposes of this Section 3.8.1. This Section 3.8.1 shall only apply when there
is a transfer of Company stock (or issuance of Company stock) and stock of the
Company remains outstanding after the transaction.

          3.8.2 Change in Effective Control of the Company. During any 12-month period,
(i) the acquisition by any person, entity or group of stock of the Company that
constitutes 35% or more of the total voting power of the stock of the Company,
or (ii) a majority of the members of the Board of Directors is replaced by
directors whose appointment or election is not endorsed by a majority of the
members of the Board of Directors as constituted prior to the date of such
appointment or election; provided that if any person, entity or group is
considered to effectively control the Company within the meaning of this
Section 3.8.2, the acquisition of additional control of the Company shall not
be considered to cause a change in effective control of the Company under this
Section 3.8.2, or a change in ownership of the Company under Section 3.8.1.

          3.8.3 Change in Ownership of a Substantial Portion of the Company’s Assets.
During any 12-month period, the acquisition by any person, entity or group of
assets of the Company that have a total gross fair market value equal to more
than 40% of the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition. For purposes of this Section
3.8.3, “gross fair market value” means the value of the Company’s total assets
or the value of the assets being disposed of, determined without regard to any
associated liabilities. Notwithstanding the foregoing, a Change in Control
shall not occur under this Section 3.8.3 where there is a transfer of assets to
an entity that is controlled by the stockholders of the Company immediately
after the transfer, including:

               (a) a stockholder of the Company (immediately before the asset transfer)
in exchange for or with respect to its stock;

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               (b) an entity, 50% or more of the total value or voting power of which is
owned, directly or indirectly, by the Company;

               (c) a person, entity or group that owns, directly or indirectly, 50% or
more of the total value or voting power of all of the outstanding stock of the
Company; or

               (d) an entity, at least 50% of the total value or voting power of which is
owned, directly or indirectly, by a person, entity or group described in
subparagraph (c).

          3.8.4 For purposes of this Section 3.8, the following rules shall apply:

               (a) Persons or entities shall not be considered to be acting as a group
solely because they purchase or own stock of the Company at the same time, or
as a result of the same public offering. However, persons or entities shall be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Company. If a person or entity owns
stock of the Company and stock of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business
transaction with the Company, such stockholder shall be considered to be acting
as a group only with other stockholders of the Company prior to the transaction
and not with respect to the stockholder’s ownership interest in the other
corporation.

               (b) Stock ownership shall be determined in accordance with section 318(a)
of the Code. Stock underlying a vested option shall be considered to be owned
by the individual who holds the vested option (and stock underlying an unvested
option shall not be considered to be owned by the individual who holds the
unvested option). For purposes of the preceding sentence, however, if a vested
option is exercisable for stock that is not substantially vested (as defined in
Treas. Reg. sections 1.83-3(b) and (j)), the stock underlying the option shall
not be treated as owned by the individual who holds the option.

          3.8.5 Notwithstanding any of the foregoing, a Change in Control shall not
include any acquisition of Company common stock by the direct lineal
descendents of Otto Haas and Phoebe Haas, the spouses of such descendents and
any trusts and foundations established by any of them.

     3.9 “Code” means the Internal Revenue Code of 1986, as amended.

     3.10 “Company” means Rohm and Haas Company and such of its Affiliated Companies
as may be designated from time to time by its Board of Directors and as may
adopt the Plan.

     3.11 “Compensation” means, for the purpose of applying the limits of Code
section 401(a)(17) and Code section 415, and for all other purposes unless
specified otherwise, Base Pay, Bonus, LTPSP Payments, any Stock Award(s),
overtime pay, Shift Payments and commissions.

     3.12 “Disabled” or “Disability” means a Participant is totally and permanently
incapacitated and as a result is entitled to receive and is receiving
disability benefits under the Social Security Act.

     3.13 “Effective Date” means January 1, 2005.

     3.14 “Employee” means any salaried employee of the Company who is employed on a
regular full-time basis.

     3.15 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations issued pursuant thereto.

     3.16 “Fair Market Value” means, on any given date, the average of the high and
low prices of Rohm and Haas Company common stock on the New York Stock Exchange
composite transaction quotations for the immediately preceding trading day.

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     3.17 “Five-Percent Owner” means any Employee who owns (or is considered as
owning within the meaning of section 318 of the Code) more than 5% of the
outstanding stock of the Company or stock possessing more than 5% of the total
combined voting power of all stock of the Company. For purposes of this
Section, section 318(a)(2)(C) of the Code shall be applied by substituting “5%”
for “50%” each time it appears therein.

     3.18 “Income” shall mean all earnings on investments, as well as all realized
and unrealized increases and decreases in the value of the securities held.

     3.19 “Investment Adviser” shall mean the adviser or advisers appointed from
time to time by the Investment Committee to supervise and manage the investment
and reinvestment of the Trust Fund. Any such adviser must be (i) registered as
such under the Investment Adviser’s Act of 1940; or (ii) a bank (as defined in
such Act); and (iii) must acknowledge in writing that it is a fiduciary with
respect to the Plan.

     3.20 “Investment Committee” means the Rohm and Haas Benefits Investment
Committee. The duties of the Investment Committee are defined in Article XIII.
The Company has designated this Committee to be the named fiduciary of the
Plan for financial matters as outlined in the Plan.

     3.21 “Long-Term Performance Share Plan (“LTPSP”) Payments” shall mean any
portion of the benefits payable in cash to a Plan Participant under a long term
performance share, incentive or bonus plan sponsored by the Company during a
Plan Year.

     3.22 “Participant” means any Employee who is eligible to receive benefits under
Article IV and who has enrolled in the Plan in accordance with Article V.

     3.23 “Plan” means the Rohm and Haas Company 2005 Non-Qualified Savings Plan, as
amended from time to time.

     3.24 “Plan Year” means the calendar year.

     3.25 “Rohm and Haas Stock Fund” shall mean the investment fund which consists
of Stock Units contributed by Participants and the Company pursuant to Article
VI.

     3.26 “Savings Funds” shall mean the investment funds offered under the Savings
Plan and designated by the Company for tracking the Trust Fund’s investment
performance. A list of the investment funds is attached as Appendix A to the
Plan.

     The investment performance of the Savings Funds shall be used to measure
the investment performance of the Trust Fund. The actual investment
performance of the Trust Fund may be less than or greater than that of the
Savings Funds. The Trustee is not obligated to actually invest the Participant
contributions credited to the Trust Fund in the Savings Funds. Participants’
Accounts shall, therefore, to the extent possible, track the investment
performance of the Savings Funds.

     3.27 “Savings Plan” means the Rohm and Haas Company Employee Stock Ownership
and Savings Plan, as amended from time to time.

     3.28 “Scheduled Benefit Distribution Date” means the date specified by a
Participant in his or her contribution agreement on which distributions from
the Plan will commence.

     3.29 “Separation from Service” shall have the meaning provided in regulations
and other guidance issued under section 409A of the Code.

     3.30 “Specified Employee” means an Employee who, at any time during the Plan
Year, is:

          3.30.1 an officer of the Company having annual Compensation greater than
$130,000 (as adjusted under section 416(i)(1) of the Code);

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          3.30.2 a Five-Percent Owner; or

          3.30.3 a person who has annual Compensation from the Employer of more than
$150,000 and who would be classified as a Five-Percent Owner if “one percent”
were substituted for “five percent” each time it appears in the definition of
such term.

     3.31 “Shift Payments” shall include the shift differential payments made to
individuals (including supervisors of hourly employees) who work a rotating
shift or any shift other than a “day” shift.

     3.32 “Stock Awards” shall mean any Rohm and Haas Company common stock awarded
to the Participant pursuant to an employee benefit plan approved by the
stockholders, determined without regard to any restriction.

     3.33 “Stock Unit” means a book-entry unit representing the right to acquire one
share of Rohm and Haas Company common stock. The number of Stock Units shall
be adjusted to reflect stock dividends, stock splits, combinations of shares,
and any other change in the corporate capital structure of Rohm and Haas
Company including reorganization, recapitalization, merger and consolidation.
The value of a Stock Unit at any time shall equal the current Fair Market Value
of a share of Company common stock.

     3.34 “Trust Fund” means the aggregate of all Participant contributions credited
to the grantor trust established by the Company pursuant to section 671 of the
Code.

     3.35 “Valuation Date” means, with respect to both the Savings Funds and the
Trust Funds, 4 p.m. Eastern Standard Time of each day that the New York Stock
Exchange is opened for business.

ARTICLE IV

ELIGIBILITY

     4.1 Each Employee of the Company who is classified as an exempt level 14 or
above is eligible to become a Participant in the Plan. Participation shall be
effective as soon as administratively practicable following the Participant’s
enrollment in the Plan, as described in Section 5.1 below.

ARTICLE V

EMPLOYEE PARTICIPATION

     5.1 Enrollment

          5.1.1 An eligible Employee, as described in section 4.1 above, may enroll in
the Plan by submitting a written, telephonic or electronic contribution
agreement in accordance with Section 5.3 and any other procedures prescribed by
the Administrative Committee. Such Employee shall become a Participant
effective as of the time prescribed in Section 5.2.

