1998 Stock Option Plan - GSV I

1998 Stock Option Plan - GSV Inc. 

   CYBERSHOP INTERNATIONAL, INC.
                             1998 STOCK OPTION PLAN

1.   PURPOSE OF THE PLAN.

          The purpose of the  CyberShop  International,  Inc.  1998 Stock Option
Plan (the "Plan") is to advance the interests of CyberShop International,  Inc.,
a  Delaware  corporation  (the  "Company"),  by  providing  an  opportunity  for
ownership of the stock of the Company by employees, agents and directors of, and
consultants  to, the Company or of any  subsidiary  corporation  (herein  called
"subsidiary"  or  "subsidiaries"),  as defined in Section 424(f) of the Internal
Revenue  Code of 1986,  as amended  (the  "Code") and the  Treasury  regulations
promulgated thereunder (the "Regulations"). Such employees, agents and directors
of, and consultants  to, the Company or any subsidiary are hereinafter  referred
to individually as an "Eligible Person" and collectively as "Eligible  Persons".
By providing  an  opportunity  for such stock  ownership,  the Company  seeks to
attract and retain  qualified  personnel,  and  otherwise to provide  additional
incentive for optionees to promote the success of its business.

2.   STOCK SUBJECT TO THE PLAN.

          (a) The  total  number of shares of the  authorized  but  unissued  or
treasury  shares of the  common  stock,  par value of $.001  per  share,  of the
Company (the  "Common  Stock") for which  options may be granted  under the Plan
(the "Options") shall be 1,000,000, subject to adjustment as provided in Section
13 hereof.

          (b)  If an  Option  granted  or  assumed  hereunder  shall  expire  or
terminate for any reason without having been exercised in full, the  unpurchased
shares  subject  thereto shall again be available for  subsequent  Option grants
under the Plan.

          (c) Common Stock issuable upon exercise of an Option may be subject to
such  restrictions  on  transfer,  repurchase  rights  or  other  conditions  or
restrictions  as shall be  determined  by the Board of  Directors of the Company
(the "Board").

3.   ADMINISTRATION OF THE PLAN.

          (a) The Plan  shall be  administered  by the  Board.  No member of the
Board shall act upon any matter affecting any Option granted or to be granted to
himself or herself under the Plan;  provided,  however,  that nothing  contained
herein  shall be deemed to  prohibit a member of the Board from  acting upon any
matter  generally  affecting  the  Plan or any  Options  granted  thereunder.  A
majority of the members of the Board shall  constitute a quorum,  and any action
may be taken by a  majority  of those  present  and voting at any  meeting.  The
decision of the Board as to all questions of  interpretation  and application of
the Plan shall be final,  binding and conclusive on all persons.  The Board,  in
its sole discretion, may grant Options to purchase






shares of the Common  Stock only as  provided in the Plan,  and shares  shall be
issued upon  exercise of such  Options as provided in the Plan.  The Board shall
have authority,  subject to the express provisions of the Plan, to determine the
Eligible  Persons who shall be issued  Options,  the times when Options shall be
granted  and within  which they may be  exercised,  the prices at which  Options
shall be  exercised,  the number of shares of Common Stock to be subject to each
Option and whether an Option shall be treated as an incentive  stock option or a
non-qualified stock option. The Board shall also have the authority,  subject to
the express  provisions  of the Plan,  to amend the Plan, to determine the terms
and provisions of the respective  option  agreements,  which may but need not be
identical,  to construe the  respective  option  agreements and the Plan, and to
make  all  other  determinations  in the  judgment  of the  Board  necessary  or
desirable for the  administration  of the Plan. The Board may correct any defect
or supply any  omission or  reconcile  any  inconsistency  in the Plan or in any
option  agreement  in the manner and to the  extent it shall deem  expedient  to
implement the Plan and shall be the sole and final judge of such expediency.

          (b) The Board, in its discretion,  may delegate its power,  duties and
responsibilities to a committee,  consisting solely of two or more "Non-Employee
Directors"  (as  hereinafter  defined).  If a  committee  is so  appointed,  all
references  to the Board  herein  shall mean and relate to such  committee.  The
existence  of such a committee  shall not affect the power or  authority  of the
Board  to  administer  the  Plan.  For  the  purposes  of  the  Plan,  the  term
"Non-Employee  Director"  shall have the  meaning  ascribed  to it in  paragraph
(b)(3) of Rule 16b-3 promulgated  under the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"), as such term is interpreted from time to time.

