STEMCELLS, INC.
                           2001 EQUITY INCENTIVE PLAN
 
1.  PURPOSE
 
    The purpose of this Equity Incentive Plan (the "Plan") is to advance the
interests of StemCells, Inc. (the "Company") by enhancing its ability to attract
and retain employees and other persons or entities who are in a position to make
significant contributions to the success of the Company and its subsidiaries
through ownership of shares of the Company's common stock ("Stock").
 
    The Plan is intended to accomplish these goals by enabling the Company to
grant Awards in the form of Options, Stock Appreciation Rights, Restricted Stock
or Unrestricted Stock Awards, Deferred Stock Awards, Performance Awards, Loans
or Supplement Grants, or combinations thereof, all as more fully described
below.
 
2.  ADMINISTRATION
 
    The Plan will be administered by the Board of Directors of the Company (the
"Board"). The Board will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose; (b) determine
the size of each Award, including the number of shares of Stock subject to the
Award; (c) determine the type or types of each Award; (d) determine the terms
and conditions of each Award; (e) waive compliance by a Participant (as defined
below) with any obligations to be performed by the Participant under an Award
and waive any term or condition of an Award; (f) amend or cancel an existing
Award in whole or in part (and if an award is cancelled, grant another Award in
its place on such terms as the Board shall specify), except that the Board may
not, without the consent of the holder of an Award, take any action under this
clause with respect to such Award if such action would adversely affect the
rights of such holder; (g) prescribe the form or forms of instruments that are
required or deemed appropriate under the Plan, including any written notices and
elections required of Participants, and change such forms from time to time;
(h) adopt, amend and rescind rules and regulations for the administration of the
Plan; and (i) interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Board, and all other determinations and
actions of the Board made or taken under authority granted by any provision of
the Plan, will be conclusive and will bind all parties. Nothing in this
paragraph shall be construed as limiting the power of the Board to make
adjustments under Section 7.3 or Section 8.6.
 
    The Board may, in its discretion, delegate some or all of its powers with
respect to the Plan to a committee (the "Committee"), in which event all
references (as appropriate) to the Board hereunder shall be deemed to refer to
the Committee. The Committee, if one is appointed, shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. On and after registration of the Stock under the Securities
Exchange Act of 1934 (the "1934 Act"), the Board shall delegate the power to
select directors and officers to receive Awards under the Plan and the timing,
pricing and amount of such Awards to a committee, all members of which shall be
non-employee directors within the meaning of Rule 16b-3 under the 1934 Act and
"outside directors" within the meaning of section 162(m)(4)(C)(i) of the
Internal Revenue Code of 1986, as
 
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amended (the "Code"). In addition, the Board may, in its discretion, delegate to
a Committee consisting solely of the chief executive officer of the Company, if
he or she is member of the Board of Directors, the power to grant Awards under
the Plan to persons who are not, and who are not expected to be, officers or
directors of the Company.
 
3.  EFFECTIVE DATE AND TERM OF PLAN
 
    The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Grants of Awards under the Plan may be made prior
to that date (but after Board adoption of the Plan), subject to such approval of
the Plan.
 
    No Award may be granted under the Plan after March 28, 2011, but Awards
previously granted may extend beyond that date.
 
4.  SHARES SUBJECT TO THE PLAN
 
    Subject to the adjustment as provided in Section 8.6 below, the aggregate
number of shares of Stock that may be delivered under the Plan will be
3,000,000. If any Award requiring exercise by the Participant for delivery of
Stock terminates without having been exercised in full, or if any Award payable
in Stock or cash is satisfied in cash rather than Stock, the number of shares of
Stock as to which such Award was not exercised or for which cash was substituted
will be available for future grants.
 
    Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock will be delivered under the Plan.
 
