Document:

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                                                                   EXHIBIT 10.26

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (hereinafter referred to as the "Agreement")
is effective June 1, 2001, by and between Meadowbrook, Inc., and Meadowbrook
Insurance Group, Inc., (hereinafter referred to as the "Company"), and Michael
G. Costello (hereinafter referred to as the "Executive").

                                    RECITALS:

         WHEREAS, the Company and the Executive desire to set forth their
respective rights and obligations in connection with the employment of the
Executive by the Company by entering into a contract of employment;

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and understandings contained herein, the parties hereto
agree as follows:

                                   AGREEMENT:

         1. EMPLOYMENT. The Company agrees to employ the Executive during the
Employment Term (as such term is hereinafter defined in Paragraph 5.) and the
Executive hereby accepts such employment by the Company, subject to the terms
and conditions hereinafter set forth and the Company's Associate Manual
(hereinafter referred to as the "Manual"). To the extent that the terms and
Conditions of this Agreement conflict with the Manual, this Agreement shall
control while in effect.

         2. RESPONSIBILITIES AND DUTIES. The Executive shall be employed as the
Company's Senior Vice President and General Counsel or in such other position(s)
and with such responsibilities and duties as the President of the Company may
from time to time determine. The Executive shall devote his full working time to
the performance of his responsibilities and duties hereunder.

         3. COMPENSATION. In consideration of the performance by Executive of
his obligations during the Employment Term, the Company will during the
Employment Term pay the Executive:

                  (A)      BASE SALARY. A base salary of not less than
                           $16,749.00 per month. Such Base Salary shall be
                           payable in accordance with the normal payroll
                           practices of the Company then in effect. Any
                           increases in the Base Salary shall be determined by
                           the Company.

                  (B)      DISCRETIONARY BONUS. A discretionary bonus targeted
                           at forty percent (40%) of Executive's Base Salary.
                           This discretionary bonus may be paid at the sole
                           discretion of the Company and will be based on
                           attainment of:

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                           (1) Corporate Goals (growth & profit);
                           (2) Profit Center Goals; and
                           (3) Personal Goals and Objectives.

                           The Company reserves the right to amend the
                           Discretionary Bonus target of the Executive and/or
                           the bonus formula described in Section 3 (B)(1)-(3).

                  (C)      SEVERANCE.

                           (1) WITHOUT CAUSE OR CHANGE IN CONTROL TERMINATION.
                           In the event Executive's employment is terminated by
                           the Company during the Employment Term without Cause
                           or as a result of Change in Control of the Company:

                                    A. Executive shall be paid a severance equal
                                    to twelve (12) months of his Base Salary.
                                    This severance shall be paid bi-monthly in
                                    accordance with the Company's regular
                                    payment schedule of its employees. The
                                    Company's obligation to pay this severance
                                    shall immediately cease on the date the
                                    Executive commences any subsequent
                                    comparable employment;

                           (2) FOR CAUSE TERMINATION.

                                    A. For purposes of this Agreement, "Cause"
                                    shall mean:

                                            (I) the failure by the Executive to
                                            obey the reasonable and lawful
                                            orders of the President of the
                                            Company;

                                            (II) misconduct by the Executive
                                            that is materially  injurious to the
                                            Company; or

                                            (III) the Executive engaging in
                                            dishonest activities injurious to
                                            the Company;

                                    B. Should the Executive's employment be
                                    terminated by the Company for Cause during
                                    the Employment Term, this Agreement shall be
                                    terminated forthwith without notice or
                                    payment in lieu thereof and the Executive
                                    shall not be entitled to receive any other
                                    consideration (beyond consideration accrued
                                    to the date of dismissal that is owing but
                                    not yet paid) from the Company; and

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                                    C. In the event the Executive's employment
                                    is terminated by the Company during the
                                    Employment Term for Cause, the Executive
                                    shall be paid no severance payments.

                  (D)      CHANGE IN CONTROL. For purposes of this Agreement,
                           "Change in Control" shall be defined as any purchaser
                           acquiring 50% or more of the outstanding shares of
                           Meadowbrook Insurance Group, Inc.

         4. OTHER BENEFITS. The Executive shall also be entitled to such
additional benefits as outlined in the Manual during the Employment Term or
severance period, with the exception of 401-K participation during the severance
period.

