Document:

NETWORK INSTALLATION CORPORATION
                            PLACEMENT AGENT AGREEMENT

Dated  as  of:  October  10,  2003

The  undersigned,  Network  Installation Corporation., a Nevada corporation (the
"COMPANY"),  hereby  agrees  with  Park  Capital  Securities LLC (the "PLACEMENT
AGENT")  and Preston Capital Partners, a Delaware Limited Liability Company (the
"INVESTOR")  as  follows:

1.     OFFERING.  The  Company  hereby engages the Placement Agent to act as its
exclusive  placement  agent  in  connection  with the Investment Agreement dated
September  29,  2003  (the "INVESTMENT AGREEMENT") pursuant to which the Company
shall  issue and sell to the Investor, from time to time, and the Investor shall
purchase  from  the  Company  (the  "OFFERING")  up  to Two Million Five Hundred
Thousand  Dollars  ($2,500,000)  of  the  Company's  Voting  Common  Stock  (the
"COMMITMENT  AMOUNT"), par value $0.001 per share (the "COMMON STOCK"), at price
per share equal to the Purchase Price, as that term is defined in the Investment
Agreement.  Pursuant  to  the  terms  hereof,  the  Placement Agent shall render
consulting  services to the Company with respect to the Investment Agreement and
shall  be  available  for  consultation  in  connection  with the advances to be
requested  by the Company pursuant to the Investment Agreement.  All capitalized
terms  used  herein and not otherwise defined herein shall have the same meaning
ascribed  to  them  as in the Investment Agreement. The Investor will be granted
certain  registration  rights with respect to the Common Stock as more fully set
forth  in  a  Registration Rights Agreement between the Company and the Investor
dated September 29, 2003 (the "REGISTRATION RIGHTS AGREEMENT"). The documents to
be  executed  and  delivered in connection with the Offering, including, but not
limited,  to  this  Agreement,  the  Investment  Agreement, and the Registration
Rights  Agreement,  and  any Prospectus or other disclosure document ( including
all  amendments  and  supplements ) utilized in connection with the Offering are
referred  to sometimes hereinafter collectively as the "OFFERING MATERIALS." The
Company's Common Stock is sometimes referred to hereinafter as the "SECURITIES."
The  Placement  Agent  shall  not  be  obligated to sell any Securities and this
Offering  by  the  Placement  Agent  shall  be solely on a "best efforts basis."

2.     REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  OF  THE  PLACEMENT  AGENT.

     A.  The  Placement  Agent  represents,  warrants  and covenants as follows:

     (i)     The  Placement  Agent  has  the  necessary power to enter into this
Agreement  and  to  consummate  the  transactions  contemplated  hereby.

     (ii)     The  execution  and  delivery  by  the  Placement  Agent  of  this
Agreement  and the consummation of the transactions contemplated herein will not
result  in  any  violation  of,  or be in conflict with, or constitute a default
under, any agreement or instrument to which the Placement Agent is a party or by
which  the Placement Agent or its properties are bound, or any judgment, decree,
order  or,  to  the Placement Agent's knowledge, any statute, rule or regulation
applicable to the Placement Agent. This Agreement when executed and delivered by
the Placement Agent, will constitute the legal, valid and binding obligations of
the  Placement  Agent,  enforceable  in  accordance with their respective terms,
except  to  the

extent  that  (a)  the  enforceability  hereof  or  thereof  may  be  limited by
bankruptcy,  insolvency, reorganization, moratorium or similar laws from time to
time  in  effect  and  affecting  the  rights  of  creditors  generally, (b) the
enforceability  hereof or thereof is subject to general principles of equity, or
(c)  the  indemnification  provisions  hereof  or  thereof  may be held to be in
violation  of  public  policy.

     (iii)     Upon  receipt and execution of this Agreement the Placement Agent
will promptly forward copies of this Agreement to the Company or its counsel and
the  Investor  or  its  counsel.

     (iv)     The  Placement  Agent  will not take any action that it reasonably
believes  would  cause  the Offering to violate the provisions of the Securities
Act  of  1933,  as amended (the "1933 ACT"), the Securities Exchange Act of 1934
(the  "1934  ACT"), the respective rules and regulations promulgated there under
(the  "RULES  AND  REGULATIONS")  or  applicable "Blue Sky" laws of any state or
jurisdiction.

     (v)     The  Placement  Agent  will use all reasonable efforts to determine
(a)  whether the Investor is an Accredited Investor and (b) that any information
furnished  by the Investor is true and accurate.  The Placement Agent shall have
no  obligation  to  insure  that  (x)  any  check, note, draft or other means of
payment  for  the  Common Stock will be honored, paid or enforceable against the
Investor  in accordance with its terms, or (y) subject to the performance of the
Placement  Agent's  obligations  and  the  accuracy  of  the  Placement  Agent's
representations  and  warranties  hereunder, (1) the Offering is exempt from the
registration requirements of the 1933 Act or any applicable state "Blue Sky" law
or  (2)  the  Investor  is  an  Accredited  Investor.

     (vi)     The  Placement  Agent  is  a member of the National Association of
Securities  Dealers,  Inc.,  and is a broker-dealer registered as such under the
1934  Act  and  under  the securities laws of the states in which the Securities
will  be  offered  or  sold  by the Placement Agent unless an exemption for such
state  registration  is available to the Placement Agent. The Placement Agent is
in  compliance  with  all  material  rules  and  regulations  applicable  to the
Placement  Agent generally and applicable to the Placement Agent's participation
in  the  Offering.

3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.

A.  The  Company  makes  to  the  Placement  Agent  all  the representations and
warranties  it  makes  to  the  Investor  in  the  Investment  Agreement and, in
addition,  represents  and  warrants  as  follows:

     (i)     The  execution, delivery and performance of each of this Agreement,
the  Investment Agreement and the Registration Rights Agreement has been or will
be  duly  and validly authorized by the Company and is, and with respect to this
Agreement,  the  Investment Agreement and the Registration Rights Agreement will
each be, a valid and binding agreement of the Company, enforceable in accordance
with  its  respective  terms,  except  to the extent that (a) the enforceability
hereof  or  thereof  may  be  limited by bankruptcy, insolvency, reorganization,
moratorium  or similar laws from time to time in effect and affecting the rights
of  creditors  generally, (b) the enforceability hereof or thereof is subject to
general  principles  of  equity  or (c) the indemnification provisions hereof or
thereof  may  be  held to be in violation of public policy. The Securities to be
issued  pursuant  to  the  transactions  contemplated  by this Agreement and the
Investment  Agreement  have  been duly  authorized  and,  when  issued and  paid
for in accordance with (x) this Agreement,  the  Investment  Agreement  and  the
certificates/instruments representing  such  Securities, (y)  will  be valid and
binding  obligations  of  the  Company,  enforceable  in  accordance  with their
respective  terms, except to the extent  that  (1)  the  enforceability  thereof
may  be  limited  by  bankruptcy,  insolvency,  reorganization,  moratorium  or
similar  laws  from  time  to  time  in  effect  and  affecting  the  rights  of
creditors  generally,  and  (2)  the  enforceability  thereof  is  subject  to
general principles of equity. All corporate action  required  to  be  taken  for
the  authorization,  issuance  and  sale of the Securities  has  been  duly  and
validly  taken  by  the  Company.