    Subject to Section 8.6(a), the maximum number of shares of Stock as to which
Options may be granted to any Participant during the life of the Plan is 500,000
and the maximum number of shares of Stock as to which Stock Appreciation Rights
may be granted to any Participant during the life of the Plan is 500,000. For
purposes of this paragraph, except as otherwise provided in regulations or other
guidance issued under Section 162(m) of the Code, any repricing of an Option or
Stock Appreciation Right shall be treated as an additional grant. The
per-individual limitations described in this paragraph shall be construed and
applied consistent with the rules and regulations under Section 162(m) of the
Code.
 
5.  ELIGIBILITY AND PARTICIPATION
 
    Those eligible to receive Awards under the Plan ("Participants") will be
employees of the Company or any of its subsidiaries ("Employees") and other
persons or entities (including without limitation non-Employee directors of the
Company or a subsidiary of the Company) who, in the opinion of the Board, are in
a position to make a significant contribution to the success of the Company or
its subsidiaries. A "subsidiary" for purposes of the Plan will be a corporation
in which the Company owns, directly or indirectly, stock possessing 50% or more
of the total combined voting power of all classes of stock.
 
6.  TYPES OF AWARDS
 
    6.1. Options
 
       (a) Nature of Options. An Option is an Award entitling the recipient on
           exercise thereof to purchase Stock at a specified exercise price.
 
           Both "incentive stock options," as defined in section 422 of the Code
           (any Option intended to qualify as an incentive stock option being
           hereinafter referred to as an "ISO"), and
 
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           Options that are not incentive stock options [non-ISOs], may be
           granted under the Plan. ISOs shall be awarded only to Employees.
 
       (b) Exercise Price. The exercise price of an Option will be determined by
           the Board subject to the following:
 
           (1) The exercise price of an ISO shall not be less than 100% (110% in
               the case of an ISO granted to a ten-percent shareholder) of the
               fair market value of the Stock subject to the Option, determined
               as of the time the Option is granted. A "ten-percent shareholder"
               is any person who at the time of grant owns, directly or
               indirectly, or is deemed to own by reason of the attribution
               rules of section 424(d) of the Code, stock possessing more than
               10% of the total combined voting power of all classes of stock of
               the Company or of any of its subsidiaries.
 
           (2) In no case may the exercise price paid for Stock which is part of
               an original issue of authorized Stock be less than the par value
               per share of the Stock.
 
           (3) The Board may reduce the exercise price of an Option at any time
               after the time of grant, but in the case of an Option originally
               awarded as an ISO, only with the consent of the Participant.
 
       (c) Duration of Options. The latest date on which an Option may be
           exercised will be the tenth anniversary (fifth anniversary, in the
           case of an ISO granted to a ten-percent shareholder) of the day
           immediately preceding the date the Option was granted, or such
           earlier date as may have been specified by the Board at the time the
           Option was granted.
 
       (d) Exercise of Options. An Option will become exercisable at such time
           or times, and on such conditions, as the Board may specify. The Board
           may at any time accelerate the time at which all or any part of the
           Option may be exercised.
 
           Any exercise of an Option must be in writing, signed by the proper
           person and delivered or mailed to the Company, accompanied by
           (1) any documents required by the Board and (2) payment in full in
           accordance with paragraph (e) below for the number of shares for
           which the Option is exercised.
 
       (e) Payment for Stock. Stock purchased on exercise of an Option must be
           paid for as follows: (1) in cash or by check (acceptable to the
           Company in accordance with guidelines established for this purpose),
           bank draft or money order payable to the order of the Company or
           (2) if so permitted by the instrument evidencing the Option (or in
           the case of an Option which is not an ISO, by the Board at or after
           grant of the Option), (i) through the delivery of shares of Stock
           which have been outstanding for at least six months (unless the Board
           expressly approves a shorter period) and which have a fair market
           value on the last business day preceding the date of exercise equal
           to the exercise price, or (ii) by delivery of a promissory note of
           the Option holder to the Company, payable on such terms as are
           specified by the Board, or (iii) by delivery of an unconditional and
           irrevocable undertaking by a broker to deliver promptly to the
           Company sufficient funds to pay the exercise price, or (iv) by the
           withholding of shares of Stock otherwise deliverable upon exercise
           which have a fair market value on the date of exercise at least equal
           to the exercise price, or (v) by any combination of the permissible
           forms of payment; provided, that if the Stock delivered upon exercise
           of the Option is an original issue of authorized Stock, at least so
           much of the exercise price as
 
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           represents the par value of such Stock must be paid other than by the
           Option holder's personal check or promissory note.
 