         5. EMPLOYMENT TERM. The period of the Executive's employment by the
Company under this Agreement (the "Employment Term") shall commence on June 1,
2001 and shall continue through December 31, 2003 (and annually thereafter as
provided below) or the earliest date on which any of the following events
occurs:

                  (A)      the death or retirement of the Executive;

                  (B)      the date on which the Company discharges the
                           Executive by reason of the Executive's Total
                           Disability. For purposes of this Agreement, "Total
                           Disability" shall have the same meaning as used in
                           the Manual and consistent with the Long Term
                           Disability Benefits of the Company;

                  (C)      a mutual written agreement between the Company and
                           the Executive regarding an early termination date; or

                  (D)      the date on which the Company terminates the
                           Executive's employment for Cause as recited in
                           Paragraph 3 (C) (2).

Either party hereto may elect not to renew this Employment Agreement by giving
the other party written notice on or before June 30, 2003. If written notice of
the election not to renew this Agreement is not provided on or before June 30,
2003, and annually thereafter, this Agreement shall renew for an employment term
of one (1) year commencing January 1, 2004, and annually thereafter.

         6. CONFIDENTIAL INFORMATION AGREEMENT. Executive hereby reaffirms the
Confidential Information Agreement, executed by him and dated January 15,1996,
and agrees that it shall remain in full force and effect;

         7. BINDING EFFECT; ASSIGNMENT. The Company may assign this Agreement to
any of its affiliates or their successors or assigns. This Agreement shall be
binding upon and shall inure to the benefit of the Company, its affiliates and
their successors and

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assigns. This Agreement shall be binding upon and shall inure to the benefit of
the Executive. Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives.

         8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.

         9. NOTICES. All notices or other communications required or permitted
hereunder shall be given in writing and shall be deemed sufficient if delivered
by hand (including by courier), mailed by registered or certified mail, postage
prepaid (return receipt requested), or sent by facsimile transmission, as
follows:

         If to the Executive:               If to the Company:

         To the address on file             MEADOWBROOK, INC
         with the Company's                 Attn:  Human Resources
         Human Resources                    26600 Telegraph Road, Suite 300
         Department as the                  Southfield,  MI  48034
         Executive's home address.

or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or, if mailed upon receipt thereof; provided,
however, that any notice or communication changing any of the addresses set
forth above shall be effective and deemed given only upon its receipt.

         10. SEVERABILITY. If any provision of this Agreement, or any
application thereof to any circumstance, is invalid, in whole or in part, such
provision or application shall to that extent be severable and shall not affect
other provisions or applications of this Agreement.

         11. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Michigan, excluding any choice of law
rule requiring application of the law or any other jurisdiction. Any action
arising out of or relating to this Agreement, its performance, enforcement or
breach, will be venued in the Circuit Court for the County of Oakland, State of
Michigan.

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         12. ENTIRE AGREEMENT. This Agreement and Confidential Information and
Non-Solicitation Agreement which is reaffirmed and incorporated by reference,
set forth the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
written or oral, between them as to such subject matter.

         13. HEADINGS. The headings contained herein are solely for the purpose
of reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and effective as of the date first written above.

WITNESSES:                                  MEADOWBROOK INSURANCE
                                            GROUP, INC.

--------------------                        ------------------------
                                            By: Robert S. Cubbin
                                            Its: President & COO

                                            MEADOWBROOK, INC.

--------------------                        ------------------------
                                            By: Robert S. Cubbin
                                            Its:  President

--------------------                        ------------------------
                                            Michael G. Costello

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                                                               EXHIBIT 10.2 (bb)

================================================================================

                                  CATUITY INC.
                         2000 DIRECTOR STOCK OPTION PLAN

================================================================================

                  ARTICLE I. PURPOSE AND ADOPTION OF THE PLAN

        SECTION 1.01 PURPOSE. The purpose of the Catuity Inc. 2000 Director
Stock Option Plan is to attract and retain the services of experienced and
knowledgeable independent directors of Catuity Inc. (the "Company") and to
provide an additional incentive for such directors to continue to work for the
best interests of the Company and its stockholders.

        SECTION 1.02 ADOPTION AND TERM. The Plan has been approved by the
Board, effective as of October 1, 2000, subject to the approval of its
stockholders described below. It will remain in effect until all shares
authorized under the terms of the Plan have been issued, unless earlier
terminated or abandoned by action of the Board. This Plan became effective on
the date of its adoption by the Board, provided that this Plan is approved by
the stockholders of the Company (excluding Option Shares issued by the Company
pursuant to the exercise of Options granted under this Plan) within 12 months
after that date. If this Plan is not so approved by the stockholders of the
Company within that 12-month period of time, any Options granted under this
Plan will be rescinded and will be void.