          5.1.2 A Participant may designate a Beneficiary or Beneficiaries, independent
of any beneficiary designation under the Savings Plan, and may change such
designation at any time by written notice to the Company.

     5.2 Effective Date — For the purpose of determining the period of a
Participant’s participation, the effective date of such participation shall be
as soon as is administratively feasible following the date on which the
Participant’s contribution agreement is received.

     5.3 Contribution Agreement.

          5.3.1 First Year of Participation. Upon first becoming eligible to participate
in the Plan, or upon rehire, an eligible Employee wishing to participate in the
Plan must submit his or her contribution

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agreement to the Administrative Committee within 30 days after becoming
eligible. Such contribution agreement shall only be effective with respect to
Compensation earned after the date on which it is submitted.

          5.3.2 Continuing Participation. Contribution agreements with respect to
Compensation earned in any Plan Year subsequent to the year of a Participant’s
initial eligibility may only be submitted by a Participant during the
enrollment period designated by the Administrative Committee, but in no event
later than December 15th of the Plan Year preceding the Plan Year in which such
Compensation is earned.

          5.3.3 Participants in the 2003 NQSP. Notwithstanding the above, the 2005 Plan
Year shall not be considered to be the first year of participation with respect
to any Employee who was eligible to participate or participated in the 2003
NQSP as of December 31, 2004. Such Employees shall participate in this Plan in
accordance with the requirements of Section 5.3.2.

          5.3.4 Deferral Elections for Compensation Other than Annual Bonus, LTIP
(“Performance Share Plan” or “PSP”) Payments and Stock Awards. A Participant
may authorize the Company to make contributions to the Participant’s
Tax-Deferred Account on behalf of the Participant, through a written,
telephonic, or electronic contribution agreement, in whole percentage points of
1% to 50% of the Participant’s Compensation (excluding the Annual Bonus,
LTIP/PSP Payments and Stock Awards) without regard to the Code section
401(a)(17) limit. Such contribution agreement shall be submitted by the
Participant within the time period prescribed in Section 5.3.1 or 5.3.2, as
applicable.

          5.3.5 Deferral of Annual Bonus and LTIP/PSP Payments. A Participant may
make a separate election in a written, telephonic, or electronic contribution
agreement with respect to the Participant’s Annual Bonus and any LTIP/PSP
Payment at least six months prior to the end of the applicable performance
period relating to such Annual Bonus and/or LTIP/PSP Payment, authorizing the
Company to contribute, on the Participant’s behalf, 1% to 100% (in whole
percentage points) of the Participant’s Annual Bonus and/or the cash portion of
the Participant’s LTIP/PSP Payment. Contributions under this Section 5.3.5
shall be credited to the Participant’s Account in the year in which the portion
of the Annual Bonus and/or LTIP/PSP Payment subject to this election would
otherwise have been payable to such Participant. Amounts elected under this
Section 5.3.5 may not be contributed to the Participant’s Rohm and Haas Stock
Account.

          5.3.6 Deferral of Certain Stock Awards. Subject to the limitations
described in subparagraph (d) below, a Participant may make an irrevocable
election in his or her contribution agreement with respect to any Stock Award
(‘Shares’) in the Plan Year preceding the Plan Year in which the Stock Award is
granted (or in the case of Stock Awards granted under the LTIP/PSP, at least
six months prior to the end of the performance period relating to such Stock
Award), authorizing the Company to convert such Shares, once any applicable
restrictions lapse, on the Participant’s behalf, as follows:

               (a) Into units of the Rohm and Haas Stock Fund, in whole percentage points
of 1% to 100%; or

               (b) Into shares of the Savings Fund(s) elected by the Participant under
the Plan, in whole percentage points of 1% to 100%; or

               (c) Into any combination of units of the Rohm and Haas Stock Fund, and
shares of the Savings Fund(s) elected by the Participant under the Plan.

               (d) Units of the Rohm and Haas Stock Fund acquired through the conversion
of restricted stock may not be transferred or diversified into any other Savings
Fund, except as otherwise provided in Section 7.4 of the Plan.

          5.3.7 Irrevocable Election. Unless changed or suspended as described in
Sections 5.3.8 or 5.3.9 below, a Participant’s election(s) pursuant to this
Section 5.3 shall remain in full force and effect from year to year and shall
govern the contributions to his or her Account.

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          5.3.8 Change in Contribution Agreement — A Participant may elect to change or
revoke his or her written, telephonic, or electronic contribution agreement
with respect to future Compensation in the manner described in this Section.
Such election may only be made during the annual enrollment period designated
by the Administrative Committee.

          5.3.9 Suspension of Contributions — Notwithstanding anything herein to the
contrary, if, after other required and authorized salary reductions have been
made in a payroll period, there is insufficient money available in a
Participant’s pay to permit the Participant’s contribution, the contribution
agreement shall automatically be suspended for that payroll period only.

     5.4 Designation of Time and Form of Payment.

          5.4.1 In General. At the time of a Participant’s initial election to defer
Compensation pursuant to Section 5.3, he or she shall also elect the time and
manner in which his or her Account will be distributed from the Plan.
Permissible distribution events and forms of benefit shall be those set forth
in Article X. Except as provided in Section 5.4.2, such election shall remain
in effect from year to year and shall govern all distributions from the
Participant’s Account. Notwithstanding the foregoing, a Participant who
previously participated in the 2003 NQSP and who made or was deemed to have
made a distribution election pursuant to Section 5.5 with respect to
Compensation earned in 2005 and/or Shares that remain unvested as of December
31, 2004, shall be permitted to make a new distribution election on or before
December 31, 2005 with respect to the portion of his or her Account
attributable to Compensation earned after December 31, 2005 (including any
Stock Awards granted after December 31, 2005) and any related Company matching
contributions (the “Post-2005 Account”). Except as provided in Section 5.4.2,
such new election shall remain in effect from year to year and shall govern all
distributions from the Participant’s Post-2005 Account. If such Participant
fails to make a new distribution election as described herein, his or her
actual or deemed distribution election pursuant to Section 5.5 shall remain in
effect and shall govern all distributions from the Participant’s Post-2005
Account.

          5.4.2 Election of a Scheduled Benefit Payment Date. Notwithstanding the
requirements of Section 5.4.1, a Participant who elects a Scheduled Benefit
Distribution Date shall be permitted to make a new distribution election with
respect to future Compensation in the Plan Year preceding the Plan Year in
which the Scheduled Benefit Distribution Date occurs. Such election shall be
made during the designated enrollment period occurring in such preceding Plan
Year. Such election shall apply to all amounts credited to the Participant’s
Account after the Scheduled Benefit Distribution Date; provided, however, that
if such election specifies a new Scheduled Benefit Distribution Date, such
election shall only apply until the new Scheduled Benefit Distribution Date,
and the Participant shall again make a distribution election as provided herein
with respect to amounts subsequently credited to his or her Account. If a
Participant who has elected a Scheduled Benefit Distribution Date fails to make
a new distribution election as provided hereunder, he or she shall be deemed to
have elected to have all amounts credited to his or her Account after a
Scheduled Benefit Distribution Date distributed in a single lump sum upon his
or her Separation from Service.

     5.5 Treatment of Compensation Deferred Prior to 2005 under the 2003 NQSP.

          5.5.1 Compensation other than certain Stock Awards. On or before December 31,
2005, a Participant who made a deferral election under the 2003 NQSP with
respect to Compensation earned in 2005 (“2005 Compensation”) may cancel such
election. If a Participant does not cancel such election, his or her 2005
Compensation shall be deemed to be deferred into this Plan. A Participant who
does not cancel a deferral election with respect to 2005 Compensation shall
designate the time and manner in which the portion of his or her Account
attributable to 2005 Compensation and any related Company matching
contributions will be distributed from the Plan. Permissible distribution
events and forms of benefit shall be those set forth in Article X. A
Participant who fails to affirmatively elect a time and manner of distribution
hereunder shall be deemed to have elected to have the portion of his or her
Account attributable to 2005 Compensation and any related Company matching
contributions distributed in a single lump sum upon his or her Separation from
Service.

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          5.5.2 Certain Stock Awards. On or before December 31, 2005, a Participant who
made a deferral election under the 2003 NQSP with respect to Shares that remain
unvested as of December 31, 2004 (“Unvested Shares”), may cancel such election.
If a Participant does not cancel such election, his or her Unvested Shares
shall be deemed to be deferred into this Plan. A Participant who does not
cancel a deferral election with respect to Unvested Shares shall designate the
time and manner in which the portion of his or her Account attributable to the
Unvested Shares shall be distributed from the Plan. Permissible distribution
events and forms of benefit shall be those set forth in Article X. A
Participant who fails to affirmatively elect a time and manner of distribution
hereunder shall be deemed to have elected to have the portion of his or her
Account attributable to the Unvested Shares distributed in a single lump sum
upon his or her Separation from Service.