       (f) Discretionary Payments. If the market price of shares of Stock
           subject to an Option (other than an Option which is in tandem with a
           Stock Appreciation Right as described in Section 6.2 below) exceeds
           the exercise price of the Option at the time of its exercise, the
           Board may cancel the Option and cause the Company to pay in cash or
           in shares of Common Stock (at a price per share equal to the fair
           market value per share) to the person exercising the Option an amount
           equal to the difference between the fair market value of the Stock
           which would have been purchased pursuant to the exercise (determined
           on the date the Option is cancelled) and the aggregate exercise price
           which would have been paid. The Board may exercise its discretion to
           take such action only if it has received a written request from the
           person exercising the Option, but such a request will not be binding
           on the Board.
 
    6.2. Stock Appreciation Rights
 
       (a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
           Award entitling the recipient on exercise of the Right to receive an
           amount, in cash or Stock or a combination thereof (such form to be
           determined by the Board), determined in whole or in part by reference
           to appreciation in Stock value.
 
           In general, a Stock Appreciation Right entitles the Participant to
           receive, with respect to each share of Stock as to which the Right is
           exercised, the excess of the share's fair market value on the date of
           exercise over its fair market value on the date the Right was
           granted. However, the Board may provide at the time of grant that the
           amount the recipient is entitled to receive will be adjusted upward
           or downward under rules established by the Board to take into account
           the performance of the Stock in comparison with the performance of
           other stocks or an index or indices of other stocks. The Board may
           also grant Stock Appreciation Rights that provide, in such limited
           circumstances following a change in control (as determined by the
           Board) of the Company as the Board may specify, that the holder of
           such Right will be entitled to receive, with respect to each share of
           Stock subject to the Right, an amount equal to the excess of a
           specified value (which may include an average of values) for a share
           of Stock during a period preceding the change in control over the
           fair market value of a share of Stock on the date the Right was
           granted.
 
       (b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
           granted in tandem with, or independently of, Options granted under
           the Plan. A Stock Appreciation Right granted in tandem with an Option
           which is not an ISO may be granted either at or after the time the
           Option is granted. A Stock Appreciation Right granted in tandem with
           an ISO may be granted only at the time the Option is granted.
 
       (c) Rules Applicable to Tandem Awards. When Stock Appreciation Rights are
           granted in tandem with Options, the following will apply:
 
           (1) The Stock Appreciation Right will be exercisable only at such
               time or times, and to the extent, that the related Option is
               exercisable and will be exercisable in accordance with the
               procedure required for exercise of the related Option.
 
           (2) The Stock Appreciation Right will terminate and no longer be
               exercisable upon the termination or exercise of the related
               Option, except that a Stock Appreciation Right
 
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               granted with respect to less than the full number of shares
               covered by an Option will not be reduced until the number of
               shares as to which the related Option has been exercised or has
               terminated exceeds the number of shares not covered by the Stock
               Appreciation Right.
 
           (3) The Option will terminate and no longer be exercisable upon the
               exercise of the related Stock Appreciation Right.
 
           (4) The Stock Appreciation Right will be transferable only with the
               related Option.
 
           (5) A Stock Appreciation Right granted in tandem with an ISO may be
               exercised only when the market price of the Stock subject to the
               Option exceeds the exercise price of such option.
 
       (d) Exercise of Independent Stock Appreciation Rights. A Stock
           Appreciation Right not granted in tandem with an Option will become
           exercisable at such time or times, and on such conditions, as the
           Board may specify. The Board may at any time accelerate the time at
           which all or any part of the Right may be exercised.
 