                            ARTICLE II. DEFINITIONS

        SECTION 2.01 GENERAL. The following words and phrases shall, when used
herein, have the following respective meanings unless the context clearly
indicates otherwise:

                (a)     BENEFICIARY means (i) an individual, trust or estate who
        or which, by will or by operation of the laws of descent and
        distribution, succeeds to the rights and obligations of the Director
        under the Plan and Option Agreement upon the Director's death; or (ii)
        an individual, who by designation of the Director, succeeds to the
        rights and obligations of the Director under the Plan and Option
        Agreement upon the Director's death.

                (b)     BOARD means the Board of Directors of the Company.

                (c)     CODE means the Internal Revenue Code of 1986, as
        amended. References to a section of the Code shall include that section
        and any comparable section or sections of any future legislation that
        amends, supplements or supersedes that section.

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                (d)     COMPANY means Catuity Inc., a corporation organized
        under the laws of the State of Delaware.

                (e)     COMPANY COMMON STOCK means the Common Stock of the
        Company.

                (f)     DATE OF GRANT means the date an Option is granted under
        this Plan.

                (g)     DIRECTOR means a member of the Board of Directors of the
        Company or any Subsidiary.

                (h)     EXCHANGE ACT means the Securities Exchange Act of 1934,
        as amended.

                (i)     EXPIRATION DATE means the date specified in an Option
        Agreement as the expiration date of such Award.

                (j)     FAIR MARKET VALUE shall be determined by the Board based
        on such valuation methods and/or indicia of value as the Board deems
        advisable at the time of such determination. The use by the Board of any
        method or indicia of value to determine Fair Market Value on any
        valuation date will not, of itself, preclude the Board from use of a
        different method or indicia on a subsequent valuation date.

                (k)     NONEMPLOYEE DIRECTOR means a Director who is not an
        employee of the Company or a Subsidiary.

                (l)     NON-QUALIFIED STOCK OPTION means a stock option that is
        not an Incentive Stock Option as described in Section 422 of the Code.

                (m)     OPTION means a Non-Qualified Stock Option granted at any
        time under the Plan.

                (n)     OPTION AGREEMENT means a written agreement between the
        Company and the option holder evidencing the grant of an Option and
        setting forth the terms and conditions of the Option.

                (o)     PLAN means the Catuity Inc. 2000 Director Stock Option
        Plan, as described herein and as it may be amended from time to time.

                (p)     PURCHASE PRICE, with respect to options, shall have the
        meaning set forth in Section 5.02 below.

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                (q)     RULE 16b-3 means Rule 16b-3 promulgated by the
        Securities and Exchange Commission under Section 16 of the Exchange Act,
        as currently in effect and as it may be amended from time to time, and
        any successor rule.

                (r)     SUBSIDIARY shall have the meaning set forth in Section
        424(f) of the Code.

        ARTICLE III. COMPANY COMMON STOCK ISSUABLE PURSUANT TO THE PLAN

        SECTION 3.01 SHARES ISSUABLE. Shares to be issued under the Plan may be
authorized and unissued shares or issued shares that have been reacquired by the
Company. The Options granted under the Plan shall be limited so that Options to
acquire no more than 130,000 shares in the aggregate may be outstanding at any
one time.

        SECTION 3.02 SHARES SUBJECT TO TERMINATED OPTIONS. In the event that any
Option at any time granted under the Plan shall be surrendered to the Company,
be terminated or expire before it shall have been fully exercised, then all
shares formerly subject to such Option as to which such Option shall not have
been exercised shall be available for any Option subsequently granted in
accordance with the Plan.

        SECTION 3.03 ADJUSTMENTS TO REFLECT CAPITAL CHANGES. If capital changes
occur, adjustments shall be made as described below.

                (a)     RECAPITALIZATION. The number and kind of shares subject
        to outstanding Options, the Purchase Price for such shares, and the
        number and kind of shares available for Options subsequently granted
        under the Plan shall be appropriately adjusted to reflect any stock
        dividend, stock split, combination or exchange of shares, merger,
        consolidation or other change in capitalization with a similar
        substantive effect upon the Plan or the Options granted under the Plan.
        The Board shall have the power to determine the amount of the adjustment
        to be made in each case.