4.   TYPE OF OPTION.

          Options granted  pursuant to the Plan shall be authorized by action of
the Board and may be designated as either  incentive  stock options  meeting the
requirements of Section 422 of the Code or non-qualified stock options which are
not  intended to meet the  requirements  of such  Section  422 of the Code,  the
designation  to be in the sole  discretion of the Board.  Options  designated as
incentive  stock  options  that fail to  continue  to meet the  requirements  of
Section 422 of the Code shall be  redesignated  as  non-qualified  stock options
automatically without further action by the Board on the date of such failure to
continue to meet the requirements of Section 422 of the Code.

5.   ELIGIBILITY.

          Options  designated as incentive  stock options may be granted only to
Eligible  Persons  who  are  officers  or  employees  of the  Company  or of any
subsidiary.  Directors  who are not  otherwise  employees  of the  Company  or a
subsidiary shall not be eligible to be granted  incentive stock options pursuant
to the Plan. Options designated as non-qualified stock options may be granted to
any Eligible Person.

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          The Board shall take into account such factors as it may deem relevant
in determining  the number of shares of Common Stock to be included in an Option
to be granted to any Eligible Person.

6.   RESTRICTIONS ON OPTIONS.

          Incentive stock options (but not non-qualified  stock options) granted
under this Plan shall be subject to the following restrictions:

          (a) Limitation on Number of Shares. The aggregate fair market value of
the shares of Common Stock with  respect to which  incentive  stock  options are
granted  (determined  as of the date the  incentive  stock options are granted),
exercisable  for the first time by an individual  during any calendar year shall
not exceed  $100,000.  If an incentive stock option is granted pursuant to which
the aggregate fair market value of shares with respect to which it first becomes
exercisable  in  any  calendar  year  by an  individual  exceeds  such  $100,000
limitation,  the  portion  of such  option  which is in excess  of the  $100,000
limitation shall be treated as a non-qualified  stock option pursuant to Section
422(d)(1) of the Code.  In  determining  the fair market value under this clause
(a),  the  provisions  of  Section 8 hereof  shall  apply.  In the event that an
individual  is eligible  to  participate  in any other stock  option plan of the
Company or any  subsidiary  of the Company which is also intended to comply with
the provisions of Section 422 of the Code, such $100,000  limitation shall apply
to the  aggregate  number of shares for which  incentive  stock  options  may be
granted under this Plan and all such other plans.

          (b)  Ten  Percent  Stockholder.  If any  Eligible  Person  to  whom an
incentive  stock option is granted  pursuant to the provisions of the Plan is on
the date of grant the owner of stock (as determined  under Section 424(d) of the
Code) possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any  subsidiary  of the Company,  then the  following
special provisions shall be applicable to the incentive stock options granted to
such individual:

                   (i) The Option price per share  subject to such Options shall
be not less than 110% of the fair  market  value of the  shares of Common  Stock
with respect to which Options are granted (determined as of the date such Option
was granted).  In  determining  the fair market value under this clause (i), the
provisions of Section 8 hereof shall apply.

                   (ii) The Option by its terms shall not be  exercisable  after
the expiration of five years from the date such Option is granted.

7.   OPTION AGREEMENT; DISQUALIFYING DISPOSITIONS.

          (a) Each Option shall be evidenced by an option  agreement,  in a form
approved  from time to time by the Board (the  "Agreement"),  duly  executed  on
behalf of the Company and by

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the optionee to whom such Option is granted,  which  Agreement shall comply with
and be  subject  to the terms and  conditions  of the Plan.  The  Agreement  may
contain such other terms,  provisions and conditions  which are not inconsistent
with  the  Plan  as may  be  determined  by the  Board;  provided  that  Options
designated  as incentive  stock  options  shall meet all of the  conditions  for
incentive  stock  options as defined in Section 422 of the Code. No Option shall
be granted  within the meaning of the Plan and no purported  grant of any Option
shall be effective  until the Agreement  shall have been duly executed on behalf
of the Company and the optionee.