    Any exercise of an independent Stock Appreciation Right must be in writing,
signed by the proper person and delivered or mailed to the Company, accompanied
by any other documents required by the Board.
 
    6.3. Restricted and Unrestricted Stock
 
       (a) Nature of Restricted Stock Award. A Restricted Stock Award entitles
           the recipient to acquire, for a purchase price equal to par value,
           shares of Stock subject to the restrictions described in
           paragraph (d) below ("Restricted Stock").
 
       (b) Acceptance of Award. A Participant who is granted a Restricted Stock
           Award will have no rights with respect to such Award unless the
           Participant accepts the Award by written instrument delivered or
           mailed to the Company accompanied by payment in full of the specified
           purchase price, if any, of the shares covered by the Award. Payment
           may be by certified or bank check or other instrument acceptable to
           the Board.
 
       (c) Rights as a Stockholder. A Participant who receives Restricted Stock
           will have all the rights of a stockholder with respect to the Stock,
           including voting and dividend rights, subject to the restrictions
           described in paragraph (d) below and any other conditions imposed by
           the Board at the time of grant. Unless the Board otherwise
           determines, certificates evidencing shares of Restricted Stock will
           remain in the possession of the Company until such shares are free of
           all restrictions under the Plan.
 
       (d) Restrictions. Except as otherwise specifically provided by the Plan,
           Restricted Stock may not be sold, assigned, transferred, pledged or
           otherwise encumbered or disposed of, and if the Participant ceases to
           be an Employee or otherwise suffers a Status Change (as defined at
           Section 7.2(a) below) for any reason, must be offered to the Company
           for purchase for the amount of cash paid for the Stock, or forfeited
           to the Company if no cash was paid. These restrictions will lapse at
           such time or times, and on such conditions, as the Board may specify.
           The Board may at any time accelerate the time at which the
           restrictions on all or any part of the shares will lapse.
 
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       (e) Notice of Election. Any Participant making an election under
           Section 83(b) of the Code with respect to Restricted Stock must
           provide a copy thereof to the Company within 10 days of the filing of
           such election with the Internal Revenue Service.
 
       (f) Other Awards Settled with Restricted Stock. The Board may, at the
           time any Award described in this Section 6 is granted, provide that
           any or all the Stock delivered pursuant to the Award will be
           Restricted Stock.
 
       (g) Unrestricted Stock. The Board may, in its sole discretion, sell to
           any Participant shares of Stock free of restrictions under the Plan
           for a price which is not less than the par value of the Stock.
 
    6.4. Deferred Stock
 
        A Deferred Stock Award entitles the recipient to receive shares of Stock
       to be delivered in the future. Delivery of the Stock will take place at
       such time or times, and on such conditions, as the Board may specify. The
       Board may at any time accelerate the time at which delivery of all or any
       part of the Stock will take place. At the time any Award described in
       this Section 6 is granted, the Board may provide that, at the time Stock
       would otherwise be delivered pursuant to the Award, the Participant will
       instead receive an instrument evidencing the Participant's right to
       future delivery of Deferred Stock.
 
    6.5. Performance Awards; Performance Goals
 
       (a) Nature of Performance Awards. A Performance Award entitles the
           recipient to receive, without payment, an amount in cash or Stock or
           a combination thereof (such form to be determined by the Board)
           following the attainment of Performance Goals. Performance Goals may
           be related to personal performance, corporate performance,
           departmental performance or any other category of performance deemed
           by the Board to be important to the success of the Company. The Board
           will determine the Performance Goals, the period or periods during
           which performance is to be measured and all other terms and
           conditions applicable to the Award.
 
       (b) Other Awards Subject to Performance Condition. The Board may, at the
           time any Award described in this Section 6 is granted, impose the
           condition (in addition to any conditions specified or authorized in
           this Section 6 or any other provision of the Plan) that Performance
           Goals be met prior to the Participant's realization of any payment or
           benefit under the Award.
 