                (b)     SALE OR REORGANIZATION. After any reorganization, merger
        or consolidation in which the Company is a party, each Director shall,
        at no additional cost, be entitled upon exercise of an Option to receive
        (subject to any required action by stockholders), in lieu of the number
        of shares of Company Common Stock receivable or exercisable pursuant to
        such Option, a number and class of shares of stock or other securities
        to which such Director would have been entitled pursuant to the terms of
        the reorganization, merger or consolidation if, at the time of such
        reorganization, merger or consolidation, such Director had been the
        holder of record of a number of shares of stock equal to the number of
        shares receivable or exercisable pursuant to such Option. Comparable

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        rights shall accrue to each Director in the event of successive
        reorganizations, mergers or consolidations of the character described
        above.

                           ARTICLE IV. PARTICIPATION

        SECTION 4.01 ELIGIBLE INDIVIDUALS. All Nonemployee Directors of the
Company or a Subsidiary shall be eligible to receive Options under the Plan.

                            ARTICLE V. OPTION AWARDS

        SECTION 5.01 GRANT OF OPTIONS. Each of the Company's or a Subsidiary's
Nonemployee Directors, on the date he or she first becomes a Nonemployee
Director, shall automatically receive a Non-Qualified Stock Option to purchase
10,000 shares of Company Common Stock. Thereafter, each person who is a
Nonemployee Director of the Company or a Subsidiary on the last business day of
September in each calendar year shall automatically receive a Non-Qualified
Stock Option to purchase 5,000 shares of Company Common Stock. If the Chairman
is a Nonemployee Director, then his/her initial and annual grants shall be
12,500 and 6,250 shares, respectively. An Option Agreement shall evidence each
Option. Each Nonemployee Director shall receive only one Option grant per grant
date hereunder, notwithstanding that such Nonemployee Director may serve on more
than one Board of Directors in respect of the Company and its Subsidiaries.
Further, a Nonemployee Director may receive only one grant hereunder in any
calendar year.

        SECTION 5.02 PURCHASE PRICE OF OPTIONS. The Purchase Price of each share
of Company Common Stock that may be purchased upon exercise of any Option
granted under the Plan shall be the Fair Market Value on the Date of Grant.

        SECTION 5.03 VESTING OF OPTIONS. Options will be fully vested on the
Date of Grant, and shall be exercisable with respect to all of the shares on and
after the Date of Grant.

        SECTION 5.04 DURATION OF OPTIONS. Options granted under the Plan shall
terminate after the first to occur of the following events:

                (a)     Eight years from the Date of Grant.

                (b)     Six months after the Director ceases to be a Director,
        except in the case of either (a) retirement from the Board after the
        Director reaches the age of 60 (in which case that Director's Options
        will stay in effect until they otherwise terminate), or (b) death.

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                (c)     If a Director dies while still a Director or after
        retirement after he or she reaches the age of 60, the right to exercise
        all unexpired Options shall be accelerated and shall accrue as of the
        date of death, and the Director's Options may be exercised by his
        Beneficiary at any time within one year after the date of the Director's
        death. If the Director dies within the ninety day period after he or she
        ceases to be a director, the Director's Beneficiary may exercise his or
        her Options, to the extent exercisable on the date of death, within one
        year after the date of the Director's death.

        SECTION 5.05 EXERCISE PROCEDURES. Each Option granted under the Plan
shall be exercised by written notice to the Company that must be received by the
officer of the Company designated in the Option Agreement on or before the
Expiration Date of the Option. The Purchase Price of shares purchased upon
exercise of an Option granted under the Plan shall be paid in full in cash by
the Director pursuant to the Option Agreement; provided, however, that the Board
may (but need not) permit payment to be made by delivery to the Company of
either (i) shares of Company Common Stock (provided that the Director has owned
such shares for at least six months), or (ii) any combination of cash and shares
of Company Common Stock, or (iii) such other consideration as the Board deems
appropriate and in compliance with applicable law (including payment in
accordance with a cashless exercise program under which, if so instructed by the
Director, shares of Company Common Stock may be issued directly to the
Director's broker or dealer upon receipt of the Purchase Price in cash from the
broker or dealer). If any Company Common Stock shall be transferred to the
Company to satisfy all or any part of the Purchase Price, the part of the
Purchase Price deemed to have been satisfied by such transfer of Company Common
Stock shall be equal to the product derived by multiplying the Fair Market Value
as of the date of exercise times the number of shares transferred. The Director
may not transfer to the Company in satisfaction of the Purchase Price (y) a
number of shares which when multiplied times the Fair Market Value as of the
date of exercise would result in a product greater than the Purchase Price or
(z) any fractional share of Company Common Stock. Any part of the Purchase Price
paid in cash upon the exercise of any Option shall be added to the general funds
of the Company and used for any proper corporate purpose. Unless the Board shall
otherwise determine, any Company Common Stock transferred to the Company as
payment of all or part of the Purchase Price upon the exercise of any Option
shall be held as treasury shares.