     (ii)     The  Company  has  a  duly  authorized,  issued  and  outstanding
capitalization  as set forth herein and in the Investment Agreement. The Company
is  not  a  party  to or bound by any instrument, agreement or other arrangement
providing  for it to issue any capital stock, rights, warrants, options or other
securities,  except  for  this Agreement, the agreements described herein and as
described  in the Investment Agreement, dated the date hereof and the agreements
described  therein.  All  issued and outstanding securities of the Company, have
been  duly  authorized and validly issued and are fully paid and non-assessable;
the  holders  thereof  have  no  rights  of rescission or preemptive rights with
respect  thereto  and  are not subject to personal liability solely by reason of
being  security holders; and none of such securities were issued in violation of
the  preemptive  rights of any holders of any security of the Company. As of the
date hereof, the authorized capital stock of the Company consists of 100,000,000
shares  of  Common  Stock, par value $0.001 per share of which 12,325,000 shares
of  Common  Stock  are  issued  and  outstanding.

     (iii)     The  Common  Stock to be issued in accordance with this Agreement
and  the  Investment Agreement has been duly authorized and when issued and paid
for  in  accordance  with  this  Agreement,  the  Investment  Agreement  and the
certificates/instruments representing such Common Stock, will be validly issued,
fully-paid  and  non-assessable;  the  holders  thereof  will  not be subject to
personal  liability  solely by reason of being such holders; such Securities are
not  and  will  not  be  subject  to  the preemptive rights of any holder of any
security  of  the  Company.

4.     REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  OF  THE  INVESTOR.

A.     The  Investor  makes  to  the Placement Agent all the representations and
warranties  it makes to the Company in the Investment Agreement and, in addition
represents,  warrants  and  covenants  as  follows:

     (i)     The  Investor  has the necessary power to enter into this Agreement
and  to  consummate  the  transactions  contemplated  hereby.

     (ii)     The  execution  and delivery by the Investor of this Agreement and
the  consummation of the transactions contemplated herein will not result in any
violation  of,  or  be  in  conflict with,  or  constitute  a default under, any
agreement  or  instrument  to  which  the  Investor  is  a party or by which the
Investor  or  its properties are bound, or any judgment,  decree,  order  or, to
the  Investor's  knowledge, any statute, rule or regulation  applicable  to  the
Investor.  This  Agreement  when  executed  and  delivered  by  the  Investor,
will  constitute  the  legal,  valid  and  binding  obligations  of  the
Investor,  enforceable  in accordance with their respective terms, except to the
extent  that  (a)  the  enforceability  hereof  or  thereof  may  be limited  by
bankruptcy,  insolvency, reorganization, moratorium or similar laws from time to
time  in  effect  and  affecting  the  rights  of  creditors  generally, (b) the
enforceability  hereof or thereof is subject to general principles of equity, or
(c)  the  indemnification  provisions  hereof  or  thereof  may be held to be in
violation  of  public  policy.

         (iii)  the  Investor  is  not,  and  will  not  be,  as a result of the
transactions  contemplated  by  the  Offering  Materials  a  "dealer" within the
meaning  of the Securities Exchange Act of 1934 and applicable federal and state
securities  laws and regulations. The Investor covenants that in this respect it
is and will remain in compliance with the requirements of applicable "no action"
rulings  of  the  U.S.  Securities  Exchange  Commission.

     (iv)     The  Investor  will  promptly  forward  copies  of any and all due
diligence  questionnaires  compiled  by  the  Investor  to  the Placement Agent.

5.     CERTAIN  COVENANTS  AND  AGREEMENTS  OF  THE  COMPANY.

     The  Company covenants and agrees at its expense and without any expense to
the  Placement  Agent  as  follows:

A.     To  advise  the  Placement  Agent  of  any material adverse change in the
Company's  financial  condition,  prospects  or  business  or of any development
materially  affecting the Company or rendering untrue or misleading any material
statement in the Offering Materials occurring at any time as soon as the Company
is  either  informed  or  becomes  aware  thereof.

B.     To  use  its  commercially  reasonable  efforts to cause the Common Stock
issuable  in  connection  with  the  Equity  Line  of  Credit to be qualified or
registered  for  sale  on terms consistent with those stated in the Registration
Rights  Agreement  and  under  the  securities laws of such jurisdictions as the
Placement  Agent  and  the  Investor  shall  reasonably  request. Qualification,
registration  and  exemption  charges  and  fees  shall  be at the sole cost and
expense  of  the  Company.

C.     Upon  written  request,  to provide and continue to provide the Placement
Agent  and the Investor copies of all quarterly financial statements and audited
annual  financial  statements  prepared  by  or  on behalf of the Company, other
reports  prepared  by  or on behalf of the Company for public disclosure and all
documents  delivered  to  the  Company's  stockholders.

D.     To  deliver,  during the registration period of the Investment Agreement,
to  the  Placement  Agent  upon  the  Placement  Agent's  request,

     (i)     within  forty  five  (45)  days, a statement of its income for each
such  quarterly  period,  and  its  balance  sheet and a statement of changes in
stockholders'  equity  as of the end of such quarterly period, all in reasonable
detail,  certified  by  its  principal  financial  or  accounting  officer;

     (ii)     within  ninety  (90) days after the close of each fiscal year, its
balance  sheet as of the close of such fiscal year, together with a statement of
income,  a  statement of changes in stockholders' equity and a statement of cash
flow for such fiscal year, such balance sheet, statement of income, statement of
changes  in  stockholders' equity and statement of cash flow to be in reasonable
detail  and  accompanied  by  a  copy  of  the  certificate or report thereon of
independent  auditors  if  audited  financial  statements  are  prepared;  and

     (iii)     a copy of all documents, reports and information furnished to its
stockholders  at  the  time  that  such  documents,  reports and information are
furnished  to  its  stockholders.

(iv)     a  copy  of  all  documents,  reports  and information furnished to the
Investor  at the time that such documents, reports and information are furnished
to  the  Investor.

E.     To  comply  with  the  terms  of  the  Offering  Materials.

F.     To  ensure  that any transactions between or among the Company, or any of
its  officers,  directors  and affiliates be on terms and conditions that are no
less  favorable  to  the  Company,  than  the terms and conditions that would be
available  in  an  "arm's  length"  transaction with an independent third party.