    6.6. Loans and Supplemental Grants
 
       (a) Loans. The Company may make a loan to a Participant ("Loan"), either
           on the date of or after the grant of any Award to the Participant. A
           Loan may be made either in connection with the purchase of Stock
           under the Award or with the payment of any Federal, state and local
           income tax with respect to income recognized as a result of the
           Award. The Board will have full authority to decide whether to make a
           Loan and to determine the amount, terms and conditions of the Loan,
           including the interest rate (which may be zero), whether the Loan is
           to be secured or unsecured or with or without recourse against the
           borrower, the terms on which the Loan is to be repaid and the
           conditions, if any, under which it may be forgiven. However, no Loan
           may have a term (including extensions) exceeding ten years in
           duration.
 
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       (b) Supplemental Grants. In connection with any Award, the Board may at
           the time such Award is made or at a later date, provide for and grant
           a cash award to the Participant ("Supplemental Grant") not to exceed
           an amount equal to (1) the amount of any federal, state and local
           income tax on ordinary income for which the Participant may be liable
           with respect to the Award, determined by assuming taxation at the
           highest marginal rate, plus (2) an additional amount on a grossed-up
           basis intended to make the Participant whole on an after-tax basis
           after discharging all the Participant's income tax liabilities
           arising from all payments under this Section 6. Any payments under
           this subsection (b) will be made at the time the Participant incurs
           Federal income tax liability with respect to the Award.
 
7.  EVENTS AFFECTING OUTSTANDING AWARDS
 
    7.1. Death
 
        If a Participant dies, the following will apply:
 
       (a) All Options and Stock Appreciation Rights held by the Participant
           immediately prior to death, to the extent then exercisable, may be
           exercised by the Participant's executor or administrator or the
           person or persons to whom the Option or Right is transferred by will
           or the applicable laws of descent and distribution, at any time
           within the one-year period ending with the first anniversary of the
           Participant's death (or such shorter or longer period as the Board
           may determine), and shall thereupon terminate. In no event, however,
           shall an Option or Stock Appreciation Right remain exercisable beyond
           the latest date on which it could have been exercised without regard
           to this Section 7. Except as otherwise determined by the Board, all
           Options and Stock Appreciation Rights held by a Participant
           immediately prior to death that are not then exercisable shall
           terminate at death.
 
       (b) Except as otherwise determined by the Board, all Restricted Stock
           held by the Participant must be transferred to the Company (and, in
           the event the certificates representing such Restricted Stock are
           held by the Company, such Restricted Stock will be so transferred
           without any further action by the Participant) in accordance with
           Section 6.3 above.
 
       (c) Any payment or benefit under a Deferred Stock Award, Performance
           Award, or Supplemental Grant to which the Participant was not
           irrevocably entitled prior to death will be forfeited and the Award
           canceled as of the time of death, unless otherwise determined by the
           Board.
 
    7.2. Termination of Service (Other Than By Death)
 
        If a Participant who is an Employee ceases to be an Employee for any
       reason other than death, or if there is a termination (other than by
       reason of death) of the consulting, service or similar relationship in
       respect of which a non-Employee Participant was granted an Award
       hereunder (such termination of the employment or other relationship being
       hereinafter referred to as a "Status Change"), the following will apply:
 
       (a) Except as otherwise determined by the Board, all Options and Stock
           Appreciation Rights held by the Participant that were not exercisable
           immediately prior to the Status Change shall terminate at the time of
           the Status Change. Any Options or Rights that were exercisable
           immediately prior to the Status Change will continue to be
           exercisable for a period of three months (or such longer period as
           the Board may determine), and shall thereupon terminate, unless the
           Award provides by its terms for immediate termination in
 
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           the event of a Status Change or unless the Status Change results from
           a discharge for cause which in the opinion of the Board casts such
           discredit on the Participant as to justify immediate termination of
           the Award. In no event, however, shall an Option or Stock
           Appreciation Right remain exercisable beyond the latest date on which
           it could have been exercised without regard to this Section 7. For
           purposes of this paragraph, in the case of a Participant who is an
           Employee, a Status Change shall not be deemed to have resulted by
           reason of (i) a sick leave or other bona fide leave of absence
           approved for purposes of the Plan by the Board, so long as the
           Employee's right to reemployment is guaranteed either by statute or
           by contract, or (ii) a transfer of employment between the Company and
           a subsidiary or between subsidiary, or to the employment of a
           corporation (or a parent or subsidiary corporation of such
           corporation) issuing or assuming an option in a transaction to which
           section 424(a) of the Code applies.
 
