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                                                                    EXHIBIT 10.1

                                  TVIA, INC.

                             AMENDED AND RESTATED
                           1999 STOCK INCENTIVE PLAN

     1    Purposes of the Plan.  The purposes of this Stock Incentive Plan are
          --------------------
to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.

     2.   Definitions.  As used herein, the following definitions shall apply:
          -----------

          (a) "Administrator" means the Board or any of the Committees appointed
               -------------
to administer the Plan.

          (b) "Applicable Laws" means the legal requirements relating to the
              ----------------
administration of stock incentive plans, if any, under applicable provisions of
federal and state securities laws, the corporate laws of California and, to the
extent other than California, the corporate law of the state of the Company's
incorporation, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards
granted to residents therein.

          (c) "Award" means the grant of an Option, Restricted Stock, or other
               -----
right or benefit under the Plan.

          (d) "Award Agreement" means the written agreement evidencing the grant
              ----------------
of an Award executed by the Company and the Grantee, including any amendments
thereto.

          (e) "Board" means the Board of Directors of the Company.
               -----

          (f) "Cause" means, with respect to the termination by the Company or a
               -----
Related Entity of the Grantee's Continuous Service, that such termination is for
"Cause" as such term is expressly defined in a then-effective written agreement
between the Grantee and the Company or such Related Entity, or in the absence of
such then-effective written agreement and definition, is based on, in the
determination of the Administrator, the Grantee's: (i) refusal or failure to act
in accordance with any specific, lawful direction or order of the Company or a
Related Entity; (ii) unfitness or unavailability for service or unsatisfactory
performance (other than as a result of Disability); (iii) performance of any act
or failure to perform any act in bad faith and to the detriment of the Company
or a Related Entity; (iv) dishonesty, intentional misconduct or material breach
of any agreement with the Company or a Related Entity; or (v) commission of a
crime involving dishonesty, breach of trust, or physical or emotional harm to
any person.  At least 30 days prior to the termination of the Grantee's
Continuous Service pursuant to (i) or (ii) above, the Company shall provide the
Grantee with notice of the Company's or such Related Entity's intent to
terminate, the reason therefor, and an opportunity for the Grantee to cure such
defects in his or her service to the Company's or such Related Entity's
satisfaction.  During this 30 day (or longer) period, no Award issued to the
Grantee under the Plan may be exercised or purchased.

          (g) "Code" means the Internal Revenue Code of 1986, as amended.
               ----

          (h) "Committee" means any committee appointed by the Board to
               ---------
administer the Plan.

          (i) "Common Stock" means the common stock of the Company.
               ------------

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          (j) "Company" means Tvia, Inc., a California corporation.
               -------

          (k) "Consultant" means any person (other than an Employee or a
               ----------
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

          (l) "Continuous Service" means that the provision of services to the
               ------------------
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated.  Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related Entity, or
any successor, in any capacity of Employee, Director or Consultant, or (iii) any
change in status as long as the individual remains in the service of the Company
or a Related Entity in any capacity of Employee, Director or Consultant (except
as otherwise provided in the Award Agreement).  An approved leave of absence
shall include sick leave, military leave, or any other authorized personal
leave.  For purposes of Incentive Stock Options, no such leave may exceed ninety
(90) days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract.

          (m) "Corporate Transaction" means any of the following transactions to
               ---------------------
which the Company is a party:

              (i)     a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

              (ii)    the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;

              (iii)   any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger; or

              (iv)    acquisition by any person or related group of persons
(other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities, but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.

          (n) "Director" means a member of the Board or the board of directors
               --------
of any Related Entity.

          (o) "Disability" means that a Grantee is permanently unable to carry
               ----------
out the responsibilities and functions of the position held by the Grantee by
reason of any medically determinable physical or mental impairment.  A Grantee
will not be considered to have incurred a Disability unless he or she furnishes
proof of such impairment sufficient to satisfy the Administrator in its
discretion.

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          (p) "Employee" means any person, including an Officer or Director, who
               --------
is an employee of the Company or any Related Entity.  The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

          (q) "Exchange Act" means the Securities Exchange Act of 1934, as
               ------------
amended.