6.     INDEMNIFICATION.

A.     The  Company  hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement  Agent  and  each  person  controlling,  controlled by or under common
control  with  the  Placement Agent within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act or the SEC's Rules and Regulations promulgated
there under (the "Rules and Regulations"), harmless from and against any and all
loss,  claim,  damage, liability, cost or expense whatsoever (including, but not
limited  to,  any  and  all  reasonable  legal  fees  and  other  expenses  and
disbursements  incurred in connection with investigating, preparing to defend or
defending  any  action,  suit  or  proceeding,  including  any  inquiry  or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or  preparing  for  appearance  as  a witness in any action, suit or proceeding,
including  any  inquiry,  investigation  or  pretrial  proceeding  such  as  a
deposition)  to  which  the  Placement  Agent  or such indemnified person of the
Placement  Agent  may become subject under the 1933 Act, the 1934 Act, the Rules
and  Regulations, or any other federal or state law or regulation, common law or
otherwise,  arising  out  of  or  based upon (i) any untrue statement or alleged
untrue  statement  of  a  material  fact  contained  in  (a)  Section  4 of this
Agreement,  (b) the Offering Materials (except those written statements relating
to  the  Placement  Agent given by an indemnified person for inclusion therein),
(c)  any  application or other document or written communication executed by the
Company  or based upon written information furnished by the Company filed in any
jurisdiction  in  order  to  qualify  the Common Stock under the securities laws
thereof,  or  any  state  securities  commission or agency; (ii) the omission or
alleged  omission from documents described in clauses (a), (b) or (c) above of a
material  fact required to be stated therein or necessary to make the statements
therein  not  misleading;  or  (iii) the breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement. The Company further
agrees  that  upon  demand by an indemnified person, at any time or from time to
time,  it  will  promptly reimburse such indemnified person for any loss, claim,
damage,  liability,  cost  or  expense  actually  and reasonably  paid  by  the
indemnified  person  as  to  which  the  Company  has  indemnified  such  person
pursuant  hereto.  Notwithstanding  the  foregoing provisions of this  Paragraph
6(A),  any such payment or reimbursement by the Company  of  fees, expenses  or
disbursements incurred by an indemnified person in any  proceeding  in  which a
final judgment by a court of competent jurisdiction (after  all  appeals or the
expiration  of time to appeal) is entered against the Placement  Agent  or such
indemnified  person based upon specific finding of fact  as  to  the  Placement
Agent or such indemnified person's gross negligence or willful misfeasance will
be  promptly  repaid  to  the  Company.

B.     The  Placement  Agent  hereby  agrees that it will indemnify and hold the
Company  and  each officer, director, shareholder, employee or representative of
the  Company, and each person controlling, controlled by or under common control
with  the Company within the meaning of Section 15 of the 1933 Act or Section 20
of  the 1934 Act or the Rules and Regulations, harmless from and against any and
all  loss,  claim, damage, liability, cost or expense whatsoever (including, but
not  limited  to,  any  and  all  reasonable  legal  fees and other expenses and
disbursements  incurred in connection with investigating, preparing to defend or
defending  any  action,  suit  or  proceeding,  including  any  inquiry  or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or  preparing  for  appearance  as  a witness in any action, suit or proceeding,
including  any  inquiry,  investigation  or  pretrial  proceeding  such  as  a
deposition)  to  which the Company or such indemnified person of the Company may
become  subject  under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any  other  federal or state law or regulation, common law or otherwise, arising
out  of  or  based  upon (i) the conduct of the Placement Agent or its officers,
employees  or  representatives  in  willful  violation  of  any of such laws and
regulations  while  acting  as  Placement  Agent  for  the  Offering or (ii) the
material  breach  of any representation, warranty, covenant or agreement made by
the  Placement Agent in this Agreement (iii) any false or misleading information
provided  to  the  Company  by one of the Placement Agent's indemnified persons.

C.     The  Investor hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement  Agent,  and  each  person  controlling, controlled by or under common
control  with  the  Placement Agent within the meaning of Section 15 of the 1933
Act  or  Section  20 of the 1934 Act or the Rules and Regulations, harmless from
and  against  any  and  all  loss,  claim,  damage,  liability,  cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other  expenses  and  disbursements  incurred  in connection with investigating,
preparing  to  defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing  or  preparing  for  appearance  as  a  witness in any action, suit or
proceeding,  including any inquiry, investigation or pretrial proceeding such as
a  deposition)  to  which  the Placement Agent or such indemnified person of the
Placement  Agent  may become subject under the 1933 Act, the 1934 Act, the Rules
and  Regulations, or any other federal or state law or regulation, common law or
otherwise,  arising  out of or based upon (i) the conduct of the Investor or its
officers,  employees  or  representatives  in its acting as the Investor for the
Offering  or  (ii) the material breach of any representation, warranty, covenant
or  agreement  made by the Investor in the Offering Materials (iii) any false or
misleading information provided to the Placement Agent by the Investor or one of
the  Investor's  indemnified  persons.

D.     The  Placement  Agent  hereby  agrees that it will indemnify and hold the
Investor  and each officer, director, shareholder, employee or representative of
the  Investor,  and  each  person  controlling,  controlled  by  or under common
control  with  the  Investor within the meaning of Section 15 of the 1933 Act or
Section  20  of the 1934 Act or the Rules and  Regulations,  harmless  from  and
against  any  and  all  loss,  claim,  damage,  liability,  cost  or  expense
whatsoever  (including, but not limited to, any and all  reasonable  legal  fees
and  other  expenses  and  disbursements  incurred  in  connection  with
investigating, preparing to defend or defending any action, suit or  proceeding,
including  any  inquiry  or investigation, commenced or threatened, or any claim
whatsoever  or  in  appearing  or  preparing for appearance as a witness in  any
action,  suit  or  proceeding,  including any inquiry, investigation or pretrial
proceeding  such  as  a  deposition)  to  which  the  Investor  or  such
indemnified  person  of  the Investor may become subject under the 1933 Act, the
1934  Act,  the  Rules  and  Regulations,  or  any other federal or state law or
regulation,  common  law  or  otherwise,  arising  out  of or based upon (i) the
conduct  of the Placement Agent or its officers, employees or representatives in
willful  violation  of  any  of  such  laws and regulations while  acting as the
Placement  Agent  for  the  Offering  or  (ii)  the  material  breach  of  any
representation,  warranty,  covenant or agreement made by the Placement Agent in
this  Agreement  (iii)  any  false  or  misleading  information  provided to the
Investor  by  one  of  the  Placement  Agent's  indemnified  persons.