          (b) If an  optionee  makes a  "disposition"  (within  the  meaning  of
Section 424(c) of the Code) of shares of Common Stock issued upon exercise of an
incentive  stock  option  within  two years from the date of grant or within one
year from the date the shares of Common Stock are  transferred  to the optionee,
the optionee shall, within ten days of disposition, notify the Board and deliver
to it any withholding and employment  taxes due.  However,  if the optionee is a
person subject to Section 16(b) of the Exchange Act, delivery of any withholding
and  employment  taxes due may be  deferred  until  ten days  after the date any
income on the  disposition  is  recognized  under  Section  83 of the Code.  The
Company may cause a legend to be affixed to certificates  representing shares of
Common Stock issued upon exercise of incentive  stock options to ensure that the
Board receives notice of disqualifying dispositions.

8.   OPTION PRICE.

          (a) The  Option  price or prices of  shares  of the  Common  Stock for
Options designated as non-qualified  stock options shall be as determined by the
Board.

          (b) Subject to the  conditions  set forth in Section 6(b) hereof,  the
Option price or prices of shares of the  Company's  Common Stock  designated  as
incentive  stock  options shall be at least the fair market value of such Common
Stock on the date the Option is granted as determined by the Board in accordance
with the Regulations promulgated under Section 422 of the Code.

          (c)  If  such  shares  are  then  listed  on any  national  securities
exchange, the fair market value shall be the mean between the high and low sales
prices,  if any,  on the largest  such  exchange on the date of the grant of the
Option  or, if there are no such  sales on such  date,  shall be  determined  by
taking a weighted  average of the means  between the  highest  and lowest  sales
prices on the nearest  date before and the nearest  date after the date of grant
in accordance with Section  25.2512-2 of the Regulations.  If the shares are not
then listed on any such exchange,  the fair market value of such shares shall be
the mean  between the closing  "Bid" and the closing  "Ask"  prices,  if any, as
reported in the National  Association of Securities Dealers Automated  Quotation
System  ("NASDAQ") for the date of the grant of the Option,  or, if there are no
such prices on such date,  shall be determined  by taking a weighted  average of
the means between the highest and lowest sales prices on the nearest date before
and the  nearest  date  after  the  date of  grant in  accordance  with  Section
25.2512-2 of the  Regulations.  If the shares are not then either  listed on any
such  exchange  or quoted in NASDAQ,  the fair  market  value  shall be the mean
between  the average of the "Bid" and "Ask"  prices,  if any, as reported in the
National

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Association of Securities  Dealers National Daily Quotation Service for the date
of the grant of the Option,  or, if there are no such prices on such date, shall
be determined by taking a weighted  average of the means between the highest and
lowest  sales  prices on the nearest  date before and the nearest date after the
date of grant in accordance with Section  25.2512-2 of the  Regulations.  If the
fair market value cannot be determined under the preceding three  sentences,  it
shall be determined in good faith by the Board in accordance with Section 422 of
the Code.

9.   MANNER OF PAYMENT; MANNER OF EXERCISE.

          (a) Options  granted under the Plan may provide for the payment of the
exercise  price by delivery  of (i) cash or a check  payable to the order of the
Company in an amount equal to the exercise price of such Options, (ii) shares of
Common  Stock owned by the  optionee  having a fair market value (at the date of
exercise) equal in amount to the exercise price of the Options being  exercised,
or (iii) any combination of (i) and (ii). The fair market value of any shares of
Common  Stock  which  may be  delivered  upon  exercise  of an  Option  shall be
determined by the Board in accordance with Section 8 hereof.

          (b) To the  extent  that an  Option  is  exercisable,  Options  may be
exercised  in full at one time or in part from time to time,  by giving  written
notice,  signed by the person or persons  exercising the Option, to the Company,
stating  the  number  of  shares  with  respect  to which  the  Option  is being
exercised, accompanied by payment in full for such shares as provided in Section
9(a) hereof. No exercise of an Option may be made for fewer than 100 full shares
of Common Stock unless such exercise is made for the entire fractional amount of
a share remaining to be purchased  pursuant to such Option.  Upon such exercise,
delivery of a certificate  for paid-up,  non-assessable  shares shall be made by
the Company to the person or persons  exercising  the Option  within 20 business
days after receipt of such notice by the Company.