          (r) "Fair Market Value" means, as of any date, the value of Common
               -----------------
Stock determined as follows:

              (i)     Where there exists a public market for the Common Stock,
the Fair Market Value shall be (A) the closing price for a Share for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the Administrator to be
the primary market for the Common Stock or the Nasdaq National Market, whichever
is applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

              (ii)    In the absence of an established market for the Common
Stock of the type described in (i), above, the Fair Market Value thereof shall
be determined by the Administrator in good faith and in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations.

          (s) "Grantee" means an Employee, Director or Consultant who receives
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an Award under the Plan.

          (t) "Incentive Stock Option" means an Option intended to qualify as an
               ----------------------
incentive stock option within the meaning of Section 422 of the Code.

          (u) "Non-Qualified Stock Option" means an Option not intended to
               --------------------------
qualify as an Incentive Stock Option.

          (v)  "Officer" means a person who is an officer of the Company or a
                -------
Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

          (w) "Option" means an option to purchase Shares pursuant to an Award
               ------
Agreement granted under the Plan.

          (x) "Parent" means a "parent corporation," whether now or hereafter
               ------
existing, as defined in Section 424(e) of the Code.

          (y) "Plan" means this Amended and Restated 1999 Stock Incentive Plan.
               ----

          (z) "Post-Termination Exercise Period" means the period specified in
               --------------------------------
the Award Agreement of not less than thirty (30) days commencing on the date of
termination (other than termination by the Company or any Related Entity for
Cause) of the Grantee's Continuous Service, or such longer period as may be
applicable upon death or Disability.

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          (aa) "Registration Date" means the first to occur of (i) the closing
                -----------------
of the first sale to the general public of (A) the Common Stock or (B) the same
class of securities of a successor corporation (or its Parent) issued pursuant
to a Corporate Transaction in exchange for or in substitution of the Common
Stock, pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction, .

          (bb) "Related Entity" means any Parent, Subsidiary and any business,
                --------------
corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly.

          (cc) "Restricted Stock" means Shares issued under the Plan to the
               -----------------
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

          (dd) "Share" means a share of the Common Stock.
                -----

          (ee) "Subsidiary" means a "subsidiary corporation," whether now or
                ----------
hereafter existing, as defined in Section 424(f) of the Code.

     3.   Stock Subject to the Plan.
          --------------------------

          (a) Subject to the provisions of Section 11(a) below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 13.8 million Shares.  The shares may be authorized,
but unissued, or reacquired Common Stock.

          (b) Any Shares covered by an Award (or portion of an Award) which is
forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan.  If any unissued Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated).  Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

     4.   Administration of the Plan.
          ---------------------------

          (a) Plan Administrator.  With respect to grants of Awards to
              ------------------
Employees, Directors, or Consultants, the Plan shall be administered by (A) the
Board or (B) a Committee (or a subcommittee of the Committee) designated by the
Board, which Committee shall be constituted in such a manner as to satisfy
Applicable Laws.  Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.

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          (b) Powers of the Administrator.  Subject to Applicable Laws and the
              ---------------------------
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:

              (i)     to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;

              (ii)    to determine whether and to what extent Awards are granted
hereunder;

              (iii)   to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;

              (iv)    to approve forms of Award Agreements for use under the
Plan;

              (v)     to determine the terms and conditions of any Award granted
hereunder;

              (vi)    to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such rules or laws; provided,
however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent
with the provisions of the Plan;

              (vii)   to amend the terms of any outstanding Award granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent;

              (viii)  to construe and interpret the terms of the Plan and
Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan; and

              (ix)    to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.

          (c) Effect of Administrator's Decision.  All decisions, determinations
              ----------------------------------
and interpretations of the Administrator shall be conclusive and binding on all
persons.

     5.   Eligibility.  Awards other than Incentive Stock Options may be granted
          -----------
to Employees, Directors and Consultants.  Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary.  An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards.  Awards may be granted to such Employees,
Directors or Consultants who are residing in foreign jurisdictions as the
Administrator may determine from time to time.