        SECTION 5.06 RIGHTS AS A STOCKHOLDER. The Director or any permitted
transferee of an Option shall have no rights as a stockholder with respect to
any shares of Company Common Stock covered by an Option until the Director or
transferee shall have become the holder of record of any such shares, and no
adjustment shall be made for dividends and cash or other property or
distributions or other rights with respect to any such shares of Company Common
Stock for which the record date is prior to the

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date on which the Director or a transferee of the Option shall have become the
holder of record of any such shares covered by the Option.

        SECTION 5.07 PLAN PROVISIONS CONTROL OPTION TERMS. The terms of the Plan
shall govern all Options granted under the Plan. In the event any provision of
any Option granted under the Plan conflicts with any term in the Plan as
constituted on the Date of Grant of such Option, the term in the Plan as
constituted on the Date of Grant of such Option shall control. The terms of any
Option granted under the Plan may not be changed after the granting of such
Option without the express approval of the Director.

        SECTION 5.08 TAXES. The Company shall be entitled, if the Company deems
it necessary or desirable, to withhold (or secure payment from the Director in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any shares issuable upon
exercise of an Option, and the Company may defer issuance of the stock upon
exercise unless indemnified to its satisfaction against any liability for such
tax. The amount of such withholding or tax payment shall be determined by the
Board and, unless otherwise provided by the Board, shall be payable by the
Director at the time of issuance or payment in accordance with the following
rules:

                (a)     Unless otherwise provided by the Board, a Director shall
        meet his or her withholding requirement by direct payment to the Company
        in cash of the amount of any taxes required to be withheld with respect
        to such Option.

                (b)     If the Board, in its discretion, determines to permit
        payment of the withholding requirements in shares of Company Common
        Stock, the Company shall withhold from such Option exercise the
        appropriate number of shares of Company Common Stock, rounded up to the
        next whole number, the Fair Market Value of which is equal to the
        amount, as determined by the Board, required to satisfy applicable tax
        withholding requirements.

                (c)     In the event that an Option or property received upon
        exercise of an Option has already been transferred to the Director on
        the date upon which withholding requirements apply, the Director shall
        pay directly to the Company the cash amount determined by the Company to
        be sufficient to satisfy applicable federal, state or local withholding
        requirements. The Director shall provide to the Company such information
        as the Company shall require to determine the amounts to be withheld and
        the time such withholding requirements become applicable.

                (d)     If permitted under applicable federal income tax laws, a
        Director may elect to be taxed in the year in which an Award is
        exercised or received, even if it would not otherwise have become
        taxable to the Director. If the Director makes such an election, the
        Director shall promptly notify the Company

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        in writing and shall provide the Company with a copy of the executed
        election form as filed with the Internal Revenue Service no later than
        thirty days from the date of exercise or receipt. Promptly following
        such notification, the Director shall pay directly to the Company the
        cash amount determined by the Company to be sufficient to satisfy
        applicable federal, state or local withholding tax requirements.

        SECTION 5.09 LIMITATIONS ON TRANSFER. A Director's rights and interest
under the Plan may not be assigned or transferred other than by will or the laws
of descent and distribution, or pursuant to the terms of a domestic relations
order, as defined in Section 414(p)(1)(B) of the Code, which satisfies the
requirements of Section 414(p)(1)(A) of the Code (a "Qualified Domestic
Relations Order"). During the lifetime of a Director, only the Director
personally (or the Director's personal representative or attorney-in-fact) or
the alternate payee named in a Qualified Domestic Relations Order may exercise
the Director's rights under the Plan. The Director's Beneficiary may exercise a
Director's rights to the extent they are exercisable under the Plan following
the death of the Director.

                         ARTICLE VI. GENERAL PROVISIONS

        SECTION 6.01 AMENDMENT AND TERMINATION OF PLAN. The Plan may be amended,
suspended or terminated as set forth below.