E.     Promptly  after receipt by an indemnified party of notice of commencement
of  any  action  covered  by  Section  6(A),  (B),  (C)  or (D), the party to be
indemnified  shall, within five (5) business days, notify the indemnifying party
of  the  commencement  thereof;  the omission by one (1) indemnified party to so
notify  the  indemnifying  party shall not relieve the indemnifying party of its
obligation  to  indemnify any other indemnified party that has given such notice
and  shall  not  relieve the indemnifying party of any liability outside of this
indemnification  if  not  materially  prejudiced  thereby. In the event that any
action  is brought against the indemnified party, the indemnifying party will be
entitled  to participate therein and, to the extent it may desire, to assume and
control  the  defense  thereof  with  counsel  chosen  by it which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such  indemnified  party  of  its election to so assume the defense thereof, the
indemnifying  party  will  not  be  liable  to such indemnified party under such
Section  6(A),  (B),  (C),  or  (D) for any legal or other expenses subsequently
incurred  by  such indemnified party in connection with the defense thereof, but
the  indemnified  party  may, at its own expense, participate in such defense by
counsel  chosen  by  it,  without,  however,  impairing the indemnifying party's
control  of  the  defense.  Subject  to  the  proviso  of  this  sentence  and
notwithstanding  any  other  statement  to  the  contrary  contained herein, the
indemnified  party  or  parties  shall have the right to choose its or their own
counsel  and  control  the  defense  of  any  action,  all at the expense of the
indemnifying  party  if,  (i)  the  employment  of  such counsel shall have been
authorized  in  writing by the indemnifying party in connection with the defense
of  such  action  at  the  expense  of  the  indemnifying  party,  or  (ii)  the
indemnifying  party  shall  not have employed counsel reasonably satisfactory to
such  indemnified  party  to  have charge of the defense of such action within a
reasonable  time  after  notice  of  commencement  of  the action, or (iii) such
indemnified  party  or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available  to  one  or  all  of  the  indemnifying  parties  (in  which case the
indemnifying  parties  shall  not  have  the right to direct the defense of such
action  on  behalf  of the indemnified party or parties), in any of which events
such  fees  and  expenses  of  one  additional  counsel  shall  be  borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection  with any one action or separate but substantially similar or related
actions  in the same jurisdiction arising out of the same general allegations or
circumstance,  be  liable  for the reasonable fees and expenses of more than one
separate  firm  of  attorneys  at  any  time  for all such indemnified  parties.
No settlement of any action or proceeding against an indemnified party  shall be
made without the consent of the indemnifying party.

F.     In  order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 6 is due in accordance with
its  terms but is for any reason held by a court to be unavailable on grounds of
policy  or otherwise, the Company and the Placement Agent and the Investor shall
contribute  to  the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or  defense  of  same)  which the other may incur in such proportion so that the
Company,  the  Placement  Agent  and  the Investor shall be responsible for such
percent  of  the  aggregate  of  such losses, claims, damages and liabilities as
shall  equal  the  percentage  of  the  gross  proceeds  paid  to each of them.;
provided,  however, that no person guilty of fraudulent misrepresentation within
the  meaning  of Section 11(f) of the 1933 Act shall be entitled to contribution
from  any  person  who  was not guilty of such fraudulent misrepresentation. For
purposes  of  this  Section 6(F), any person controlling, controlled by or under
common  control  with  the  Placement  Agent, or any partner, director, officer,
employee, representative or any agent of any thereof, shall have the same rights
to  contribution  as the Placement Agent and each person controlling, controlled
by  or under common control with the Company within the meaning of Section 15 of
the  1933  Act or Section 20 of the 1934 Act and each officer of the Company and
each  director  of the Company shall have the same rights to contribution as the
Company  and each person controlling, controlled by or under common control with
the  Investor  within the meaning of Section 15 of the 1933 Act or Section 20 of
the  1934 Act and each member of the general partner of the Investor  shall have
the  same  rights  to  contribution  as  the  Company.  Any  party  entitled  to
contribution  will,  promptly  after  receipt  of  notice of commencement of any
action,  suit  or  proceeding against such party in respect of which a claim for
contribution may be made against the other party under this Section 6(F), notify
such  party  from whom contribution may be sought, but the omission to so notify
such party shall not relieve the party from whom contribution may be sought from
any  obligation  they  may  have  hereunder  or otherwise if the party from whom
contribution  may  be sought is not materially prejudiced thereby. The indemnity
and  contribution  agreements contained in this Section 6 shall remain operative
and  in  full  force  and  effect  regardless of any investigation made by or on
behalf  of  any  indemnified  person  or  any  termination  of  this  Agreement.

7.     FEES.  The  Company  hereby  agrees to pay the Placement Agent 1% for the
gross  proceeds  from  each  Put with a aggregate maximum of seven thousand five
hundred  dollars  ($7,500)  over  the  term.

8.     PAYMENT  OF  EXPENSES.  The  Company  hereby  agrees  to  bear all of the
expenses  in  connection  with  the  Offering, including, but not limited to the
following:  filing fees, printing and duplicating costs, advertisements, postage
and  mailing  expenses  with  respect to the transmission of Offering Materials,
registrar  and  transfer agent fees, and expenses, fees of the Company's counsel
and  accountants,  issue  and transfer taxes, if any. The Company agrees to bear
all  the  reasonable  expenses of the Placement Agent in performing its services
under  this  Agreement  including  but  not  limited to the fees and expenses of
counsel.

9.     CONDITIONS  OF  CLOSING.  The Closing shall be held at the offices of the
Investor  or its counsel. The obligations of the Placement Agent hereunder shall
be  subject  to the continuing accuracy of the representations and warranties of
the  Company  herein  as  of  the date hereof and as of the Date of Closing (the
"Closing  Date") with respect to the Company as if it had been made on and as of
such  Closing  Date;  the  accuracy  on  and  as  of  the Closing  Date  of the
statements of the  officers  of  the  Company made  pursuant to  the  provisions
hereof;  and  the  performance  by the Company on and as of the Closing Date  of
its covenants and obligations hereunder and to the following further conditions:

A.     Upon  the  effectiveness  of a registration statement  in accordance with
the  Investment  Agreement,  the  Placement  Agent shall receive the opinions of
Counsel  to the Company and of the Investor, dated as of the date thereof, which
opinion  shall be in form and substance reasonably satisfactory to the Investor,
the  Company,  their  counsel  and  the  Placement  Agent.

B.     At or prior to the Closing, the Placement Agent shall have been furnished
such  documents,  certificates and opinions as it may reasonably require for the
purpose  of enabling them to review or pass upon the matters referred to in this
Agreement  and  the  Offering  Materials,  or in order to evidence the accuracy,
completeness  or  satisfaction  of  any  of  the  representations, warranties or
conditions  herein  contained.

C.     At  and  prior  to  the  Closing,  (i)  there shall have been no material
adverse  change  nor development involving a prospective change in the condition
or  prospects or the business activities, financial or otherwise, of the Company
from  the  latest  dates as of which such condition is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business except the transactions pursuant to the Investment Agreement entered
into by the Company which has not been disclosed in the Offering Materials or to
the  Placement  Agent  in  writing;  (iii)  except  as set forth in the Offering
Materials,  the  Company  shall  not  be  in  default under any provision of any
instrument  relating  to  any  outstanding  indebtedness  for  which a waiver or
extension  has  not  been  otherwise  received;  (iv) except as set forth in the
Offering Materials, the Company shall not have issued any securities (other than
those  to  be  issued as provided in the Offering Materials) or declared or paid
any  dividend  or  made  any  distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities  or  obligations  of the Company (contingent or otherwise) and trade
payable  debt;  (v)  no  material amount of the assets of the Company shall have
been  pledged  or  mortgaged, except as indicated in the Offering Materials; and
(v)  no  action, suit or proceeding, at law or in equity, against the Company or
affecting  any  of  its  properties or businesses shall be pending or threatened
before  or  by  any  court  or  federal  or  state  commission,  board  or other
administrative  agency,  domestic  or  foreign, wherein an unfavorable decision,
ruling or finding could materially adversely affect the businesses, prospects or
financial  condition  or  income  of  the  Company,  except  as set forth in the
Offering  Materials.