     6.   Terms and Conditions of Awards.
          -------------------------------

          (a) Type of Awards.  The Administrator is authorized under the Plan to
              --------------
award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, or similar right with
a fixed or variable price related to the Fair Market Value of the Shares and
with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any other security with the value

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derived from the value of the Shares. Such awards include, without limitation,
Options, or sales or bonuses of Restricted Stock, and an Award may consist of
one such security or benefit, or two (2) or more of them in any combination or
alternative.

          (b) Designation of Award.  Each Award shall be designated in the Award
              --------------------
Agreement.  In the case of an Option, the Option shall be designated as either
an Incentive Stock Option or a Non-Qualified Stock Option.  However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options.  For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option.

          (c) Conditions of Award.  Subject to the terms of the Plan, the
              -------------------
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria.  The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total shareholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

          (d) Acquisitions and Other Transactions.  The Administrator may issue
              -----------------------------------
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.

          (e) Award Exchange Programs.  The Administrator may establish one or
              -----------------------
more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.

          (f) Separate Programs.  The Administrator may establish one or more
              -----------------
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.

          (g) Early Exercise.  The Award Agreement may, but need not, include a
              --------------
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award.  Any unvested Shares received pursuant to such exercise may be
subject to a repurchase right in favor of the Company or a Related Entity or to
any other restriction the Administrator determines to be appropriate.

          (h) Term of Award.  The term of each Award shall be the term stated in
              -------------
the Award Agreement, provided, however, that the term shall be no more than ten
(10) years from the date of grant

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thereof. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Award Agreement.

          (i) Transferability of Awards.  Non-Qualified Stock Options shall be
              -------------------------
transferable (i) to the extent provided in the Award Agreement and in a manner
consistent with Section 260.140.41 of Title 10 of the California Code of
Regulations and (ii) by will, and by the laws of descent and distribution.
Incentive Stock Options and other Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Grantee, only by the Grantee.

          (j) Time of Granting Awards.  The date of grant of an Award shall for
              -----------------------
all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

     7.   Award Exercise or Purchase Price, Consideration, Taxes and Reload
          -----------------------------------------------------------------
Options.
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          (a) Exercise or Purchase Price.  The exercise or purchase price, if
              --------------------------
any, for an Award shall be as follows:

              (i)     In the case of an Incentive Stock Option:

                      (A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be not less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of grant; or

                      (B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.

              (ii)    In the case of a Non-Qualified Stock Option:

                      (A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be not less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant; or

                      (B)  granted to any person other than a person described
in the preceding paragraph, the per Share exercise price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

              (iii)   In the case of the sale of Shares:

                      (A) granted to a person who, at the time of the grant of
such Award, or at the time the purchase is consummated, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share purchase

                                       7
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price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant; or

                      (B) granted to any person other than a person described in
the preceding paragraph, the per Share purchase price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

              (iv)    In the case of other Awards, such price as is determined
by the Administrator.

              (v)     Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(d), above, the
exercise or purchase price for the Award shall be determined in accordance with
the principles of Section 424(a) of the Code.

          (b) Consideration.  Subject to Applicable Laws, the consideration to
              -------------
be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant).  In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following:

              (i)     cash;

              (ii)    check;

              (iii)   delivery of Grantee's promissory note with such recourse,
interest, security, and redemption provisions as the Administrator determines as
appropriate ;

              (iv)    if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);

              (v)     with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or

              (vi)    any combination of the foregoing methods of payment.

          (c) Taxes.  No Shares shall be delivered under the Plan to any Grantee
              -----
or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition

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<PAGE>

of Shares received on exercise of an Incentive Stock Option. Upon exercise of an
Award the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.

          (d) Reload Options.  In the event the exercise price or tax
              --------------
withholding of an Option is satisfied by the Company or the Grantee's employer
withholding Shares otherwise deliverable to the Grantee, the Administrator may
issue the Grantee an additional Option, with terms identical to the Award
Agreement under which the Option was exercised, but at an exercise price as
determined by the Administrator in accordance with the Plan.