ARTICLE VI

CONTRIBUTIONS TO THE PLAN

     6.1 Participant Contributions.

          6.1.1 Tax-Deferred Account. For each payroll period, the Company, on behalf of
any Participant who makes an election to contribute amounts to his or her
Tax-Deferred Account pursuant to Section 5.3, above, shall credit such
Participant’s Tax-Deferred Account with a notional amount equal to such
deferral contribution(s). Such notional contributions shall be credited to the
Participant’s Tax-Deferred Account on a monthly basis; except that if a
Participant’s contribution to his or her Tax-Deferred Account is attributable
to an LTPSP Payment or Stock Award, as described in Section 5.3.5 and Section
5.3.6 above, then such contributions shall be credited to the Participant’s
Tax-Deferred Account as soon as administratively practicable following the date
on which the LTPSP Payment would, but for the Participant’s election, have been
paid to the Participant; or, in the case of a Stock Award, as soon as
administratively practicable following the date on which restrictions on the
stock subject to the election lapse.

          6.1.2 Rohm and Haas Stock Account. The Company, on behalf of any Participant
who makes an election pursuant to Section 5.3.6 above regarding the conversion
and contribution of “Shares” to his or her Rohm and Haas Stock Account, shall
credit such Participant’s Rohm and Haas Stock Account with a notional amount
equal to such contribution(s) in the form of Stock Units. Such notional
contributions shall be allocated to the Participant’s Rohm and Haas Stock
Account as soon as administratively practicable following the date on which the
restrictions on the stock subject to the election lapse.

     6.2 Company Matching Contributions. The Company shall match each Participant’s
contributions to the Plan pursuant to Section 6.1, except that for the purpose
of this Section 6.2, contributions attributable to LTPSP Payments and Stock
Awards shall be excluded. Such matching contributions shall be made to the
Participant’s Rohm and Haas Stock Account in Rohm and Haas Stock Units. The
number of Rohm and Haas Stock Units to be contributed shall be 60% of the
amount determined by dividing the lesser of (i) the Participant’s eligible
contributions for the year, or (ii) 6% of the Participant’s Compensation
(excluding Stock Awards and LTPSP Payments), by the Fair Market Value of Rohm
and Haas common stock on the date the contribution is allocated.

ARTICLE VII

INVESTMENT OF PARTICIPANT CONTRIBUTIONS

     7.1 General. Investment elections under this Article VII are notional only, to
be used for the sole purpose of calculating the amount of a Participant’s
benefit under the Plan at any time. Actual investments, if any, by the Company
to defray the costs of this Plan will be governed by Section 8.3.

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     7.2 Participant Contributions. Pursuant to Section 6.1 above, and in
accordance with Article VIII below, the contributions allocated to a
Participant’s Tax-Deferred Account will be invested on a notional basis in the
Savings Fund(s) elected by such Participant in the manner prescribed by the
qualified Savings Plan, and contributions allocated to a Participant’s Rohm and
Haas Stock Account will be invested on a notional basis in the Rohm and Haas
Stock Fund. No contributions under this Plan may be allocated to the Rohm and
Haas ESOP Fund, and no contributions may be made to the Rohm and Haas Stock
Fund, (also called the “Stock Unit” Fund), except as permitted in subsection
5.3.6 above. Any change in a Participant’s investment elections, or a transfer
or diversification of funds under this Plan, will have no effect on the
Participant’s investment elections in the qualified Savings Plan, or result in
a transfer or diversification of funds under the qualified Savings Plan; and
vice-versa with respect to changes, transfers, or diversification under the
Savings Plan.

     7.3 Company Contributions. Pursuant to Section 6.2 above, and in accordance
with Article VIII below, all Company matching contributions allocated to the
Participant’s Rohm and Haas Stock Account shall be invested on a notional basis
in the Rohm and Haas Stock Fund.

     7.4 Diversification of Investments in the Rohm and Haas Stock Fund.
Investments of both Participant and Company contributions credited to the Rohm
and Haas Stock Fund on a notional basis may not be subsequently reallocated to
other Savings Funds, except as provided below:

          7.4.1 Subject to the restrictions set forth in Section 7.4.2 below, a
Participant may diversify his or her notional investments in the Rohm and Haas
Stock Fund beginning on the date on which a Participant attains age 55 and has
completed five (5) years of Vesting Service with the Company (as defined in the
Rohm and Haas Company Retirement Plan) by reallocating or transferring any
portion of his or her Rohm and Haas Stock Account into any other available
Savings Fund(s).

          7.4.2 Any Participant designated as a Section 16b Insider by the Company shall
not be eligible to diversify any portion of his or her Rohm and Haas Stock
Account as described in Section 7.4.1 above. In addition, any Participant who
reallocates any portion of his or her Rohm and Haas Stock Account into any
other Savings Fund(s) pursuant to Section 7.4.1 above, may not subsequently
reallocate investments into the Rohm and Haas Stock Fund.

     7.5 Investment Reallocation. Subject to any limitations which may exist with
respect to transfers as provided in the prospectus for a particular Savings
Fund, a Participant may elect to transfer any portion of his or her existing
Account balance, except for amounts credited to the Rohm and Haas Stock
Account, among the available Savings Funds at any time. A Participant may not
transfer any portion of his or her existing Account balance into the Rohm and
Haas Stock Fund.

     Amounts credited to a Participant’s Rohm and Haas Stock Account are
subject to the diversification rules described in Section 7.4 above.

ARTICLE VIII

PARTICIPANT ACCOUNTS AND TRUST FUND

     8.1 The Administrative Committee shall maintain, or cause to be maintained, for
each Participant a Rohm and Haas Stock Account and a Tax-Deferred Account.
Notional amounts equal to the value of a Participant’s before-tax contributions
shall be credited to the Participant’s Tax-Deferred Account or Rohm and Haas
Stock Account by the Company on the Participant’s behalf, as appropriate.
Notional amounts equal to the value of the Company’s matching contributions
shall be credited to the Participant’s Rohm and Haas Stock Account.

     8.2 The notional amount credited to a Participant’s Account will be reduced by
any amounts withdrawn.

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     8.3 Notwithstanding Article VII, the Administrative Committee shall direct the
Trustee to establish a Trust Fund for the Plan. The Investment Committee shall
direct the investment of such Trust Fund. The actual investment of the Trust
Fund need not correspond to actual Participant elections under Section 7.1. As
of each Valuation Date, the Trustee will determine the value of each Savings
Fund, including Income thereon. The Trustee shall also value the Trust Fund as
of each Valuation Date, and report to the Company the difference between the
Trust Fund’s actual value and the Savings Fund’s value, as derived from the
investment elections by Participants.

     8.4 The Investment Committee shall direct the funding of the Trust Fund from
time to time as it deems appropriate and in the best interests of Participants
and the Company.

ARTICLE IX

VESTING

     9.1 A Participant shall at all times be 100% vested in all amounts credited to
his or her Account.

     9.2 A Participant with funds transferred from an account under the Morton
International, Inc. Supplemental Employee Savings and Investment Plan (a “SESIP
Account”) shall become 100% vested in the amount of such funds as of the date
of transfer.

ARTICLE X

DISTRIBUTION OF ACCOUNTS

     10.1 Timing of Distribution.

          10.1.1 Elected by Participant. A Participant may elect, at the time of his or
her initial deferral of Compensation, to receive distribution of his or her
Account commencing on:

               (a) the Participant’s Separation from Service; or

               (b) a Scheduled Benefit Distribution Date; or

               (c) the earlier to occur of the events described in subparagraphs (a) and
(b).

          10.1.2 Other Distribution Events. Notwithstanding the foregoing, distributions
may be made prior to the time elected by the Participant upon the earliest to
occur of the following events:

               (a) the Participant dies;

               (b) the Participant becomes Disabled; or

               (c) the occurrence of a Change in Control.

          10.1.3 Distributions to Specified Employees. In the case of any Participant
who is a Specified Employee, a distribution payable on account of such
Participant’s Separation from Service shall not commence until six months after
the date of such Separation from Service (or, if earlier, the date of the
Participant’s death).

          10.1.4 Distributions shall commence as soon as is administratively feasible
following the applicable distribution event. If distribution is made on
account of the Participant’s death, such distribution shall be made to his or
her Beneficiary(ies). All decisions made by the Administrative Committee in
good faith and based upon affidavit or other evidence satisfactory to the
Administrative Committee regarding questions of fact in the determination of
the identity of such Beneficiary(ies) shall be conclusive and binding upon all
parties, and payment made in accordance therewith shall satisfy all liability
hereunder.

     10.2 Forms of Benefit

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          10.2.1 Distribution on Account of Separation from Service or at a Specified
Time. Distributions made on account of the events set forth in Section 10.1.1
shall be paid as provided in subparagraphs (a) or (b) below.