10.  EXERCISE OF OPTIONS.

          Each Option granted under the Plan shall,  subject to Sections  11(b),
13 and 16 hereof, be exercisable at such time or times and during such period as
shall be set forth in the Agreement; provided, however, that except as otherwise
provided  pursuant to the  provisions of Section 6(b) hereof,  no Option granted
under the Plan shall have a term in excess of ten years from the date of grant.

11.  TERM OF OPTIONS; EXERCISABILITY.

          (a)  Term.

                   (i) Each  Option  shall  expire on a date  determined  by the
Board  which is not more than ten years from the date of the  granting  thereof,
except (a) as  otherwise  provided  pursuant to the  provisions  of Section 6(b)
hereof, and (b) for earlier termination as herein provided.

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                   (ii)  Except as  otherwise  provided  in this  Section 11, an
Option  granted  to any  optionee  who ceases to be an  Eligible  Person for any
reason  shall  terminate  on the earlier of (i) three (3) months  after the date
such  optionee  ceased to be an Eligible  Person,  or (ii) the date on which the
Option expires by its terms.

                   (iii) If an optionee  ceases to be an Eligible Person because
the Company has terminated his or her status with the Company for cause (as such
term is defined in any employment or similar agreement between such optionee and
the  Company  or,  if there is no such  agreement,  or such  agreement  does not
contain provisions relating to termination or removal for cause, as such term is
defined by the law of the State of  Delaware),  such Option will,  to the extent
not terminated,  be deemed to have terminated on the date immediately  preceding
the date the optionee ceased to be an Eligible Person.

                   (iv) If an optionee  ceases to be an Eligible  Person because
the optionee has become disabled  (within the meaning of Section 22(e)(3) of the
Code), such Option shall terminate on the earlier of (i) one year after the date
such  optionee  ceased to be an Eligible  Person,  or (ii) the date on which the
Option expires by its terms.

                   (v) In the event of the death of any  optionee,  such  Option
shall  terminate on the earlier of (i) one year after the date of death, or (ii)
the date on which the Option expires by its terms.

          (b)  Exercisability.

                   (i) Except as otherwise  provided in this Section  11(b),  an
Option  granted to an optionee who  thereafter  ceases to be an Eligible  Person
shall be exercisable  only to the extent that the right to purchase shares under
such Option is  exercisable  on the date such optionee  ceased to be an Eligible
Person

                   (ii) An Option  granted  to an  optionee  who ceases to be an
Eligible  Person because he or she has become  disabled (as such term is defined
in any employment or similar agreement between such optionee and the Company or,
if there is no such  agreement,  or such agreement  does not contain  provisions
relating to termination or removal for  disability,  as determined by the Board)
shall be immediately exercisable as to the full number of shares covered by such
Option, whether or not under the provisions of the Plan or Agreement such Option
was otherwise exercisable as of the date of disability.

                   (iii) In the event of the death of an  optionee,  the  Option
granted  to such  optionee  may be  exercised  as to the full  number  of shares
covered  by such  Option,  whether  or not under the  provisions  of the Plan or
Agreement  the  optionee  was  otherwise  exercisable  at the date of his or her
death,  by the  executor,  administrator  or  personal  representative  of  such
optionee,  or by any person or persons who acquired  the right to exercise  such
Option by bequest or inheritance or by reason of the death of such optionee.

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                   (iv) In addition to the acceleration of the exercisability of
Options pursuant to this Section 11(b) and Section 13(b)(ii)  hereof,  the Board
shall have the right, in the exercise of its discretion and for any reason,  and
with the consent of the optionee,  to accelerate the date on which Options shall
be exercisable.

12.  TRANSFERABILITY.

          The right of any optionee to exercise any Option granted to him or her
shall not be assignable or  transferable  by such optionee other than by will or
the laws of descent and  distribution,  and any such Option shall be exercisable
during the  lifetime of such  optionee  only by him or her.  Any Option  granted
under the Plan shall be null and void and without  effect upon the bankruptcy of
the optionee to whom the Option is granted, or upon any attempted  assignment or
transfer,  except  as  herein  provided,   including,  without  limitation,  any
purported  assignment,  whether  voluntary  or  by  operation  of  law,  pledge,
hypothecation or other disposition,  or levy of execution,  attachment,  trustee
process or similar process,  whether legal or equitable,  upon such Option.  The
Board shall have  discretion  to grant any Option that is not  designated  as an
incentive stock option, free of any or all of the restrictions described in this
Section.