     8.   Exercise of Award.
          ------------------

          (a) Procedure for Exercise; Rights as a Shareholder.
              ------------------------------------------------

              (i)     Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement but in the case of an
Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable
conditions such as continued employment. Notwithstanding the foregoing, in the
case of an Option granted to an Officer, Director or Consultant, the Award
Agreement may provide that the Option may become exercisable, subject to
reasonable conditions such as such Officer's, Director's or Consultant's
Continuous Service, at any time or during any period established in the Award
Agreement.

              (ii)    An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised, including, to the
extent selected, use of the broker-dealer sale and remittance procedure to pay
the purchase price as provided in Section 7(b)(v). Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Award Agreement
or Section 11(a), below.

          (b) Exercise of Award Following Termination of Continuous Service.  In
              -------------------------------------------------------------
the event of termination of a Grantee's Continuous Service for any reason other
than Disability or death (but not in the event of a Grantee's change of status
from Employee to Consultant or from Consultant to Employee), such Grantee may,
but only during the Post-Termination Exercise Period (but in no event later than
the expiration date of the term of such Award as set forth in the Award
Agreement), exercise the Award to the extent that the Grantee was entitled to
exercise it at the date of such termination or to such other extent as may be
determined by the Administrator.  The Grantee's Award Agreement may provide that
upon the termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Award shall terminate concurrently with the
termination of Grantee's Continuous Service.  In the event of a Grantee's change
of status from Employee to Consultant, an Employee's Incentive Stock Option
shall convert automatically to a Non-Qualified Stock Option on the day three (3)
months and one day following such change of status.  To the extent that the
Grantee is not entitled to exercise the Award at the date of termination, or if
the Grantee does not exercise such Award to the extent so entitled within the
Post-Termination Exercise Period, the Award shall terminate.

                                       9
<PAGE>

          (c) Disability of Grantee.  In the event of termination of a Grantee's
              ---------------------
Continuous Service as a result of his or her Disability, Grantee may, but only
within twelve (12) months from the date of such termination (and in no event
later than the expiration date of the term of such Award as set forth in the
Award Agreement), exercise the Award to the extent that the Grantee was
otherwise entitled to exercise it at the date of such termination; provided,
however, that if such Disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically convert to a Non-Qualified Stock
Option on the day three (3) months and one day following such termination.  To
the extent that the Grantee is not entitled to exercise the Award at the date of
termination, or if Grantee does not exercise such Award to the extent so
entitled within the time specified herein, the Award shall terminate.

          (d) Death of Grantee.  In the event of a termination of the Grantee's
              ----------------
Continuous Service as a result of his or her death, or in the event of the death
of the Grantee during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's Termination of Continuous Service as a
result of his or her Disability, the Grantee's estate or a person who acquired
the right to exercise the Award by bequest or inheritance may exercise the
Award, but only to the extent that the Grantee was entitled to exercise the
Award as of the date of termination, within twelve (12) months from the date of
death (but in no event later than the expiration of the term of such Award as
set forth in the Award Agreement).  To the extent that, at the time of death,
the Grantee was not entitled to exercise the Award, or if the Grantee's estate
or a person who acquired the right to exercise the Award by bequest or
inheritance does not exercise such Award to the extent so entitled within the
time specified herein, the Award shall terminate.

          (e) Buyout Provisions.  The Administrator may at any time offer to buy
              -----------------
out for a payment in cash or Shares, an Award previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Grantee at the time that such offer is made.

     9.   Conditions Upon Issuance of Shares.
          -----------------------------------

          (a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

          (b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.