               (a) A Participant may elect, during the time or times set forth in Section
5.4 and/or Section 5.5 (as applicable), to receive distribution of his or her
Account:

                    (i) in a single sum payment; or

                    (ii) in installment payments over a term of years selected by the
Participant, which shall not exceed (1) in the case of an unmarried
Participant, the Participant’s life expectancy or (2) in the case of a married
Participant, the joint life expectancies of the Participant and the
Participant’s spouse. The life expectancies to be used will be determined from
tables issued by the Internal Revenue Service and will not be subject to
recalculation after payments begin. The amount of the payment to be made each
year (at intervals determined by the Administrative Committee) will be
determined by multiplying the balance of the Participant’s Account at the end
of the previous year by a fraction, the numerator of which will be one (1) and
the denominator of which will be the original term of years reduced by the
number of years during which payments have already been made. If the
Participant dies (or in the case of a married Participant, both the Participant
and the Participant’s spouse die) before all of the scheduled installment
payments have been made, any remaining payments shall be paid as soon as is
administratively feasible in a single sum to such Participant’s
Beneficiary(ies). All decisions made by the Administrative Committee in good
faith and based upon an affidavit or other evidence satisfactory to the
Administrative Committee regarding questions of fact in the determination of
the identity of such Beneficiary(ies) shall be conclusive and binding upon all
parties, and payment made in accordance therewith shall satisfy all liability
hereunder.

               (b) If a Participant fails to elect a form benefit as provided in
subparagraph (a), his or her Account shall be paid in a single lump sum.

          10.2.2 Other Distributions. Distributions made on account of the events
set forth in Section 10.1.2 shall be distributed in a single lump sum as soon
as is administratively feasible following the applicable distribution event.

     If distribution is made on account of the Participant’s death, such
distribution shall be made to his or her Beneficiary(ies). All decisions made
by the Administrative Committee in good faith and based upon an affidavit or
other evidence satisfactory to the Administrative Committee regarding questions
of fact in the determination of the identity of such Beneficiary(ies) shall be
conclusive and binding upon all parties, and payment made in accordance
therewith shall satisfy all liability hereunder.

     10.3 Change in Time of Distribution and Form of Benefit. With respect to
previously deferred Compensation, a Participant may elect to change the time of
distribution elected pursuant to Section 10.1.1 and/or the form of benefit
elected pursuant to Section 10.2.1 (a “subsequent election”), if the following
requirements are met:

          10.3.1 The subsequent election shall not take effect for at least twelve (12)
months after the date of such subsequent election;

          10.3.2 The first payment with respect to such subsequent election shall not be
made until at least five (5) years after the date on which distribution would
have otherwise begun; provided that earlier distribution may be made in the
event of the Participant’s death or Disability;

          10.3.3 If applicable, the subsequent election shall be made at least 12 months
prior to a Scheduled Benefit Distribution Date; and

          10.3.4 In no event shall a Participant be permitted to change his or her
elected form of benefit from installment payments to a single lump sum if such
change would result in a material

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acceleration of payment, as provided in regulations and other guidance issued
under section 409A of the Code.

     10.4 Permitted Acceleration of Payment. Notwithstanding the Participant’s
elected time and form of distribution pursuant to Section 10.2 and the
restrictions of Section 10.3, the time or schedule of a payment shall be
accelerated in the following circumstances:

          10.4.1 Payment shall be made to the extent necessary to comply with a domestic
relations order (as defined in section 414(p)(1)(B) of the Code) that meets the
requirements of the Company’s domestic relations order procedures applicable to
non-qualified plans, if such payment is made to an individual other than the
Participant.

          10.4.2 Payment shall be made to the extent necessary to comply with a
certificate of divestiture (as defined in Section 1043(b)(2) of the Code).

          10.4.3 Payment of a Participant’s entire Account shall be made upon his or her
Separation from Service, provided that (i) the payment is made on or before the
later of (A) the December 31 of the calendar year in which the Participant’s
Separation from Service occurs or (B) the date that is two and one-half (2-1/2)
months after the Participant’s Separation from Service and (ii) the payment is
not greater than $10,000.

          10.4.4 Payment shall be made to the extent necessary to satisfy any applicable
federal, state and local tax withholding requirements.

     10.5 Form of Distribution.

          10.5.1 Tax-Deferred Account. Amounts from a Participant’s Tax-Deferred Account
shall be distributed in cash.

          10.5.2 Rohm and Haas Stock Account. Stock Units notionally credited to a
Participant’s Rohm and Haas Stock Account shall be distributed in Company
common stock shares. The amount of such shares to be distributed shall equal
the number of whole Stock Units, plus a cash payment equal to the Fair Market
Value on the date of distribution of any fractional Stock Units, which are
credited to the Participant’s Account as of the date of distribution.

ARTICLE XI

REEMPLOYMENT

     11.1 If a Participant’s employment is terminated, and he or she is subsequently
reemployed as an Employee eligible to participate in the Plan under Article IV,
such eligible Employee may again participate in the Plan in accordance with
Article V.

ARTICLE XII

ADMINISTRATION OF THE PLAN

     12.1 The Administrative Committee will be responsible for the administration of
the Plan and is designated as the Plan’s agent to receive service of process.
All matters relating to the administration of the Plan, including the duties
imposed upon the Plan administrator by law, except those duties relating to the
control or management of Plan assets, shall be the responsibility of the
Administrative Committee. The Investment Committee will have the authority and
responsibility to control and manage the assets of the Plan. Members of both
the Administrative Committee and the Investment Committee shall be appointed
and removed by the Chief Executive Officer, or his or her designee.

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     12.2 The Administrative Committee shall have the full responsibility to
represent the Company and the Participants in all things it may deem necessary
for the proper administration of the Plan. Subject to the terms of the Plan,
the decision of the Administrative Committee upon any question of fact,
interpretation, definition or procedure relating to the administration of the
Plan shall be conclusive. The responsibilities of the Administrative Committee
shall include the following:

          12.2.1 Verifying all procedures by which payments to Participants and their
Beneficiaries are authorized;

          12.2.2 Deciding all questions relating to the eligibility of Employees to
become Participants in the Plan;

          12.2.3 Interpreting the provisions of the Plan in all particulars;

          12.2.4 Establishing and publishing rules and regulations for carrying out the
Plan;

          12.2.5 Preparing an individual record for each Participant in the Plan, which
shall be available for examination by such Participant, the Investment
Committee and its members, or other authorized persons; and

          12.2.6 Reviewing and answering any denied claim for benefits that has been
appealed to the Administrative Committee under the provisions of Section 14.6.

     12.3 The following general provision shall govern the actions of either the
Administrative or Investment Committee:

          12.3.1 The Committee shall choose a chairman from its members and shall appoint
a secretary who shall keep minutes of the Committee’s proceedings and shall be
responsible for preparing such reports as may be advisable for the
administration of the Plan. The Committee may employ and compensate such
advisory, clerical, and other employees as it may deem reasonable and necessary
to the performance of its duties.

          12.3.2 The action of the Committee shall be determined by a majority vote of
all its members, except that no member of the Committee may vote on any
question relating specifically to himself or herself.

          12.3.3 The members of the Committee shall serve without compensation for their
services as such. All expenses of the Committee shall be paid by the Company.

          12.3.4 The chairman or the secretary of the Committee may execute any written
direction on behalf of the Committee.

          12.3.5 The Committee may, at its discretion, allocate among its members or to
other persons those functions and responsibilities which it deems advisable for
the efficient and effective operation and management of the Plan.

          12.3.6 Except as expressly provided, neither the Committee nor any member
thereof shall be in any way subject to any suit or litigation or to any legal
liability for any cause or reason or thing whatsoever in connection with the
administration or financial performance of the Plan.

ARTICLE XIII

PLAN AMENDMENT; FUTURE OF THE PLAN

     13.1 Plan Amendment. The Company reserves the right to amend the Plan at any
time and from time to time, in any fashion, including such amendments as are
necessary to comply with the requirements of the AJCA and the regulations and
other guidance issued thereunder.

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     13.2 Expiration of the Plan. The Plan will expire on December 31, 2014. The
Company reserves the right at any time before that date to reduce, suspend or
discontinue payments to be made by it as provided hereunder. The Company
reserves the right to discontinue the Plan at any time. However, in no event
shall a discontinuance of the Plan cause the distribution of Accounts prior to
the time or times provided in Article X. In the event of a Change in Control,
the Company may in its discretion terminate the Plan and distribute all
Accounts to Participants within 12 months after such Change in Control.

ARTICLE XIV

GENERAL PROVISIONS

     14.1 The right of any Participant, or Beneficiary to receive future payments
under the provisions of the Plan shall be an unsecured claim against the
general assets of the Company. Any trust, and any other fund, account,
contract or arrangement that the Company chooses to establish for the future
payment of benefits under this Plan to a Participant or Beneficiary shall
remain part of the Company’s general assets and no person claiming payments
under the Plan shall have any right, title or interest in or to any such trust,
fund, account, contract or arrangement.