       (b) Except as otherwise determined by the Board, all Restricted Stock
           held by the Participant at the time of the Status Change must be
           transferred to the Company (and, in the event the certificates
           representing such Restricted Stock are held by the Company, such
           Restricted Stock will be so transferred without any further action by
           the Participant) in accordance with Section 6.3 above.
 
       (c) Any payment or benefit under a Deferred Stock Award, Performance
           Award, or Supplemental Grant to which the Participant was not
           irrevocably entitled prior to the Status Change will be forfeited and
           the Award cancelled as of the date of such Status Change unless
           otherwise determined by the Board.
 
    7.3. Certain Corporate Transactions
 
        Except as provided below in this Section 7.3, on the effective date of a
       Corporate Transaction (as defined below) (i) each outstanding Option and
       Stock Appreciation Right shall automatically become exercisable with
       respect to one hundred percent (100%) of any portion of such Option or
       Stock Appreciation Right which is not then exercisable, (ii) all
       restrictions with respect to one hundred percent (100%) of the shares of
       Common Stock then subject to the restrictions of Restricted Stock awards
       shall lapse, (iii) one hundred percent (100%) of all payments or other
       benefits under each outstanding Deferred Stock Award, Performance Award
       and Supplemental Grant which have not then been paid or provided shall be
       paid or provided, and (iv) one hundred percent (100%) of the unpaid
       principal balance and accrued interest on each outstanding Loan shall be
       forgiven.
 
        Provisions (i) through (iv) above shall not apply to the extent an
       outstanding Award held by a participant who, following the covered
       transaction, will be employed by or otherwise providing services to a
       corporation which is a surviving or acquiring corporation in such
       transaction or an affiliate of such a corporation, is replaced by such
       surviving or acquiring corporation or affiliate with a replacement award
       which, in the judgment of the Board, is substantially equivalent to the
       Award and which replacement award provides that if the recipient of such
       replacement award suffers an Involuntary Termination (as defined below)
       within twenty-four (24) months after the effective date of the Corporate
       Transaction in which such replacement award was granted then (i) each
       replacement option and stock appreciation right will automatically become
       exercisable with respect to one hundred percent (100%) of any portion of
       such replacement option or stock appreciation right which is
       unexercisable at the time of the Involuntary Termination, (ii) all
 
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       restrictions with respect to one hundred percent (100%) of the shares of
       stock subject to replacement restricted stock awards at the time of the
       Involuntary Termination shall lapse, (iii) one hundred percent (100%) of
       all payments or other benefits under each outstanding replacement
       deferred stock award, performance award and supplemental grant which have
       not been paid or provided as of the time of the Involuntary Termination
       shall be paid or provided, and (iv) one hundred percent (100%) of the
       unpaid principal balance and accrued interest at the time of the
       Involuntary Termination on each outstanding replacement loan shall be
       forgiven.
 
        The term "Corporate Transaction" shall mean the occurrence of any of the
       following: (i) a merger or consolidation involving the Company which
       results in less than 50% of the combined voting power of the surviving or
       resulting entity's outstanding securities being held by the stockholders
       of the Company who were stockholders immediately prior to such
       transaction, or (ii) the sale, transfer or other disposition of more than
       51% of the Company's assets in a single or related series of transactions
       or (iii) within any twenty-four (24) consecutive month period, persons
       who were members of the Board immediately prior to such twenty-four
       (24) month period, together with any persons who were first elected as
       directors (other than as a result of any settlement of a proxy or consent
       solicitation contest or any action taken to avoid such a contest) during
       such twenty-four (24) month period by or upon the recommendation of
       persons who were members of the Board immediately prior to such
       twenty-four (24) month period and who constituted a majority of the Board
       at the time of such election, cease to constitute a majority of the
       Board.
 