13.  RECAPITALIZATION, REORGANIZATIONS AND THE LIKE.

          (a) In the event that the  outstanding  shares of the Common Stock are
changed  into or  exchanged  for a  different  number or kind of shares or other
securities  of the  Company by reason of any  reorganization,  recapitalization,
reclassification,  stock split,  combination of shares,  or dividends payable in
capital stock,  appropriate and equitable adjustment shall be made by the Board,
in its sole discretion, in the number and kind of shares as to which Options may
be  granted  under  the Plan and as to which  outstanding  Options  or  portions
thereof then  unexercised  shall be exercisable.  Such adjustment in outstanding
Options  shall be made  without  change in the  total  price  applicable  to the
unexercised  portion of such Options and with a corresponding  adjustment in the
Option price per share.

          (b) (i) In addition,  unless otherwise  determined by the Board in its
sole  discretion,  in the case of any (I) merger or  consolidation  pursuant  to
which the  Company's  stockholders  shall  receive cash or securities of another
corporation and less than 50% of the outstanding  capital stock of the surviving
corporation  pursuant  to such  merger  or  consolidation  shall be owned by the
stockholders of the Company, (II) sale or conveyance to another entity of all or
substantially  all of the  property and assets of the Company or (III) Change in
Control of the  Company,  the  Company  shall,  or shall  cause  such  surviving
corporation  or the  purchaser(s)  of the  Company's  assets to,  deliver to the
optionee the same kind of consideration that is delivered to the stockholders of
the  Company as a result of such  merger,  consolidation,  sale,  conveyance  or
Change in Control,  or the Board may cancel all outstanding  Options in exchange
for consideration in cash or marketable securities,  which consideration in both
cases  shall be equal in value to the  value of those  shares  of stock or other
securities the optionee would have received had the Option been

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exercised  (but only to the extent then  exercisable)  and had no disposition of
the  shares  acquired  upon  such  exercise  been  made  prior  to such  merger,
consolidation,  sale,  conveyance  or Change in Control,  less the Option  price
therefor or, in lieu thereof,  the Board shall give the optionee at least twenty
days  prior  written  notice  of any such  transaction  in order to  enable  the
optionee to  exercise  the  exercisable  portion,  if any,  of the Option.  Upon
receipt of such  consideration  effective on the date  specified in such notice,
all Options (whether or not then exercisable) shall immediately terminate and be
of no further force or effect.  The value of the stock or other  securities  the
optionee  would  have  received  if the  Option  had  been  exercised  shall  be
determined  in good  faith by the  Board,  and in the case of  shares  of Common
Stock, in accordance with the provisions of Section 8 hereof.

                   (ii) The  Board  shall  also  have  the  power  and  right to
accelerate the exercisability of any Options, notwithstanding any limitations in
this Plan or in the Agreement upon such merger, consolidation,  sale, conveyance
or Change in Control.

          (c) A "Change  in  Control"  shall be deemed to have  occurred  if any
person, or any two or more persons acting as a group, and all affiliates of such
person or persons, who prior to such time Beneficially Owned (as defined in Rule
13d-3  under the  Exchange  Act) less  than 40% of the then  outstanding  Common
Stock,  shall  acquire  such  additional  shares of Common  Stock in one or more
transactions, or series of transactions, such that following such transaction or
transactions,  such person or group and affiliates  Beneficially Own 50% or more
of the Common Stock outstanding.

          (d) If by reason of a corporate merger, consolidation,  acquisition of
property or stock, separation,  reorganization,  or liquidation, the Board shall
authorize  the issuance or  assumption  of a stock option or stock  options in a
transaction to which Section 424(a) of the Code applies,  then,  notwithstanding
any other  provision of the Plan,  the Board may grant an option or options upon
such  terms  and  conditions  as it may  deem  appropriate  for the  purpose  of
assumption  of the old  Option,  or  substitution  of a new  option  for the old
Option, in conformity with the provisions of such Section 424(a) of the Code and
the Regulations  thereunder,  and any such option shall not reduce the number of
shares  otherwise  available  for issuance  under the Plan. In the event of such
issuance or  assumption,  the  provisions  of Section  13(b) hereof shall not be
applicable.