D.     .  At  Closing,  the  Placement  Agent shall receive a certificate of the
Company  signed by an executive officer and chief financial officer, dated as of
the  applicable  Closing,  to  the  effect  that  the  conditions  set  forth in
subparagraph  (C)  above  have  been  satisfied  and  that, as of the applicable
closing,  the representations and warranties of the Company set forth herein are
true  and  correct.

10.     TERMINATION.  This  Agreement  shall  be co-terminus with, and terminate
upon  the  same  terms  and  conditions  as  those  set forth in, the Investment
Agreement.  The  rights of the Investor and the obligations of the Company under
the Registration Rights Agreement, and the rights of the Placement Agent and the
obligations  of  the  Company  shall  survive  the termination of this Agreement
unabridged  for  a  period  of  twenty-four  (24) months after the Closing Date.

11.     MISCELLANEOUS.  A.  This  Agreement  may  be  executed  in any number of
counterparts,  each  of  which  shall be deemed to be an original, but all which
shall  be  deemed  to  be one and the same instrument. B. Any notice required or
permitted  to  be  given hereunder shall be given in writing and shall be deemed
effective  when  deposited  in  the United States mail, postage prepaid, or when
received if personally delivered or faxed (upon confirmation of receipt received
by  the  sending  party),  addressed  as  follows:

     If  to  Placement  Agent,  to:

     Park  Capital
     Attn:  Phillip  Orlando
     216  East  45th  Street,  7th  Floor
     New  York,  New  York  10017
     Tel:   212-244-1555
     Fax:  212-201-3502

     If  to  the  Company,  to:

     With  a  copy  to:

     If  to  the  Investor:

     Preston  Capital  Partners,  LLC
     34  Myrtle  St
     Boston,  MA  02108
     Tel:     (617)  783-7354

     or  to  such  other address of which written notice is given to the others.

C.     This  Agreement  shall be governed by and construed in all respects under
the  laws  of  the  State of Delaware, without reference to its conflict of laws
rules  or  principles. Any suit, action, proceeding or litigation arising out of
or relating to this Agreement shall be brought and prosecuted in such federal or
state  court  or  courts  located  within  the  Commonwealth of Massachusetts as
provided  by  law. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the Commonwealth of
Massachusetts  and to service of process by registered or certified mail, return
receipt requested, or by any other manner provided by applicable law, and hereby
irrevocably  and unconditionally waive any right to claim that any suit, action,
proceeding  or  litigation  so  commenced  has been commenced in an inconvenient
forum.

D.     This  Agreement  and  the  other agreements referenced herein contain the
entire  understanding  between  the  parties  hereto  and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the  modification  or  amendment  is  sought.

E.     If  any  provision  of  this  Agreement  shall  be  held to be invalid or
unenforceable,  such  invalidity  or unenforceability shall not affect any other
provision  of  this  Agreement.

     [REMAINDER  OF  PAGE  INTENTIONALLY  LEFT  BLANK]

IN  WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of the
date  first  written  above.

COMPANY:

By:  /s/ Michael Cummmings
    ----------------------
Name:  Michael  Cummings
Title:  CEO

PLACEMENT  AGENT:

By:  /s/ Phillip Orlando
   ---------------------
Name:  Phillip  Orlando
Title:  President

INVESTOR:

PRESTON  CAPITAL  PARTNERS,  LLC

By: /s/ John Wykoff
   ----------------
Name:  John  Wykoff
Title:  A  Managing  Member<PAGE>
                                                                EXHIBIT 10.1

                            PACIFIC BIOMETRICS, INC.

                            1996 STOCK INCENTIVE PLAN
               (as amended August 28, 1997 and September 17, 2003)

SECTION 1. Purpose

      The purpose of the Pacific Biometrics, Inc. 1996 Stock Incentive Plan (the
"Plan") is to enable Pacific Biometrics, Inc. (the "Company") and its
subsidiaries (as defined below) to provide employees, officers, directors,
consultants and advisors the opportunity to acquire a proprietary interest in
the Company and to benefit from the appreciation in the value of its common
shares and thereby to enhance the ability of the Company to attract and retain
employees and other persons of exceptional ability who, by their participation
in the Plan, will have a greater incentive to contribute to the Company's
long-term success and growth. For purposes of the Plan, a "subsidiary" means any
subsidiary corporation as defined in Section 424(f) of the Internal Revenue Code
of 1986, as amended, (the "Code").

SECTION 2. Types of Awards

      2.1 Awards under the Plan may be in the form of (i) incentive stock
options or non-qualified stock options ("Stock Options"); (ii) Stock
Appreciation Rights; (iii) Restricted Stock; (iv) Performance Shares; (v) Loans;
and/or (vi) Tax Offset Payments.

      2.2 An eligible person may be granted one or more types of awards, which
may be independent or granted in tandem. If two awards are granted in tandem the
grantee may exercise (or otherwise receive the benefit of) one award only to the
extent he or she relinquishes the tandem award.

SECTION 3. Administration

      3.1 The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Board") or such other committee of directors
as the Board shall designate (the "Committee"), which shall consist of not less
than two disinterested persons (as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Act") or any successor rule) who shall
serve at the pleasure of the Board. In addition, from and after the first
meeting of the stockholders of the Company occurring after December 31, 1999 at
which directors are to be elected, all members of the Committee shall be
"outside directors" within the contemplation of Section 162(m)(4)(C)(i) of the
Code. The President of the Company shall also be a member of the Committee,
ex-officio, whether or not he is otherwise eligible to be a member of the
Committee. The Committee shall be appointed annually by the Board, which may at
any time and from time to time remove any members of the Committee, with or
without cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members present at a meeting duly called and held except that
the Committee may delegate to any one of its members the authority of the
Committee with respect to the grant of Options to persons who shall not be
officers and/or directors of the Company and who are not, and in the judgment of
the Committee may not be reasonably expected to become, a "covered employee"
within the meaning of Section 162(m)(3) of the Code. Any decision or
determination of the Committee reduced to writing and signed by all of the
members of the Committee (or by the member of the Committee to whom authority
has been delegated) shall be fully as effective as if it had been made at a
meeting duly called and held.

      3.2 The Committee shall have the authority to grant awards to eligible
persons under the Plan; to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall deem advisable; to
interpret the terms and provisions of the Plan and any award granted under the
Plan; and to otherwise supervise the administration of the Plan. In particular,
and without limiting its authority and powers, the Committee shall have the
authority:

                                      -1-
<PAGE>
            (a) to determine whether and to what extent any award or combination
of awards will be granted hereunder, including whether any awards will be
granted in tandem with each other;

            (b) to select the persons to whom awards will be granted;

            (c) to determine the number of shares of the common stock of the
Company (the "Stock") to be covered by each award granted hereunder;

            (d) to determine the terms and conditions of any award granted
hereunder, including, but not limited to, any vesting or other restrictions
based on performance and such other factors as the Committee may determine, and
to determine whether the terms and conditions of the award are satisfied;

            (e) to determine the treatment of awards upon an employee's
retirement, disability, death, termination for cause or other termination of
employment;

            (f) to determine pursuant to a formula or otherwise the Fair Market
Value of the Stock on a given date; Fair Market Value shall mean the value of
one (1) share of Common Stock, determined as follows:

              (i) If the Common Stock is not listed or admitted to trading on a
stock exchange, the last sale price of the Common Stock in the over-the-counter
market on the date of valuation, or,

              (ii) If the Common Stock is then listed or admitted to trading on
any stock exchange, the closing sale price on the date of valuation on the
principal stock exchange on which the Common Stock is then listed or admitted to
trading. If no closing sale price is quoted on such day, or if no sale takes
place on such day on such principal exchange, as the case may be, then the
closing sale price on the over-the-counter market or the closing sale price of
the Common Stock on such exchange on the next preceding day on which a sale
occurred or closing sale price was reported, as the case may be, shall be the
Fair Market Value. During such times as there is not a market price available,
the Fair Market Value shall be determined by the Board or the Committee in good
faith, which determination shall be conclusive and binding on all interested
parties.