        The term "Involuntary Termination" shall mean (i) the termination of the
       services of any Participant which occurs by reason of such individual's
       involuntary dismissal or discharge for reasons other than as a result of
       (a) the commission of any act or fraud, embezzlement or dishonesty by the
       Participant, (b) material unauthorized use or disclosure by such
       individual of confidential information or trade secrets of the Company or
       its successor, or (c) any other intentional misconduct by such individual
       adversely affecting the business or affairs of the Company or its
       successor in a material manner, or (ii) (d) a material diminution of the
       responsibilities of a Participant, (e) a reduction of more than 10% in a
       Participant's level of compensation (including base salary, benefits or
       any non-discretionary and objective-standard incentive payment or bonus
       award) or (c) a relocation of a Participant's principal place of
       employment by more than 50 miles, only if such change, reduction or
       relocation is effected by the Company or the successor thereto without
       the Participant's consent.
 
8.  GENERAL PROVISIONS
 
    8.1. Documentation of Awards
 
        Awards will be evidenced by such written instruments, if any, as may be
       prescribed by the Board from time to time. Such instruments may be in the
       form of agreements to be executed by both the Participant and the
       Company, or certificates, letters or similar instruments, which need not
       be executed by the Participant but acceptance of which will evidence
       agreement to the terms thereof.
 
    8.2. Rights as a Stockholder, Dividend Equivalents
 
        Except as specifically provided by the Plan, the receipt of an Award
       will not give a Participant rights as a stockholder; the participant will
       obtain such rights, subject to any limitations imposed by the Plan or the
       instrument evidencing the Award, upon actual receipt of Stock. However,
       the Board may, on such conditions as it deems appropriate, provide that a
       Participant will receive a
 
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       benefit in lieu of cash dividends that would have been payable on any or
       all Stock subject to the Participant's Award had such Stock been
       outstanding. Without limitation, the Board may provide for payment to the
       Participant of amounts representing such dividends, either currently or
       in the future, or for the investment of such amounts on behalf of the
       Participant.
 
    8.3. Conditions on Delivery of Stock
 
        The Company will not be obligated to deliver any shares of Stock
       pursuant to the Plan or to remove restriction from shares previously
       delivered under the Plan (a) until all conditions of the Award have been
       satisfied or removed, (b) until, in the opinion of the Company's counsel,
       all applicable federal and state laws and regulation have been complied
       with, (c) if the outstanding Stock is at the time listed on any stock
       exchange, until the shares to be delivered have been listed or authorized
       to be listed on such exchange upon official notice of notice of issuance,
       and (d) until all other legal matters in connection with the issuance and
       delivery of such shares have been approved by the Company's counsel. If
       the sale of Stock has not been registered under the Securities Act of
       1933, as amended, the Company may require, as a condition to exercise of
       the Award, such representations or agreements as counsel for the Company
       may consider appropriate to avoid violation of such Act and may require
       that the certificates evidencing such Stock bear an appropriate legend
       restricting transfer.
 
        If an Award is exercised by the Participant's legal representative, the
       Company will be under no obligation to deliver Stock pursuant to such
       exercise until the Company is satisfied as to the authority of such
       representative.
 
    8.4. Tax Withholding
 
        The Company will withhold from any cash payment made pursuant to an
       Award an amount sufficient to satisfy all federal, state and local
       withholding tax requirements (the "withholding requirements").
 
        In the case of an Award pursuant to which Stock may be delivered, the
       Board will have the right to require that the Participant or other
       appropriate person remit to the Company an amount sufficient to satisfy
       the withholding requirements, or make other arrangements satisfactory to
       the Board with regard to such requirements, prior to the delivery of any
       Stock. If and to the extent that such withholding is required, the Board
       may permit the Participant or such other person to elect at such time and
       in such manner as the Board provides to have the Company hold back from
       the shares to be delivered, or to deliver to the Company, Stock having a
       value calculated to satisfy the withholding requirement.
 