                (a)     AMENDMENT. The Board shall have complete power and
        authority to amend the Plan at any time as it deems necessary or
        appropriate and no approval by the stockholders of the Company or by any
        other person, committee or entity of any kind shall be required to make
        any amendment; provided, however, that the Board shall not, without the
        requisite affirmative approval of stockholders of the Company, make any
        amendment which requires stockholder approval under any applicable law,
        including Rule 16b-3 or the Code, unless such compliance, if
        discretionary, is no longer desired. No termination or amendment of the
        Plan may, without the consent of the Director to whom any Option shall
        theretofore have been granted under the Plan, adversely affect the right
        of such individual under such Option. For the purposes of this section,
        an amendment to the Plan shall be deemed to have the affirmative
        approval of the stockholders of the Company if such amendment shall have
        been submitted for a vote by the stockholders at a duly called meeting
        of such stockholders at which a quorum was present and the majority of
        votes cast with respect to such amendment at such meeting shall have
        been cast in favor of such amendment, or if the holders of outstanding
        stock having not less than a majority of the outstanding shares consent
        to such amendment in writing in the manner provided under the Company's
        bylaws.

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                (b)     SUSPENSION OR TERMINATION. The Board shall have the
        right and the power to suspend the operation of or terminate the Plan at
        any time. If the Plan is not earlier terminated, the Plan shall
        terminate when all shares authorized under the Plan have been issued. No
        Option shall be granted under the Plan while the Plan is suspended of
        after the termination of the Plan, but the suspension or termination of
        the Plan shall not have any other effect and any Option outstanding at
        the time of the suspension or termination of the Plan may be exercised
        after suspension or termination of the Plan at any time prior to the
        expiration date of such Option to the same extent such award would have
        been exercisable if the Plan had not been suspended or terminated.

        SECTION 6.02 NO RIGHT TO CONTINUE AS DIRECTOR. Neither the Plan nor any
action taken hereunder shall be construed as giving any Director any right to be
retained as a Director, or to limit in any way the right of the stockholders of
the Company to remove such person as a Director.

        SECTION 6.03 COMPLIANCE WITH RULE 16b-3. If and so long as the Company
is subject to Section 16 of the Exchange Act: (i) it is intended that the Plan
be applied and administered in compliance with Rule 16b-3; (ii) if any provision
of the Plan would be in violation of Rule 16b-3 if applied as written, such
provision shall not have effect as written and shall be given effect so as to
comply with Rule 16b-3, as determined by the Administrator; and (iii) the Board
is authorized to amend the Plan and to make any such modifications to Award
Agreements to comply with Rule 16b-3, as it may be amended from time to time,
and to make any other such amendments or modifications as it deems necessary or
appropriate to better accomplish the purposes of the Plan in light of any
amendments made to Rule 16b-3.

        SECTION 6.04 SECURITIES LAW RESTRICTIONS. The shares of Company Common
Stock issuable pursuant to the terms of any Options granted under the Plan may
not be issued by the Company without registration or qualification of such
shares under the Securities Act of 1933, as amended, or under various state
securities laws or without an exemption from such registration requirements.
Unless the shares to be issued under the Plan have been registered and/or
qualified as appropriate, the Company shall be under no obligation to issue
shares of Company Common Stock upon exercise of an Option unless and until such
time as there is an appropriate exemption available from the registration or
qualification requirements of federal or state law as determined by the Company
in its sole discretion. The Company may require any person who is granted an
award hereunder to agree with the Company to represent and agree in writing that
if such shares are issuable under an exemption from registration requirements,
the shares will be "restricted" securities which may be resold only in
compliance with applicable securities laws, and that such person is acquiring
the shares issued upon exercise of the Option for investment, and not with the
view toward distribution.

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        SECTION 6.05 CAPTIONS. The captions (i.e., all section headings) used in
the Plan are for convenience only, do not constitute a part of the Plan, and
shall not be deemed to limit, characterize or affect in any way any provisions
of the Plan, and all provisions of the Plan shall be construed as if no captions
have been used in the Plan.

        SECTION 6.06 SEVERABILITY. Whenever possible, each provision in the Plan
and every Option at any time granted under the Plan shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Option at any time granted under the Plan shall be held to be
prohibited or invalid under applicable law, then (a) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Option at any time granted under the Plan shall remain
in full force and effect.

        SECTION 6.07 CHOICE OF LAW. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of Delaware and construed in
accordance therewith.

                                       9

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