            (g) to determine whether the amount of any dividends declared with
respect to the number of shares covered by an award (i) will be paid to the
holder currently or (ii) will be deferred and deemed to be reinvested or (iii)
will otherwise be credited to such holder, or that the holder has no rights with
respect to such dividends;

            (h) to determine whether to what extent, and under what
circumstances Stock and other amounts payable with respect to an award will be
deferred either automatically or at the election of a holder, including
providing for and determining the amount (if any) of deemed earnings on any
deferred amount during any deferral period;

            (i) to provide that the shares of Stock received as a result of an
award shall be subject to a right of first refusal, pursuant to which the holder
shall be required to offer to the Company any shares that the holder wishes to
sell, subject to such terms and conditions as the Committee may specify;

            (j) to amend the terms of any award, prospectively or retroactively;
provided, however, that no amendment shall impair the rights of the award holder
without his or her consent;

            (k) to substitute new Stock Options for previously granted Stock
Options, or for options granted under other plans, in each case including
previously granted options having higher option prices; and

            (l) to allow an option holder to exercise his or her option prior to
its expiration and pay for the acquired shares with currently owned shares,
while at the same time receiving replacement options, at the then current market
price, for the same remaining term as the option exercised, or pay for the
acquired shares with a portion of the acquired shares.

                                      -2-
<PAGE>
      3.3 All determinations made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.

      3.4 The Committee may from time to time delegate to one or more officers
of the Company any or all of its authority granted hereunder except with respect
to awards granted to persons subject to Section 16 of the Act. The Committee
shall specify the maximum number of shares that the officer or officers to whom
such authority is delegated may award.

SECTION 4. Stock Subject to Plan

      4.1 The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,800,000 (subject to further adjustment as
provided below), which shall be in addition to the 95,568 shares previously
issued as of September 17, 2003 upon prior exercise of stock options under the
Plan. Such shares may consist of authorized but unissued shares or treasury
shares. The exercise of a Stock Appreciation Right for cash, the payment of any
other award in cash shall not count against this share limit.

      4.2 To the extent an option terminates without having been exercised, or
an award terminates without the holder having received payment of the award, or
shares awarded are forfeited, the shares subject to such award shall again be
available for distribution in connection with future awards under the Plan.
Subject to Section 4.1, at no time will the number of shares issued under the
Plan plus the number of shares covered by outstanding awards under the Plan
exceed the number of shares authorized under the Plan.

      4.3 In the event of any merger, reorganization, consolidation, sale of
substantially all assets, recapitalization, Stock dividend, Stock split,
spin-off, split-up, split-off, distribution of assets or other change in
corporate structure affecting the Stock, a substitution or adjustment, as may be
determined to be appropriate by the Committee in its sole discretion, shall be
made in the aggregate number of shares reserved for issuance under the Plan, the
number of shares subject to outstanding awards and the amounts to be paid by
employees or the Company, as the case may be, with respect to outstanding
awards.

SECTION 5. Eligibility

      Officers, directors, employees, consultants and advisors of the Company or
a subsidiary are eligible to be granted awards under the Plan (the
"Participants"). The Participants under the Plan shall be selected from time to
time by the Committee, in its sole discretion, from among those eligible
Participants.

SECTION 6. Stock Options

      6.1 The Stock Options awarded under the Plan may be of two types: (i)
Incentive Stock Options within the meaning of Section 422 of the Code or any
successor provision thereto; and (ii) Non-Incentive Stock Options. To the extent
that any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.

      6.2 Subject to the following provisions, Stock Options awarded under the
Plan shall be in such form and shall have such terms and conditions as the
Committee may determine:

              (a) Option Price. The option exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee. Each
Option shall state the Exercise Price, which price shall be 100% of the Fair
Market Value on the date of grant in the case of incentive stock options,
provided, however, that, in the case of a Participant who owns more than 10% of
the total combined voting power of the Common Stock at the time an Option which
is an incentive stock option is granted to him, the initial per share option
price shall not be less than 110% of the Fair Market Value of a share of the
Common Stock on the date of grant. The aggregate Fair Market Value of the shares
of the Common Stock for which any Participant may be granted incentive stock
options which are exercisable for the first time in any calendar year (whether
under the terms of the Plan or any other stock option plan of the Company) shall
not exceed $100,000. In the case of non-incentive stock options, the exercise
price shall not be less than 85% of the Fair Market Value on the date of the
grant; provided, however, that, in the case of a non-incentive stock option
granted to a person who is, or in the judgment of the Committee may reasonably
be expected

                                      -3-
<PAGE>
to become, a "covered employee" within the meaning of Section 162(m)(3) of the
Code, and in the case of non-employee director's options, the initial per share
option price shall not be less than the Fair Market Value of the Common Stock on
the date of grant.

              (b) Option Term. The term of each Stock Option shall be fixed by
the Committee. All Options under this Plan expire not later than the tenth
(10th) anniversary of the date of grant.

              (c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee. If the Committee provides that any Stock Option is exercisable
only in installments, the Committee may waive such installment exercise
provisions at any time in whole or in part.

              (d) Method of Exercise. Stock Options may be exercised in whole or
in part at any time during the option period by giving written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment of the purchase price. Payment of the purchase price
shall be made in such manner as the Committee may provide in the award, which
may include cash (including cash equivalents), delivery of shares of Stock
already owned by the optionee or subject to awards hereunder, through the
delivery of irrevocable instructions to a broker to deliver promptly to the
Company an amount equal to the purchase price, or by any other manner permitted
by law and determined by the Committee, or any combination of the foregoing. The
Committee may provide that all or part of the shares received upon the exercise
of a Stock Option which are paid for using Restricted Stock or Performance
Shares shall be restricted or deferred in accordance with the original terms of
the award in question. The Committee shall determine acceptable methods for
providing notice of exercise for tendering shares of Stock and for delivery of
irrevocable instructions to a broker and may impose such limitations and
prohibitions on the use of Stock or irrevocable instructions to a broker to
exercise as it deems appropriate.

              (e) No Shareholder Rights. An optionee shall have neither rights
to dividends or other rights of a shareholder with respect to shares subject to
a Stock Option until the optionee has given written notice of exercise and has
paid for such shares.