     10.  Repurchase Right.  If the provisions of an Award Agreement grant to
          ----------------
the Company the right to repurchase Shares upon termination of the Grantee's
Continuous Service, the Award Agreement shall (or may, with respect to Awards
granted or issued to Officers, Directors or Consultants) provide that:

          (a) the right to repurchase must be exercised, if at all, within
ninety (90) days of the termination of the Grantee's Continuous Service (or in
the case of Shares issued upon exercise of Awards after the date of termination
of the Grantee's Continuous Service, within ninety (90) days after the date of
the Award exercise);

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<PAGE>

          (b) the consideration payable for the Shares upon exercise of such
repurchase right shall be made in cash or by cancellation of purchase money
indebtedness within the ninety (90) day periods specified in Section 10(a);

          (c) the amount of such consideration shall (i) be equal to the
original purchase price paid by Grantee for each such Share; provided, that the
right to repurchase such Shares at the original purchase price shall lapse at
the rate of at least twenty percent (20%) of the Shares subject to the Award per
year over five (5) years from the date the Award is granted (without respect to
the date the Award was exercised or became exercisable), and (ii) with respect
to Shares, other than Shares subject to repurchase at the original purchase
price pursuant to clause (i) above, not less than the Fair Market Value of the
Shares to be repurchased on the date of termination of Grantee's Continuous
Service; and

          (d) the right to repurchase Shares, other than the right to repurchase
Shares at the original purchase price pursuant to clause (i) of Section 10(c),
shall terminate on the Registration Date.

     11.  Adjustments Upon Changes in Capitalization or Corporate Transaction.
          --------------------------------------------------------------------

          (a) Adjustments upon Changes in Capitalization.  Subject to any
              ------------------------------------------
required action by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Shares, or similar transaction affecting the Shares, (ii) any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock to which Section
424(a) of the Code applies or a similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator and its determination shall be final, binding and
conclusive.  Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to an Award.

          (b) Corporate Transaction.  In the event of a Corporate Transaction
              ---------------------
each Award which is at the time outstanding under the Plan shall automatically
become fully vested and exercisable and be released from any restrictions on
transfer (other than transfer restrictions applicable to Options) and repurchase
or forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by such
Award unless the Award is assumed by the successor corporation or the Parent
thereof in connection with the Corporate Transaction.  Effective upon the
consummation of the Corporate Transaction, each outstanding Award under the Plan
shall terminate unless the Award is assumed by the successor corporation or the
Parent thereof in connection with the Corporate Transaction.  For the purposes
of accelerating the vesting and the release of restrictions applicable to Awards
pursuant to this subsection (but not for purposes of termination of such
Awards), the Award shall be considered assumed if, in connection with the
Corporate Transaction, the Award is replaced with a comparable Award with
respect to shares of capital stock of the successor corporation or Parent
thereof or is replaced with a cash incentive program of the successor
corporation or Parent thereof which preserves the compensation element of such
Award existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule

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<PAGE>

applicable to such Award. The determination of Award comparability above shall
be made by the Administrator and its determination shall be final, binding and
conclusive.

     12.  Effective Date and Term of Plan.  The Plan shall become effective upon
          -------------------------------
the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company.  It shall continue in effect for a term of ten (10)
years unless sooner terminated.  Subject to Section 16, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

     13.  Amendment, Suspension or Termination of the Plan.
          -------------------------------------------------

          (a) The Board may at any time amend, suspend or terminate the Plan.
To the extent necessary to comply with Applicable Laws, the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.

          (b) No Award may be granted during any suspension of the Plan or after
termination of the Plan.

          (c) Any amendment, suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or terminated, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing
and signed by the Grantee and the Company.

     14.  Reservation of Shares.
          ----------------------

          (a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

          (b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.

     15.  No Effect on Terms of Employment/Consulting Relationship.  The Plan
          --------------------------------------------------------
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.

     16.  No Effect on Retirement and Other Benefit Plans.  Except as
          -----------------------------------------------
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation.  The
Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.

     17.  Shareholder Approval.  Continuance of the Plan shall be subject to
          --------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws.  Any Award exercised
before shareholder approval is obtained shall be rescinded if shareholder
approval

                                       12
<PAGE>

is not obtained within the time prescribed, and Shares issued on the exercise of
any such Award shall not be counted in determining whether shareholder approval
is obtained.

     18.  Information to Grantees.  The Company shall provide to each Grantee,
          -----------------------
during the period for which such Grantee has one or more Awards outstanding,
copies of financial statements at least annually.

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