     14.2 Where appropriate, and wherever the singular is used, it shall be
interpreted as including the plural.

     14.3 To the extent permitted by law, payments to and benefits under the Plan
shall not be assignable. To the extent permitted by law, such payments and
benefits shall not be subject to attachment by creditors of, or through legal
processes against, any Participant or Beneficiary.

     14.4 Participation in the Plan shall not give any Employee the right to be
retained in the service of the Company, nor any right or claim to annuity
income unless such right has specifically accrued under the terms of the Plan.

     14.5 If any person entitled to receive any benefits hereunder is a minor, or is
deemed by the Administrative Committee or is adjudged to be legally incapable
of giving a valid receipt and discharge for such benefits, they will be paid to
the duly appointed guardian, custodian or committee of such minor or
incompetent, or they may be paid to such persons who the Administrative
Committee believes are caring for or supporting such minor or incompetent.

     14.6 Any Participant or Beneficiary who claims to be entitled to the payment of
a benefit under the Plan, should bring the matter to the attention of the
Company, normally through a local personnel department. If a specific claim as
to the amount of any benefit, the method of payment or any other matter under
the Plan is denied, the claimant will be provided with a written notice,
normally within 90 days of the date the claim was filed. The notice will
include:

          14.6.1 the specific reason or reasons for the denial;

          14.6.2 the specific reference or references to the Plan provisions on which the
denial is based;

          14.6.3 a notice that the claimant or the claimant’s duly authorized
representative may appeal the denial to the Administrative Committee within 60
days; and

          14.6.4 a description of any additional information or material necessary to
perfect the claim and an explanation of the need for such material or
information.

     In the event of an appeal, the claimant or the claimant’s representative,
may submit a written application for review of the denial, may examine
documents relating to this Plan or the claim, and may

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submit written issues, comments, and documents. Such appeal will be
promptly considered by the Administrative Committee.

     14.7 Except insofar as the law of Pennsylvania has been superseded by Federal
law, Pennsylvania law shall govern the construction, validity and
administration of this Plan.

     To record the adoption of this Plan, Rohm and Haas Company has caused its
authorized officers to execute the Plan and to affix its corporate name and
seal this ___day of _________, 2005.

	 	 	 
	[CORPORATE SEAL]
	 	ROHM AND HAAS COMPANY
	 
	 
	 
	Attest: _________________________
	 	By:___________________________

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APPENDIX A

INVESTMENT FUNDS

SAVINGS FUNDS

Vanguard Life Strategy Income Fund

Vanguard Life Strategy Conservative Growth Fund

Vanguard Life Strategy Moderate Growth Fund

Vanguard Life Strategy Growth Fund

Rohm and Haas Fixed Income Fund

Vanguard Total Bond Market Index Fund

Vanguard 500 Index Fund

Vanguard Extended Market Index Fund

Vanguard Developed Markets Index Fund

Vanguard Value Index Fund

Vanguard Growth Index Fund

Vanguard Small-Cap Value Index Fund

Vanguard Small-Cap Growth Index Fund

Vanguard European Stock Index Fund

Vanguard Pacific Stock Index Fund

Rohm and Haas Stock Fund (or “Stock Unit Fund”)

NOT AVAILABLE FOR INVESTMENT OF EMPLOYEE CONTRIBUTIONS:

Rohm and Haas ESOP Fund

A-1Exhibit 4.1

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
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
REASONABLY  ACCEPTABLE  TO THE COMPANY TO SUCH  EFFECT,  THE  SUBSTANCE OF WHICH
SHALL BE REASONABLY  ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN
CONNECTION  WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED  BROKER-DEALER  OR
OTHER LOAN WITH A FINANCIAL  INSTITUTION  THAT IS AN  "ACCREDITED  INVESTOR"  AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                   LIGHTEN UP ENTERPRISES INTERNATIONAL, INC.

                  THIS COMMON STOCK PURCHASE WARRANT (this "WARRANT")  CERTIFIES
that, for value received, _________________________ (the "HOLDER"), is entitled,
upon the terms and subject to the  limitations  on exercise  and the  conditions
hereinafter  set  forth,  at any time on or after the date of  issuance  of this
Warrant  (the  "INITIAL  EXERCISE  DATE")  and  on or  prior  to the  five  year
anniversary  of the  Initial  Exercise  Date (the  "TERMINATION  DATE")  but not
thereafter,   to  subscribe  for  and  purchase  from  Lighten  Up   Enterprises
International, Inc., a Nevada corporation (the "COMPANY"), up to _______________
shares (the "WARRANT  SHARES") of Common Stock,  par value $0.001 per share,  of
the Company (the  "COMMON  STOCK").  The  purchase  price of one share of Common
Stock (the "EXERCISE  PRICE") under this Warrant shall be [$0.75/$1.00]  subject
to adjustment hereunder.

                  In addition to the terms defined elsewhere in this Warrant the
following capitalized terms shall have the following meanings:

                  "BUSINESS DAY" means any day other than a Saturday,  Sunday or
legal holiday in the State of California.

                  "PERSON"  means an  individual  or  corporation,  partnership,
trust,  incorporated  or  unincorporated  association,  joint  venture,  limited
liability company, joint stock company,  government (or an agency or subdivision
thereof) or any other entity of any kind.

                  "REGISTRATION  STATEMENT" means a registration statement filed
by the Company with the Securities and Exchange  Commission ("SEC") for a public
offering  and sale of

<PAGE>

securities of the Company  (other than a  registration  statement on Form S-8 or
Form S-4, or their successors,  or any other form for a limited purpose,  or any
registration  statement  covering  only  securities  proposed  to be  issued  in
exchange for securities or assets of another corporation).

                  "SUBSCRIPTION   AGREEMENT"  means  that  certain  Subscription
Agreement  entered into between the original  Holder of this Warrant and Lighten
Up Enterprises International,  Inc., which provided for, among other things, the
original  purchase of this Warrant from  Lighten Up  Enterprises  International,
Inc.

                  "TRADING  DAY"  means (i) a day on which the  Common  Stock is
traded or quoted on a Trading Market,  or (ii) if the Common Stock is not traded
or quoted on a Trading Market,  a day on which the Common Stock is quoted in the
over-the-counter   market  as  reported  by  the   National   Quotation   Bureau
Incorporated (or any similar  organization or agency succeeding to its functions
of reporting  price);  provided,  that in the event that the Common Stock is not
traded or quoted as set forth in (i),  and (ii)  hereof,  that Trading Day shall
mean a Business Day.

                  "TRADING  MARKET" means the following  markets or exchanges on
which the Common  Stock is listed or quoted for trading on the date in question:
the NASDAQ  SmallCap  Market,  the American Stock  Exchange,  the New York Stock
Exchange, the NASDAQ National Market or the OTC Bulletin Board.

                  1.       TITLE TO WARRANT.  Prior to the Termination  Date and
subject to compliance with  applicable laws and SECTION 7 of this Warrant,  this
Warrant and all rights hereunder are transferable, in whole or in part, to up to
three (3) Persons in any 12 month period, at the office or agency of the Company
by the Holder in person or by duly authorized  attorney,  upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.  The
transferee  shall sign an  investment  letter in form and  substance  reasonably
satisfactory to the Company.

                  2.       AUTHORIZATION OF SHARES.  The Company  covenants that
all Warrant Shares which may be issued upon the exercise of the purchase  rights
represented  by this Warrant  will,  upon  exercise of such  purchase  rights in
accordance  with the terms and  conditions of this Warrant,  including,  without
limitation,  payment of the Exercise Price, be duly authorized,  validly issued,
fully  paid and  nonassessable  and free from all  taxes,  liens and  charges in
respect of the issue  thereof  (other  than  taxes in  respect  of any  transfer
occurring contemporaneously with such issue).

                  3.       EXERCISE OF WARRANT.

                           (a)      Exercise of the purchase rights  represented
         by this  Warrant  may be made at any  time or  times  on or  after  the
         Initial Exercise Date and on or before the Termination Date by delivery
         to the  Company  of a duly  executed  facsimile  copy of the  Notice of
         Exercise  Form  annexed  hereto,  at the office of the Company (or such
         other office or agency of the Company as it may  designate by notice in
         writing  to  the  registered  Holder  at the  address  of  such  Holder
         appearing on the books of the Company);  PROVIDED, HOWEVER, within five
         (5) Trading  Days of the date said Notice of Exercise is  delivered  to

                                       2
<PAGE>

         the  Company,  the Holder  shall have  surrendered  this Warrant to the
         Company and the Company  shall have  received  payment of the aggregate
         Exercise Price of the Warrant Shares thereby purchased by wire transfer
         or  cashier's  check drawn on a United  States bank.  Certificates  for
         shares  purchased  hereunder  shall be delivered  to the Holder  within
         three (3)  Trading  Days from the  latest to occur of  delivery  to the
         Company of the Notice of Exercise  Form,  surrender of this Warrant and
         payment of the aggregate  Exercise  Price as set forth above  ("WARRANT
         SHARE  DELIVERY  DATE").  This  Warrant  shall be  deemed  to have been
         exercised and the Warrant Shares (to which the exercise  relates) shall
         be deemed  to have  been  issued,  and  Holder  or any other  person so
         designated  to be named therein shall be deemed to have become a holder
         of record of such shares for all purposes, as of the date of the latest
         to occur of (i) delivery to the Company of the Notice of Exercise Form,
         (ii)  surrender  of this  Warrant  and (iii)  payment of the  aggregate
         Exercise  Price as set forth above and all taxes required to be paid by
         the Holder, if any, pursuant to SECTION 5 ("EXERCISE DATE").