              (f) Surrender Rights. The Committee may provide that options may
be surrendered for cash upon any terms and conditions set by the Committee.

              (g) Non-transferability. No Stock Option shall be transferable by
the optionee other than by will or by the laws of descent and distribution.
During the optionee's lifetime, all Stock Options shall be exercisable only by
the optionee.

              (h) Termination of Employment. If an optionee's employment with
the Company or a subsidiary terminates by reason of death, disability,
retirement, voluntary or involuntary termination or otherwise, the Stock Option
shall be exercisable to the extent determined by the Committee. The Committee
may provide that, notwithstanding the option term fixed pursuant to Section
6.2(b), a Stock Option which is outstanding on the date of an optionee's death
shall remain outstanding for an additional period after the date of such death.

      6.3 (a) Notwithstanding the provisions of Section 6.2, no Incentive Stock
Option shall (i) have an option price which is less than 100% of the Fair Market
Value of the Stock on the date of the award of the Stock Option, (ii) be
exercisable more than ten years after the date such Incentive Stock Option is
awarded or (iii) be awarded more than ten years after the effective date of the
Plan. No Incentive Stock Option shall be granted to an employee who, at the time
the option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of its subsidiary, unless
the option price, at the time of the award, is at least 110% of the Fair Market
Value of the stock subject to the option and such option is not exercisable
after the expiration of five years from the date of the award.

              (b) The initial per share option price of any option which is a
Non-Incentive Stock Option shall not be less than 85% of the Fair Market Value
of a share of the Common Stock on the date of the grant; provided, however,
that, in the case of a Non-Incentive Stock Option granted to a person who is, or
in the judgment of the Committee may reasonably be expected to become, a
"covered employee" within the meaning of Section

                                      -4-
<PAGE>
162(m)(3) of the Code, the initial per share option price shall not be less than
the Fair Market Value of a share of the Common Stock on the date of grant.

      6.4 (a) The aggregate Fair Market Value on the date of grant of the shares
of the Common Stock for which any Participant may be granted Incentive Stock
Options which are exercisable for the first time in any calendar year (whether
under the terms of the Plan or any other stock option plan of the Company) shall
not exceed $100,000.

              (b) No Participant shall, during any fiscal year of the Company,
be granted Options to purchase more than 1,000,000 shares of the Common Stock.

SECTION 7. Stock Appreciation Rights

      7.1 A Stock Appreciation Right shall entitle the holder thereof to receive
payment of an amount, in cash, shares of Stock or a combination thereof, as
determined by the Committee, equal in value to the excess of the Fair Market
Value of the shares as to which the award is granted on the date of exercise
over an amount specified by the Committee. Any such award shall be in such form
and shall have such terms and conditions as the Committee may determine.

      7.2 The Committee may provide that a Stock Appreciation Right may be
exercised only within the 60-day period following occurrence of a Change of
Control (as defined in Section 15.2). The Committee may also provide that in the
event of a Change of Control the amount to be paid upon the exercise of a Stock
Appreciation Right shall be based on the Change of Control Price (as defined in
Section 15.3).

SECTION 8. Restricted Stock

      Subject to the following provisions, all awards of Restricted Stock shall
be in such form and shall have such terms and conditions as the Committee may
determine:

            (a) The Restricted Stock award shall specify the number of shares of
Restricted Stock to be awarded, the price, if any, to be paid by the recipient
of the Restricted Stock and the date or dates on which, or the conditions upon
the satisfaction of which, the Restricted Stock will vest. The vesting of
Restricted Stock may be conditioned upon the completion of a specified period of
service with the Company or a subsidiary, upon the attainment of specified
performance goals or upon such other criteria as the Committee may determine.

            (b) Stock certificates representing the Restricted Stock awarded to
a Participant shall be registered in the Participant's name, but the Committee
may direct that such certificates shall be held by the Company on behalf of the
Participant. Except as may be permitted by the Committee, no share of Restricted
Stock may be sold, transferred, assigned, pledged or otherwise encumbered by the
Participant until such share has vested in accordance with the terms of the
Restricted Stock award. At the time Restricted Stock vests, a certificate for
such vested shares shall be delivered to the Participant (or his or her
designated beneficiary in the event of death), free of all restrictions.

            (c) The Committee may provide that the Participant shall have the
right to vote or receive dividends on Restricted Stock. The Committee may
provide that Stock received as a dividend on, or in connection with a stock
split of Restricted Stock, shall be subject to the same restrictions as the
Restricted Stock.

            (d) Except as may be provided by the Committee, in the event of a
Participant's termination of employment before all of his or her Restricted
Stock has vested, or in the event any conditions to the vesting of Restricted
Stock have not been satisfied prior to any deadline for the satisfaction of such
conditions set forth in the award, the shares of Restricted Stock which have not
vested shall be forfeited, and the Committee may provide that (i) any purchase
price paid by the Participant shall be returned to the Participant or (ii) a
cash payment equal to the Restricted Stock's Fair Market Value on the date of
forfeiture, if lower, shall be paid to the Participant.

            (e) The Committee may waive, in whole or in part, any or all of the
conditions to receipt of, or restrictions with respect to, any or all of the
Participant's Restricted Stock.

                                      -5-
<PAGE>
SECTION 9. Performance Share Awards

      Subject to the following provisions, all awards of Performance Shares
shall be in such form and shall have such terms and conditions as the Committee
may determined:

            (a) The Performance Shares award shall specify the number of
Performance Shares to be awarded to any Participant and the duration of the
period (the "Performance Period") after which, and the terms pursuant to which,
the Performance Shares will be issued to the Participant. The Committee may
condition the award of Performance Shares, or receipt of Stock or cash at the
end of the Performance Period, upon the attainment of specified performance
goals or such other criteria as the Committee may determine.

            (b) Except as may be permitted by the Committee, Performance Share
awards may not be sold, assigned, transferred, pledged or otherwise encumbered
during the Performance Period.

            (c) At the expiration of the Performance Period, the Participant (or
his or her designated beneficiary in the event of death) shall receive (i)
certificates for the number of shares of Stock equal to the number of shares
covered by the Performance Share award, (ii) cash equal to the fair market value
of such Stock or (iii) a combination of shares and cash, as the Committee may
determine.

            (d) Except as may be provided by the Committee, in the event of a
Participant's termination of employment before the end of the Performance
Period, his or her Performance Share award shall be forfeited.

            (e) The Committee may waive, in whole or in part, any or all of the
conditions to receipt of, or restrictions with respect to, Stock or cash under a
Performance Share award.

SECTION 10. Loans

      The Committee may provide that the Company shall make, or arrange for, a
loan or loans to an employee with respect to the exercise of any Stock Option
awarded under the Plan, with respect to the payment of the purchase price, if
any, of any Restricted Stock awarded hereunder, or with respect to any taxes
arising from an award hereunder; provided, however, that the Company shall not
loan to an employee more than the excess of the purchase or exercise price of an
award (together with the amount of any taxes arising from such award) over the
par value of any shares of Stock awarded. The Committee shall have full
authority to decide whether a loan will be made hereunder and to determine the
amount, term and provisions of any such loan, including the interest rate to be
charged, whether the loan will be with or without recourse against the borrower,
any security for the loan, the terms on which the loan is to be repaid and the
conditions, if any, under which the loan may be forgiven.