14.  NO SPECIAL EMPLOYMENT RIGHTS.

          Nothing  contained in the Plan or in any Option granted under the Plan
shall confer upon any optionee any right with respect to the continuation of his
or her  employment by the Company or any subsidiary or interfere in any way with
the right of the Company or any subsidiary, subject to the terms of any separate
employment  agreement to the contrary,  at any time to terminate such employment
or to increase or decrease the  compensation  of the Option holder from the rate
in existence at the time of the grant of an Option.  Whether an authorized leave
of absence, or

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absence in military or  government  service,  shall  constitute  termination  of
employment  for purposes of any Option shall be  determined  by the Board at the
time of such occurrence.

15.  WITHHOLDING.

          The Company's  obligation  to deliver  shares upon the exercise of any
Option  granted  under  the  Plan  shall  be  subject  to  the  Option  holder's
satisfaction  of any applicable  federal,  state and local income and employment
tax  withholding  requirements.  The Company and  optionee may agree to withhold
shares of Common  Stock  purchased  upon  exercise  of an Option to satisfy  the
above-mentioned withholding requirements.

16. RESTRICTIONS ON EXERCISE OF OPTIONS AND ISSUANCE OF SHARES.

          (a)  Notwithstanding  the  provisions of Sections 9 and 11 hereof,  an
Option  cannot be  exercised,  and the Company may delay the  issuance of shares
covered by the exercise of an Option and the delivery of a certificate  for such
shares, until one of the following conditions shall be satisfied:

                   (i) The shares  with  respect  to which such  Option has been
exercised are at the time of the issuance of such shares effectively  registered
or qualified under applicable  federal and state securities acts now in force or
as hereafter amended; or

                   (ii)  Counsel  for the  Company  shall have given an opinion,
which  opinion  shall not be  unreasonably  conditioned  or  withheld,  that the
issuance of such  shares is exempt from  registration  and  qualification  under
applicable  federal  and  state  securities  acts now in  force or as  hereafter
amended.

          (b) The Company shall be under no  obligation to qualify  shares or to
cause a registration statement or a post-effective amendment to any registration
statement  to be prepared  for the purpose of covering the issuance of shares in
respect of which any Option may be  exercised  or to cause the  issuance of such
shares to be exempt from registration and qualification under applicable federal
and state  securities  acts now in force or as  hereinafter  amended,  except as
otherwise agreed to by the Company in writing in its sole discretion.

17. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION.

          Unless and until the shares to be issued  upon  exercise  of an Option
granted under the Plan have been effectively registered under the Securities Act
of 1933, as amended (the "1933 Act"), as now in force or hereafter amended,  the
Company shall be under no  obligation to issue any shares  covered by any Option
unless the person who exercises such Option,  in whole or in part,  shall give a
written  representation  and undertaking to the Company which is satisfactory in
form and scope to counsel for the Company and upon which, in the opinion of such
counsel, the Company may reasonably rely, that he or she is acquiring the shares
issued  pursuant to such exercise of the Option for his or her own account as an
investment and not with a view to, or

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for sale in connection with, the distribution of any such shares, and that he or
she will make no transfer of the same  except in  compliance  with any rules and
regulations  in force at the time of such  transfer  under the 1933 Act,  or any
other applicable law, and that if shares are issued without such registration, a
legend to this effect may be endorsed upon the securities so issued.

          In the event that the Company shall,  nevertheless,  deem it necessary
or desirable  to register  under the 1933 Act or other  applicable  statutes any
shares with respect to which an Option shall have been exercised,  or to qualify
any such shares for exemption  from the 1933 Act or other  applicable  statutes,
then the Company may take such action and may require  from each  optionee  such
information  in writing  for use in any  registration  statement,  supplementary
registration statement, prospectus, preliminary prospectus, offering circular or
any other document that is reasonably necessary for such purpose and may require
reasonable  indemnity to the Company and its officers  and  directors  from such
holder against all losses, claims, damages and liabilities arising from such use
of the  information  so  furnished  and  caused by any untrue  statement  of any
material  fact  therein  or  caused by the  omission  to state a  material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading in the light of the circumstances under which they were made.