                           (b)      If this Warrant shall have been exercised in
         part, the Company shall,  at the time of delivery of the certificate or
         certificates  representing  Warrant  Shares,  deliver  to  Holder a new
         Warrant  evidencing  the rights of Holder to purchase  the  unpurchased
         Warrant  Shares called for by this Warrant,  which new Warrant shall in
         all other respects be identical with this Warrant.

                           (c)      Subject to the provisions of this SECTION 3,
         if there is (i) an effective  Registration  Statement  registering  the
         resale of the Warrant Shares by the Holder,  (ii) the closing bid price
         of the Common Stock for each of ten (10) consecutive  Trading Days (the
         "MEASUREMENT PERIOD", which period shall not have commenced until after
         such Registration  Statement shall have been declared  effective by the
         SEC) equals or exceeds [$0.9375/$1.25] (the "THRESHOLD 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 the Subscription  Agreement) and (iii) the
         average  daily  trading  volume for the  Measurement  Period  equals or
         exceeds  100,000  shares,  then the Company may, within two (2) Trading
         Days of such  period,  call for  cancellation  of all or any portion of
         this Warrant for which a Notice of Exercise has not yet been  delivered
         (such  right,  a "CALL").  To  exercise  this right,  the Company  must
         deliver to the Holder an irrevocable  written notice (a "CALL NOTICE"),
         indicating  therein the  unexercised  portion of this  Warrant to which
         such notice  applies.  If the  conditions set forth below for such Call
         are satisfied, from the period from the date of the Call Notice through
         and  including  the Call Date (as defined  below),  then any portion of
         this Warrant subject to such Call Notice for which a Notice of Exercise
         shall not have been received from and after the date of the Call Notice
         will be cancelled at 6:30 p.m. (Pacific Standard Time) on the fifteenth
         (15th)  Trading  Day after the date the Call  Notice is received by the
         Holder (such date, the "CALL DATE").  Any  unexercised  portion of this
         Warrant to which the Call Notice does not pertain will be unaffected by
         such Call Notice.  In furtherance  thereof,  the Company  covenants and
         agrees  that it will honor all  Notices  of  Exercise  with  respect to
         Warrant Shares subject to a Call Notice that are tendered from the time
         of  delivery  of the Call Notice  through  6:30 p.m.  (PST) on the Call
         Date. The parties agree that any Notice of Exercise delivered following
         a Call Notice shall first

                                       3
<PAGE>

         reduce to zero the number of Warrant Shares subject to such Call Notice
         prior to reducing the remaining  Warrant Shares  available for purchase
         under this Warrant.  For example,  if (x) this Warrant then permits the
         Holder to acquire 100 Warrant Shares,  (y) a Call Notice pertains to 75
         Warrant  Shares,  and (z) prior to 6:30 p.m. (PST) on the Call Date the
         Holder  tenders a Notice of Exercise  in respect of 50 Warrant  Shares,
         then (1) on the Call Date the right  under  this  Warrant to acquire 25
         Warrant Shares will be automatically cancelled, (2) the Company, in the
         time and manner  required  under  this  Warrant,  will have  issued and
         delivered  to the Holder 50 Warrant  Shares in respect of the  exercise
         following receipt of the Call Notice, and (3) the Holder may, until the
         Termination Date,  exercise this Warrant for 25 Warrant Shares (subject
         to  adjustment  as herein  provided  and  subject  to  subsequent  Call
         Notices).  Subject again to the  provisions  of this SECTION 3(C),  the
         Company may  deliver  subsequent  Call  Notices for any portion of this
         Warrant  for which the  Holder  shall  not have  delivered  a Notice of
         Exercise.  Notwithstanding  anything to the  contrary set forth in this
         Warrant,  the  Company  may not  deliver a Call  Notice or require  the
         cancellation  of this  Warrant  (and any  Call  Notice  will be  void),
         unless,  from the  beginning of the ten (10)  consecutive  Trading Days
         used to determine  whether the Common Stock has achieved the  Threshold
         Price  through  the Call Date,  (i) the Company  shall have  honored in
         accordance  with the terms of this  Warrant  all  Notices  of  Exercise
         delivered by 6:30 p.m.  (PST) on the Call Date,  (ii) the  Registration
         Statement  shall  be  effective  as  to  all  Warrant  Shares  and  the
         prospectus thereunder available for use by the Holder for the resale of
         all such  Warrant  Shares and (iii) the Common Stock shall be listed or
         quoted for trading on the Trading  Market.  The Company's right to Call
         the Warrant  shall be exercised  ratably  among all holders of warrants
         issued pursuant to Subscription  Agreements entered into as part of the
         same financing.

                  4.       NO FRACTIONAL  SHARES OR SCRIP. No fractional  shares
or scrip  representing  fractional  shares  shall be issued upon the exercise of
this Warrant.  As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price.

                  5.       CHARGES, TAXES AND EXPENSES. Issuance of certificates
for Warrant  Shares shall be made without  charge to the Holder for any issue or
transfer  tax or other  incidental  expense in respect of the  issuance  of such
certificate,  all of which taxes and expenses shall be paid by the Company,  and
such  certificates  shall be issued in the name of the Holder or in such name or
names as may be  directed by the Holder;  PROVIDED,  HOWEVER,  that in the event
certificates  for Warrant  Shares are to be issued in a name other than the name
of the Holder,  this Warrant when  surrendered for exercise shall be accompanied
by the  Assignment  Form attached  hereto duly  executed by the Holder;  and the
Company may require, as a condition thereto,  the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

                  6.       CLOSING  OF  BOOKS.  The  Company  will not close its
stockholder books or records in any manner which prevents the timely exercise of
this Warrant, pursuant to the terms hereof.

                                       4
<PAGE>

                  7.       TRANSFER, DIVISION AND COMBINATION.

                           (a)      Subject to  compliance  with any  applicable
                                    securities laws and the conditions set forth
         in SECTIONS 1 and 7(e) hereof,  and to the last sentence of Section 1.8
         of the Subscription Agreement and the first sentence of Section 1.10 of
         the Subscription  Agreement,  this Warrant and all rights hereunder are
         transferable,  in whole or in part,  upon  surrender of this Warrant at
         the principal office of the Company, together with a written assignment
         of this Warrant substantially in the form attached hereto duly executed
         by the Holder or its agent or attorney and funds  sufficient to pay any
         transfer  taxes  payable  upon the making of such  transfer.  Upon such
         surrender and, if required, such payment, the Company shall execute and
         deliver  a new  Warrant  or  Warrants  in the name of the  assignee  or
         assignees and in the  denomination or  denominations  specified in such
         instrument of assignment, and shall issue to the assignor a new Warrant
         evidencing  the  portion  of this  Warrant  not so  assigned,  and this
         Warrant shall promptly be cancelled.

                           (b)      This Warrant may be divided or combined with
         other Warrants (if such other  Warrants are upon the same terms,  other
         than  number of Warrant  Shares,  as this  Warrant)  upon  presentation
         hereof at the aforesaid office of the Company,  together with a written
         notice specifying the names and denominations in which new Warrants are
         to be issued, signed by the Holder or its agent or attorney. Subject to
         compliance  with SECTION 7(a), as to any transfer which may be involved
         in such division or combination,  the Company shall execute and deliver
         a new Warrant or Warrants in exchange for the Warrant or Warrants to be
         divided or combined in accordance with such notice.

                           (c)      The Company shall prepare, issue and deliver
         at its own  expense  (other  than  transfer  taxes) the new  Warrant or
         Warrants under this SECTION 7.

                           (d)      The  Company  agrees  to  maintain,  at  its
         aforesaid  office,  books for the  registration and the registration of
         transfer of the Warrants.

                           (e)      If,  at the  time of the  surrender  of this
         Warrant in connection  with any transfer of this Warrant,  the transfer
         of this  Warrant  shall  not be  registered  pursuant  to an  effective
         registration  statement  under the Securities Act and under  applicable
         state  securities  or blue sky laws,  the  Company  may  require,  as a
         condition of allowing  such  transfer (i) that the Holder or transferee
         of this Warrant,  as the case may be,  furnish to the Company a written
         opinion of counsel reasonably  acceptable to the Company (which opinion
         shall be in form, substance and scope customary for opinions of counsel
         in  comparable  transactions)  to the effect that such  transfer may be
         made without registration under the Securities Act and under applicable
         state  securities or blue sky laws,  (ii) that the holder or transferee
         execute  and deliver to the  Company an  investment  letter in form and
         substance acceptable to the Company and (iii) that the transferee be an
         "accredited  investor"  as  defined in Rule 501  promulgated  under the
         Securities  Act or a qualified  institutional  buyer as defined in Rule
         144A(a) under the Securities Act.