SECTION 11. Tax Offset Payments

      The Committee may provide for a Tax Offset Payment by the Company to the
employee in an amount specified by the Committee, which shall not exceed the
amount necessary to pay the federal, state, local and other taxes payable with
respect to any award and receipt of the Tax Offset Payment, assuming the
employee is taxed at the maximum tax rate applicable to such income. The Tax
Offset Payment may be paid in cash, Stock or a combination thereof, as
determined by the Committee.

SECTION 12. Purchase for Investment

      12.1 Unless the shares to be issued upon the exercise of an Option by a
Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a condition of the
Company's obligation to issue such shares, be required to give a representation
in writing that he or she is acquiring such shares for his or her own account as
an investment and not with a view to, or for sale in connection with, the
distribution of any thereof.

                                      -6-
<PAGE>
SECTION 13. Tax Withholding

      13.1 Each Participant shall, no later than the date as of which the value
of an award first becomes includable in the Participant's gross income for
applicable tax purposes, pay to the Company, or make arrangements satisfactory
to the Committee regarding payment of, any federal, state, local or other taxes
of any kind required by law to be withheld with respect to the award. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company (and, where applicable, any subsidiary), shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.

      13.2 To the extent permitted by the Committee, and subject to such terms
and conditions as the Committee may provide, a Participant may irrevocably elect
to have the withholding tax obligation, or any additional tax obligation with
respect to any awards hereunder, satisfied by (i) having the Company withhold
shares of Stock otherwise deliverable to the Participant with respect to the
award or (ii) delivering to the Company, shares of unrestricted Stock.

      13.3 In the event of the death of a Participant, a condition of exercising
any Option shall be the delivery to the Company of such tax waivers and other
documents as the Committee shall determine.

SECTION 14. Amendments and Termination

      The Board may discontinue the Plan at any time and may amend it from time
to time. No amendment or discontinuation of the Plan shall adversely affect any
award previously granted without the Participant's written consent. Amendments
may be made without shareholder approval except as required to satisfy Rule
16b-3 under the Act (or any successor rule), Section 162(m) of the Code or other
regulatory requirements. The Plan will terminate no later than July 9, 2006.

SECTION 15. Change of Control

      15.1 In the event of a Change of Control, unless otherwise determined by
the Committee at the time of grant or by amendment (with the holder's consent)
of such grant:

            (a) all outstanding Stock Options and all outstanding Stock
Appreciation Rights awarded under the Plan shall become fully exercisable and
vested;

            (b) the restrictions and deferral limitations applicable to any
outstanding Restricted Stock and Deferred Stock awards under the Plan shall
lapse and such shares and awards shall be deemed fully vested; and

            (c) to the extent the cash payment of any award is based on the Fair
Market Value of Stock, such Fair Market Value shall be the Change of Control
Price.

      15.2 A "Change of Control" shall be deemed to occur on:

            (a) The date that any person or group deemed a person under Sections
3(a)(9) and 13(d)(3) of the Act, other than the Company and its subsidiaries as
determined immediately prior to that date, in a transaction or series of
transactions has become the beneficial owner, directly or indirectly (with
beneficial ownership determined as provided in Rule 13d-3, or any successor
rule, under such Act) of 20% or more of the outstanding securities of the
Company having the right under ordinary circumstances to vote at an election of
the Board;

            (b) the date on which one-half or more of the members of the Board
shall consist of persons other than Current Directors (for these purposes, a
"Current Director" shall mean any member of the Board as of the effective date
of the Plan and any successor of a Current Director whose nomination or election
has been approved by a majority of the Current Directors then on the Board); or

            (c) the date of approval by the shareholders of the Company of an
agreement providing for (A) the merger or consolidation of the Company with
another corporation where the shareholders of the Company,

                                      -7-
<PAGE>
immediately prior to the merger or consolidation, would not beneficially own,
immediately after the merger or consolidation, shares entitling such
shareholders to 50% or more of all votes (without consideration of the rights of
any class of stock to elect directors by a separate class vote) to which all
shareholders of the corporation issuing cash or securities in the merger or
consolidation would be entitled in the election of directors or where the
members of the Board, immediately prior to the merger or consolidation, would
not, immediately after the merger or consolidation, constitute a majority of the
Board of Directors of the corporation issuing cash or securities in the merger
or consolidation or (B) the sale or other disposition of all or substantially
all the assets of the Company.

      15.3 "Change of Control Price" means the highest price per share paid for
the Company's Stock in any transaction reported on any national stock exchange
or in the over-the-counter market, or paid or offered in any transaction related
to a Change of Control at any time during the 90-day period ending with the
Change of Control. Notwithstanding the foregoing sentence, in the case of Stock
Appreciation Rights granted in tandem with Incentive Stock Options, the Change
of Control Price shall be the highest price paid on the date on which the Stock
Appreciation Right is exercised.

      15.4 In the event that the Committee determines that, in connection with
the acquisition by the Company or a Subsidiary of another corporation which will
become a Subsidiary or division of the Company (such corporation being hereafter
referred to as an "Acquired Subsidiary"), Options may be granted hereunder to
employees and other personnel of an Acquired Subsidiary in exchange for then
outstanding options to purchase securities of the Acquired Subsidiary. Such
Options may be granted at such option prices, may be exercisable immediately or
at any time or times either in whole or in part, and may contain such other
provisions not inconsistent with the Plan, or the requirements set forth in
Section 14 hereof that certain amendments to the Plan be approved by the
stockholders of the Company, as the Committee, in its discretion, shall deem
appropriate at the time of the granting of such Options.

SECTION 16. General Provisions

      16.1 Each award under the Plan shall be subject to the requirement that,
if at any time the Committee shall determine that (i) the listing, registration
or qualification of the Stock subject to the award or related thereto upon any
securities exchange or under any state or federal law, or (ii) the consent or
approval of any government regulatory body or (iii) an agreement by the
recipient of an award with respect to the disposition of Stock, is necessary or
desirable (in connection with any requirement or interpretation of any federal
or state securities law, rule or regulation) as a condition of, or in connection
with, the granting of such award or the issuance, purchase or delivery of Stock
thereunder, such award shall not be granted or exercised, in whole or in part,
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.

      16.2 Nothing set forth in this Plan shall prevent the Board from adopting
other or additional compensation arrangements. Neither the adoption of the Plan
nor any award hereunder shall confer upon any Participant or employee of the
Company, or of a subsidiary, any right to continued employment.

      16.3 Determinations by the Committee under the Plan relating to the form,
amount and terms and conditions of awards need not be uniform, and may be made
selectively among persons who receive or are eligible to receive awards under
the Plan, whether or not such persons are similarly situated.

      16.4 No member of the Board or the Committee, nor any officer or employee
of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board or the Committee and all
officers or employees of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.

SECTION 17. Effective Date of Plan

      The Plan became effective upon approval by the Company's shareholders on
July 9, 1996.

                                      -8-

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