18.  LOANS.

          At the discretion of the Board,  the Company may loan to the optionee,
or pay to the  optionee  as a bonus,  some or all of the  purchase  price of the
shares acquired upon exercise of an Option,  the terms of such loans or bonus to
be at the discretion of the Board.

19.  MODIFICATION OF OUTSTANDING OPTIONS.

          Subject to any applicable  limitations contained herein, the Board may
authorize  the  amendment  of any  outstanding  Option  with the  consent of the
optionee  when and  subject to such  conditions  as are deemed to be in the best
interests  of the  Company  and in  accordance  with the  purposes  of the Plan.
Without limiting the foregoing, the Board shall have the authority to effect, at
any time and from time to time, with the consent of the affected optionees,  the
cancellation  of any or all  outstanding  Options under the Plan and to grant in
substitution  therefor new Options under the Plan covering the same or different
numbers of Shares and  having,  at the  discretion  of the Board and  subject to
Sections 6 and 8 hereof, an exercise price, in the case of Options designated as
non-qualified  stock  options,  as shall be  determined by the Board and, in the
case of Options  designated  as incentive  stock  options,  of not less than one
hundred  percent  (100%) of the fair market value of the Common Stock on the new
grant date.

20.  APPROVAL OF BOARD AND STOCKHOLDERS.

          The Plan shall  become  effective  upon  adoption by the Board and the
stockholders of the Company; provided, however, that the Plan shall be submitted
for approval by the  stockholders of the Company within 12 months after the date
of adoption of the Plan by the Board. If the stockholders of the Company fail to
approve the Plan within 12 months after the date of adoption

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of the Plan by the  Board,  the Plan and all stock  options  granted  thereunder
shall be and become null and void and of no further force or effect.

21.  TERMINATION AND AMENDMENT OF PLAN.

          Unless sooner terminated as herein provided,  the Plan shall terminate
ten years from the earlier of (x) the date on which the Plan was duly adopted by
the  Board,  and (y) the  date on  which  the  Plan  was  duly  approved  by the
stockholders  of the Company.  The Board may at any time  terminate  the Plan or
make such  modification or amendment  thereof as it deems  advisable;  provided,
however,  (i) the Board may not, without the approval of the stockholders of the
Company obtained in the manner stated in Section 20 hereof, increase the maximum
number of shares for which Options may be granted or change the  designation  of
the class of persons  eligible to receive  Options under the Plan,  and (ii) any
such  modification  or  amendment of the Plan shall be approved by a majority of
the stockholders of the Company to the extent that such stockholder  approval is
necessary to comply with applicable  provisions of the Code,  rules  promulgated
pursuant to Section 16 of the  Exchange Act (if any),  applicable  state law, or
applicable   NASD  or  exchange   listing   requirements.   Termination  or  any
modification  or  amendment  of the Plan shall not,  without  the  consent of an
optionee, affect his or her rights under an Option theretofore granted to him or
her.

22.  DUTIES OF THE COMPANY.

          The Company shall at all times keep available for issuance or delivery
such  number of shares of Common  Stock as will be  sufficient  to  satisfy  the
requirements of the Plan.

23. LIMITATION OF RIGHTS IN THE OPTION SHARES.

          An optionee shall not be deemed for any purpose to be a stockholder of
the Company with  respect to any of the Options  until (x) the Option shall have
been exercised  with respect  thereto  (including  payment to the Company of the
exercise  price) and (y) the earlier to occur of (i) the delivery by the Company
to the optionee of a certificate therefor, or (ii) the date on which the Company
is required to deliver a certificate pursuant to Section 9(b) hereof.

24.  GOVERNING LAW.

          The Plan and all Options shall be governed by and construed  under the
laws of the State of Delaware,  without giving effect to principles of conflicts
of law.

25.  NOTICES.

          Any  communication  or notice  required or permitted to be given under
the Plan shall be in writing,  and mailed by  registered  or  certified  mail or
delivered by hand,  if to the Company,  to the attention of the President at the
Company's principal place of business; and, if to an optionee, to

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his or her address as it appears on the records of the Company.

26.  HEADINGS.

          The headings  contained in this Plan are for  convenience of reference
only and in no way define,  limit or describe the scope or intent of the Plan or
in any way affect this Agreement.

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