                  8.       NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant
does  not  entitle  the  Holder  to any  voting  rights  or  other  rights  as a
shareholder  of the Company prior to the exercise

                                       5
<PAGE>

hereof. Upon the exercise of this Warrant, the Warrant Shares so purchased shall
be,  and be deemed  to be,  issued to such  Holder as the  record  owner of such
shares as of the close of business  on the  Exercise  Date with  respect to such
exercise.

                  9.       LOSS,  THEFT,  DESTRUCTION  OR MUTILATION OF WARRANT.
The Company  covenants  that upon receipt by the Company of evidence  reasonably
satisfactory  to it of the  loss,  theft,  destruction  or  mutilation  of  this
Warrant,  and in case of loss,  theft or  destruction,  of indemnity or security
reasonably  satisfactory  to it, and upon  surrender  and  cancellation  of such
Warrant,  if mutilated,  the Company will make and deliver a new Warrant of like
tenor and dated as of such cancellation, in lieu of such Warrant.

                  10.      SATURDAYS,  SUNDAYS,  HOLIDAYS,  ETC.  If the last or
appointed  day for the  taking  of any  action  or the  expiration  of any right
required or granted herein shall be a Saturday,  Sunday or a legal holiday, then
such action may be taken or such right may be exercised  on the next  succeeding
day not a Saturday, Sunday or legal holiday.

                  11.      ADJUSTMENTS  OF EXERCISE  PRICE AND NUMBER OF WARRANT
SHARES;  STOCK SPLITS,  ETC. The number and kind of securities  purchasable upon
the  exercise  of this  Warrant  and the  Exercise  Price  shall be  subject  to
adjustment from time to time upon the happening of any of the following. In case
the  Company  shall (i) pay a  dividend  in  shares  of  Common  Stock or make a
distribution  in shares of Common  Stock to  holders of its  outstanding  Common
Stock,  (ii)  subdivide  its  outstanding  shares of Common Stock into a greater
number of shares,  (iii) combine its  outstanding  shares of Common Stock into a
smaller  number  of  shares of Common  Stock,  or (iv)  issue any  shares of its
capital  stock in a  reclassification  of the Common  Stock,  then the number of
Warrant  Shares  purchasable  upon  exercise of this Warrant  immediately  prior
thereto  shall be adjusted  so that the Holder  shall be entitled to receive the
kind and number of Warrant  Shares or other  securities  of the Company which it
would  have  owned or have  been  entitled  to  receive  had such  Warrant  been
exercised in advance  thereof.  Upon each such adjustment of the kind and number
of Warrant  Shares or other  securities  of the  Company  which are  purchasable
hereunder,  the Holder  shall  thereafter  be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security  obtained by multiplying  the Exercise
Price in effect  immediately  prior to such  adjustment by the number of Warrant
Shares  purchasable  pursuant  hereto  immediately  prior to such adjustment and
dividing by the number of Warrant Shares or other securities of the Company that
are purchasable pursuant hereto immediately after such adjustment. An adjustment
made pursuant to this paragraph  shall become  effective  immediately  after the
effective  date of such event  retroactive  to the record date, if any, for such
event.  For example,  if the Company  declared a 1-for-4 reverse stock split and
400 Warrant  Shares were  purchasable  hereunder,  then  immediately  after such
1-for-4  reverse  stock split the Warrant  Shares  purchasable  hereunder  would
become 100 and the Exercise  Price would become  [$3.00/$4.00]  per share.  Such
Exercise Price is obtained by  multiplying  the current  [$0.75/$1.00]  Exercise
Price by 400 Warrant  Shares  purchasable  under this  example and  dividing the
product by 100 Warrant Shares purchasable after the 1-for-4 reverse stock split.

                  12.      REORGANIZATION,       RECLASSIFICATION,       MERGER,
CONSOLIDATION OR DISPOSITION OF ASSETS. In case the Company shall reorganize its
capital, reclassify its capital stock, consolidate

                                       6
<PAGE>

or  merge  with  or into  another  corporation  (where  the  Company  is not the
surviving corporation or where there is a change in or distribution with respect
to the Common Stock of the Company),  or sell, transfer or otherwise dispose all
or substantially all of its property,  assets or business to another corporation
and,  pursuant to the terms of such  reorganization,  reclassification,  merger,
consolidation or disposition of assets,  shares of common stock of the successor
or acquiring  corporation,  or any cash,  shares of stock or other securities or
property of any nature whatsoever  (including  warrants or other subscription or
purchase  rights) in addition to or in lieu of common stock of the  successor or
acquiring  corporation ("OTHER PROPERTY"),  are to be received by or distributed
to the holders of Common  Stock of the  Company,  then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the number of shares
of common stock of the successor or acquiring  corporation or of the Company, if
it is the surviving  corporation,  and Other  Property  receivable  upon or as a
result  of  such  reorganization,  reclassification,  merger,  consolidation  or
disposition  of assets by a Holder of the  number of shares of Common  Stock for
which this Warrant is exercisable  immediately  prior to such event.  In case of
any such reorganization,  reclassification, merger, consolidation or disposition
of assets ("Extraordinary Transaction"),  the successor or acquiring corporation
(if  other  than  the  Company)  shall  expressly  assume  the due and  punctual
observance  and  performance  of each and every  covenant and  condition of this
Warrant to be performed and observed by the Company and all the  obligations and
liabilities   hereunder,   subject  to  such  modifications  as  may  be  deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for  adjustments of Warrant Shares for which
this Warrant is exercisable  which shall be as nearly  equivalent as practicable
to the  adjustments  provided  for in this  SECTION 12. As soon as  commercially
practicable following the Extraordinary Transaction,  the successor or acquiring
corporation  (if other than the Company),  shall deliver to Holder a new warrant
in repacement of this Warrant  consistent with the provisions  referenced in the
immediately  preceding  sentence  against receipt by such successor or acquiring
corporation  of the original of this  Warrant.  For purposes of this SECTION 12,
"common stock of the successor or acquiring  corporation" shall include stock of
such  corporation  of any class which is not preferred as to dividends or assets
over any other  class of stock of such  corporation  and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other  securities  which are convertible  into or  exchangeable  for any such
stock,  either  immediately  or upon  the  arrival  of a  specified  date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock.  The  foregoing  provisions of this SECTION 12 shall
similarly  apply  to  successive  reorganizations,  reclassifications,  mergers,
consolidations or disposition of assets.

                  13.      VOLUNTARY  ADJUSTMENT BY THE COMPANY. The Company may
at any time during the term of this  Warrant  reduce the then  current  Exercise
Price to any amount and for any period of time deemed  appropriate  by the Board
of Directors of the Company.

                  14.      NOTICE OF ADJUSTMENT.  Whenever the number of Warrant
Shares or number or kind of securities or other  property  purchasable  upon the
exercise of this Warrant or the Exercise Price is adjusted,  as herein provided,
the Company  shall give notice  thereof to the Holder,  which notice shall state
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise  Price of such Warrant Shares (and
other  securities  or property)  after such  adjustment,  setting  forth a brief
statement of the facts

                                       7
<PAGE>

requiring  such  adjustment  and  setting  forth the  computation  by which such
adjustment was made.

                  15.      NOTICE OF CORPORATE ACTION. If at any time:

                           (a)      the  Company  shall  take  a  record  of the
         holders  of its  Common  Stock for the  purpose  of  entitling  them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its  indebtedness,  any shares of stock of
         any class or any other securities or property,  or to receive any other
         right, or

                           (b)      there shall be any capital reorganization of
         the Company,  any  reclassification  or recapitalization of the capital
         stock of the Company or any consolidation or merger of the Company with
         (other  than a  consolidation  or merger in which  the  Company  is the
         surviving  corporation),  or any sale, transfer or other disposition of
         all or  substantially  all the  property,  assets  or  business  of the
         Company to, another corporation, or

                           (c)      there  shall be a voluntary  or  involuntary
         dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases,  the Company shall give to Holder (i) at
least fifteen (15) days' prior written notice of the date on which a record date
shall be selected for such dividend,  distribution  or right or for  determining
rights to vote in respect of any such reorganization,  reclassification, merger,
consolidation, sale, transfer, disposition,  liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer,  disposition,  dissolution,  liquidation or winding up, at least
fifteen  (15) days'  prior  written  notice of the date when the same shall take
place.  Such notice in accordance  with the foregoing  clause also shall specify
(i) the date on which any such  record is to be taken  for the  purpose  of such
dividend,  distribution or right,  the date on which the holders of Common Stock
shall be entitled to any such dividend,  distribution  or right,  and the amount
and  character  thereof,  and (ii) the  date on which  any such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled to exchange  their  Warrant  Shares for  securities  or other  property
deliverable upon such disposition,  dissolution, liquidation or winding up. Each
such written  notice shall be  sufficiently  given if addressed to Holder at the
last address of Holder  appearing  on the books of the Company and  delivered in
accordance with SECTION 17(d).