        If at the time an ISO is exercised the Board determines that the Company
       could be liable for withholding requirements with respect to a
       disposition of the Stock received upon exercise, the Board may require as
       a condition of exercise that the person exercising the ISO agree (a) to
       inform the Company promptly of any disposition (within the meaning of
       section 424(c) of the Code) of Stock received upon exercise, and (b) to
       give such security as the Board deems adequate to meet the potential
       liability of the Company for the withholding requirements and to augment
       such security from time to time in any amount reasonably deemed necessary
       by the Board to preserve the adequacy of such security.
 
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    8.5. Transferability of Awards
 
        Except as the Board may otherwise determine in connection with gifts and
       except as provided below, no Award (other than an Award in the form of an
       outright transfer of cash or Unrestricted Stock) may be transferred other
       than by will or by the laws of descent and distribution, and during an
       employee's lifetime an Award requiring exercise may be exercised only by
       the Participant (or in the event of the Participant's incapacity, the
       person or persons legally appointed to act on the Participant's behalf).
       The Board may grant Options that are transferable, (i) without payment of
       consideration, to immediate family members of the optionee or to trusts
       or partnerships for such family members; the Committee may also amend
       outstanding Options to provide for such transferability or (ii) as is
       otherwise hereafter permitted in accordance with Rule 16b-3 of the 1934
       Act (or any rule promulgated in replacement thereof or in substitution
       therefor).
 
    8.6. Adjustments in the Event of Certain Transactions
 
       (a) In the event of a stock dividend, stock split or combination of
           shares, recapitalization or other change in the Company's
           capitalization, or other distribution to common stockholders other
           than normal cash dividends, after the effective date of the Plan, the
           Board will make any appropriate adjustments to the maximum number of
           shares that may be delivered under the Plan under Section 4 above.
 
       (b) In any event referred to in paragraph (a), the Board will also make
           any appropriate adjustments to the number and kind of shares of stock
           or securities subject to Awards then outstanding or subsequently
           granted, any exercise prices relating to Awards and any other
           provision of Awards affected by such change. The Board may also make
           such adjustments to take into account material changes in law or in
           accounting practices or principles, mergers, consolidations,
           acquisitions, dispositions or similar corporate transactions, or any
           other event, if it is determined by the Board that adjustments are
           appropriate to avoid distortion in the operation of the Plan.
 
    8.7. Employment Rights, Etc.
 
        Neither the adoption of the Plan nor the grant of Awards will confer
       upon any person any right to continue retention by the Company or any
       subsidiary as an Employee or otherwise, or affect in any way the right of
       the Company or subsidiary to terminate an employment, service or similar
       relationship at any time. Except as specifically provided by the Board in
       any particular case, the loss of existing or potential profit in Awards
       granted under the Plan will not constitute an element of damages in the
       event of termination of an employment, service or similar relationship
       even if the termination is in violation of an obligation of the Company
       to the Participant.
 
    8.8. Deferral of Payments
 
        The Board may agree at any time, upon request of the Participant, to
       defer the date on which any payment under an Award will be made.
 
    8.9. Past Services as Consideration
 
        Where a Participant purchases Stock under an Award for a price equal to
       the par value of the Stock the Board may determine that such price has
       been satisfied by past services rendered by the Participant.
 
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9.  EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
 
    Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock will be issued to
Employees.
 
    The Board may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Awards, provided that (except to
the extent expressly required or permitted by the Plan) no such amendment will,
without the approval of the stockholders of the Company, effectuate a change for
which stockholder approval is required in order for the Plan to continue to
qualify for the award of ISOs under section 422 of the Code, or for the award of
performance-based compensation under section 162(m) of the Code, or to continue
to qualify under Rule 16b-3 promulgated under Section 16 of the 1934 Act.
 
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