                  16.      AUTHORIZED  SHARES. The Company covenants that during
the period the Warrant is  outstanding,  it will reserve from its authorized and
unissued Common Stock a sufficient  number of shares to provide for the issuance
of the  Warrant  Shares  upon the  exercise of any  purchase  rights  under this
Warrant (the "REQUIRED MINIMUM").  If, on any date, the number of authorized but
unissued  (and  otherwise  unreserved)  shares of Common  Stock is less than the
Required  Minimum on such date, then the Board of Directors of the Company shall
use  commercially  reasonable  efforts  to amend the  Company's  certificate  or
articles of  incorporation  to increase  the number of  authorized  but unissued
shares of Common Stock to at least the

                                       8
<PAGE>

number of shares of Common Stock that would result from the full exercise of the
Warrant Shares at such time, as soon as possible and in any event not later than
the 75th day after such date. The Company further covenants that its issuance of
this Warrant  shall  constitute  full  authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates  for the Warrant  Shares upon the exercise of the  purchase  rights
under this Warrant.  The Company will take all such reasonable  action as may be
necessary  to assure that such Warrant  Shares may be issued as provided  herein
without violation of any applicable law or regulation, or of any requirements of
the Trading Market upon which the Common Stock may be listed.

                  Except  and to the  extent as waived  or  consented  to by the
Holder,  the Company  shall not by any action,  including,  without  limitation,
amending  its  certificate  of  incorporation  or  through  any  reorganization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue  or  sale of
securities or any other voluntary action,  avoid or seek to avoid the observance
or  performance  of any of the  terms  of this  Warrant.  Without  limiting  the
generality of the foregoing,  the Company will (a) not increase the par value of
any  Warrant  Shares  above the  amount  payable  therefor  upon  such  exercise
immediately prior to such increase in par value, (b) take all such action as may
be  necessary or  appropriate  in order that the Company may validly and legally
issue fully paid and  nonassessable  Warrant  Shares  upon the  exercise of this
Warrant,  and (c)  use  commercially  reasonable  efforts  to  obtain  all  such
authorizations,  exemptions or consents from any public  regulatory  body having
jurisdiction  thereof as may be  necessary  to enable the Company to perform its
obligations under this Warrant.

                  Before  taking any action which would result in an  adjustment
in the number of Warrant  Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such  authorizations  or exemptions
thereof,  or consents  thereto,  as may be necessary from any public  regulatory
body or bodies having jurisdiction thereof.

                  17.      MISCELLANEOUS.

                           (a)      GOVERNING   LAW.   This  Warrant   shall  be
         governed by and construed in  accordance  with the internal laws of the
         State of California  without regard to the conflicts of laws principles
         thereof.  The parties hereto hereby  irrevocably agree that any suit or
         proceeding arising directly and/or indirectly pursuant to or under this
         Warrant,  shall be brought  solely in a federal or state courts located
         in the State of California. By its execution hereof, the parties hereby
         covenant and irrevocably submit to the IN PERSONAM  jurisdiction of the
         federal and state courts  located in the State of California  and agree
         that any  process  in any such  action  may be served  upon any of them
         personally,  or by certified mail or registered mail upon them or their
         agent, return receipt requested, with the same full force and effect as
         if personally served upon them in the State of California.  The parties
         hereto waive any claim that any such  jurisdiction  is not a convenient
         forum for any such suit or  proceeding  and any  defense  or lack of IN
         PERSONAM jurisdiction with respect thereto.

                                       9
<PAGE>

                           (b)      RESTRICTIONS.  The Holder  acknowledges that
         the Warrant Shares  acquired upon the exercise of this Warrant,  if not
         registered,  will have  restrictions  upon resale  imposed by state and
         federal securities laws.

                           (c)      NONWAIVER AND ATTORNEYS'  FEES. No course of
         dealing or any delay or failure to exercise any right  hereunder on the
         part of Holder  shall  operate as a waiver of such  right or  otherwise
         prejudice Holder's rights, powers or remedies, notwithstanding the fact
         that all rights  hereunder  terminate on the  Termination  Date. If any
         action,  suit,  arbitration or other  proceeding for the enforcement of
         this  Warrant  is  brought  with  respect  to or  because of an alleged
         dispute, breach, default or misrepresentation in connection with any of
         the  provisions  hereof,  the  successful or prevailing  party shall be
         entitled to recover reasonable attorneys' fees and other costs incurred
         in that  proceeding,  in addition to any other relief to which it or he
         may be entitled.

                           (d)      NOTICES.  All notices  that are  required or
         may be given  pursuant to this Warrant must be in writing and delivered
         personally,  by a recognized courier service, by a recognized overnight
         delivery service,  or by registered or certified mail, postage prepaid,
         to the parties at the following  addresses (or to the attention of such
         other  Person or such  other  address  as any party may  provide to the
         other parties by notice in accordance with this section):

                           If to the Holder:

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

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

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

                           Attention:
                                      ---------------------------------
                           Telephone:
                                      ---------------------------------

                           With a copy to:

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

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

                           Attention:
                                      ---------------------------------
                           Telephone:
                                      ---------------------------------

                           If to the Company:

                           2200 Powell Street, Suite 675
                           Emeryville, CA 94608
                           Attention: Isaac Cohen
                           Telephone: (510) 601-2000

                                       10
<PAGE>

                           With a copy to:

                           Greenberg Traurig, LLP
                           Met Life Building
                           200 Park Avenue
                           New York, NY 10166
                           Attention: Robert Cohen
                           Telephone: (212) 801-9200

         Any such  notice  or other  communication  will be  deemed to have been
         given and received  (whether actually received or not) on the day it is
         personally  delivered or  delivered  by courier or  overnight  delivery
         service or, if mailed, when actually received.

                           (e)      REMEDIES.   Holder,  in  addition  to  being
         entitled to exercise all rights granted by law,  including  recovery of
         damages,  will be entitled to specific  performance of its rights under
         this Warrant.  The Company  agrees that  monetary  damages would not be
         adequate compensation for any loss incurred by reason of a breach by it
         of the  provisions  of this  Warrant  and  hereby  agrees  to waive the
         defense  in any action for  specific  performance  that a remedy at law
         would be adequate.

                           (f)      SUCCESSORS    AND   ASSIGNS.    Subject   to
         applicable securities laws, this Warrant and the rights and obligations
         evidenced  hereby shall inure to the benefit of and be binding upon the
         successors of the Company and the successors  and permitted  assigns of
         Holder.  The  provisions  of this  Warrant  are  intended to be for the
         benefit of all Holders  from time to time of this  Warrant and shall be
         enforceable by any such Holder.

                           (g)      AMENDMENT.  This  Warrant may be modified or
         amended  only with the  written  consent of the Company and the Holder.
         Waiver of any provision of this Warrant shall be in writing.

                           (h)      SEVERABILITY.    Wherever   possible,   each
         provision of this Warrant shall be  interpreted in such manner as to be
         effective and valid under  applicable law, but if any provision of this
         Warrant shall be prohibited  by or invalid under  applicable  law, such
         provision  shall be  ineffective  to the extent of such  prohibition or
         invalidity,  without  invalidating  the remainder of such provisions or
         the remaining provisions of this Warrant.

                           (i)      HEADINGS.  The headings used in this Warrant
         are for the  convenience  of  reference  only and  shall  not,  for any
         purpose, be deemed a part of this Warrant.

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

                                       11
<PAGE>

                  IN WITNESS WHEREOF,  the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.

Dated:  ___________ ___, 2005

                              LIGHTEN UP ENTERPRISES INTERNATIONAL, INC.

                              By:________________________________________
                                 Name:
                                 Title:

                                       12
<PAGE>

                               NOTICE OF EXERCISE

To:      Lighten Up Enterprises International, Inc.

                  (1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company  pursuant to the terms of the  attached  Warrant  (only if
exercised in full),  and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

                  (2) Payment  shall take the form of lawful money of the United
States.

                  (3) Please issue a certificate  or  certificates  representing
said Warrant  Shares in the name of the  undersigned or in such other name as is
specified below:

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

The Warrant Shares shall be delivered to the following:

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

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

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

                  (4)  ACCREDITED  INVESTOR.  The  undersigned is an "accredited
investor"  as defined  in  Regulation  D under the  Securities  Act of 1933,  as
amended.

                                          [PURCHASER]

                                          By: ______________________________
                                          Name:
                                          Title:

                                          Dated:  ________________________

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

                  FOR VALUE  RECEIVED,  the  foregoing  Warrant  and all  rights
evidenced thereby are hereby assigned to

_______________________________________________ whose address is

__________________________________________________________________.

__________________________________________________________________

                                           Dated:  ______________, _______

                      Holder's Signature: _____________________________

                      Holder's Address:   _____________________________

                                          _____________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]