GK INTELLIGENT SYSTEMS, INC.

                             2004 STOCK OPTION PLAN

      1.  Purposes  of the Plan.  The  purposes  of the Plan are to attract  and
retain the best available personnel for positions of substantial responsibility,
to provide additional  incentive to Employees and Consultants and to promote the
success of the  Company's  business  through  the  issuance  of  options,  stock
purchase rights,  other stock-based awards, and other benefits.  Options granted
under the Plan may be Incentive  Stock Options or  Nonstatutory  Stock  Options.
Stock purchase rights may also be granted under the Plan

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

            a.  "Administrator"  means  the  Board  or  any  of  its  Committees
appointed pursuant to Section 4 of the Plan to administer the Plan.

            b.  "Award"  means any award or benefit  granted to any  participant
under the Plan,  including,  without  limitation,  the grant of  Options,  Stock
Purchase Rights, and other Stock-based awards and other benefits.

            c. "Board" means the Board of Directors of the Company.

            d. "Code" means the Internal Revenue Code of 1986, as amended.

            e. "Committee" means a Committee appointed by the Board of Directors
in accordance with Section 4 of the Plan.

            f. "Common Stock" means the Common Stock of the Company.

            g. "Company" means GK Intelligent Systems, Inc.

            h. "Consultant" means any person,  including an advisor,  who is not
an Employee but is engaged by the Company or any Parent or  Subsidiary to render
services and is compensated  for such services,  and any director of the Company
whether  compensated  for such services or not provided that if and in the event
the Company  registers any class of any equity security pursuant to the Exchange
Act, the term  Consultant  shall  thereafter  not include  directors who are not
compensated for their services or are paid only a director's fee by the Company.

            i.  "Disability"  means,  with  respect  to an  Optionee,  that  the
Optionee has any medically  determinable physical or mental impairment which can
be  expected  to result in death or which has lasted or can be  expected to last
for a continuous  period of not less than twelve (12) months,  and which renders
the Optionee unable to engage in any substantial  gainful activity.  An Optionee
shall not be considered to have a Disability unless Optionee  furnishes proof of
the  existence  thereof  in such  form  and  manner,  and at such  time,  as the
Administrator may require,  and the  Administrator  determines in its discretion

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that  the  Optionee  has  such  a  medically  determinable  physical  or  mental
impairment.

            j.   "Employee"   means  any  person  who  is   determined   by  the
Administrator  to be a common  law  employee  of the  Company  or any  Parent or
Subsidiary  of the Company.  With respect to any entity for which the Company or
any  Parent  of  Subsidiary  of the  Company  is a  single  owner  and  which is
disregarded  as  an  entity   separate  from  its  owner  pursuant  to  Treasury
Regulations Section  301.7701-3,  any person who determined by the Administrator
to be a common law employee of that entity shall be treated as an Employee.

            k.  "Exchange  Act" means the  Securities  Exchange Act of 1934,  as
amended.

            l. "Fair Market  Value" means,  as of any date,  the value of Common
Stock determined as follows:

            i. If the Common Stock is listed on any  established  stock exchange
      or a national  market system  including  without  limitation  the National
      Market  System of the National  Association  of Securities  Dealers,  Inc.
      Automated Quotation  ("NASDAQ") System, its Fair Market Value shall be the
      closing  sales price for such stock on the date of  determination  (or the
      closing  bid,  if no sales were  reported,  as quoted on such  exchange or
      system for the last market trading day prior to the time of determination)
      as  reported  in The Wall  Street  Journal  or such  other  source  as the
      Administrator deems reliable;

            ii. If the Common  Stock is quoted on the NASDAQ  System (but not on
      the National  Market System  thereof) or regularly  quoted by a recognized
      securities  dealer but selling  prices are not  reported,  its Fair Market
      Value shall be the mean  between the high bid and low asked prices for the
      Common Stock on the date of determination or;

            iii. In the absence of an  established  market for the Common Stock,
      the Fair Market Value  thereof  shall be  determined  in good faith by the
      Administrator.

            m.  "Incentive  Stock Option" means an Option which is treated as an
incentive  stock option within the meaning of Section 422 of the Code. An Option
shall only be treated as an Incentive Stock Option pursuant to the Plan if it is
originally  designated as an Incentive Stock Option in the Option Agreement.  An
Option originally designated in an Option Agreement as an Incentive Stock Option
may  nonetheless be treated as a Nonstatutory  Stock Option if the Option at any
time after  grant  fails to meet to  requirements  for  incentive  stock  option
treatment under Section 422 of the Code.

            n.  "Nonstatutory  Stock  Option"  means an  Option  which is not an
Incentive  Stock Option.  An Option which is designated as a Nonstatutory  Stock
Option in the Option Agreement pursuant to which the Option was granted shall in
all events be treated as a  Nonstatutory  Stock Option.  Furthermore,  an Option

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originally  designated as an Incentive  Stock Option may  subsequently  become a
Nonstatutory  Stock  Option  upon the  Option  subsequently  failing to meet the
requirements for incentive stock option under Section 422 of the Code.

            o. "Officer"  means a person who is an officer of the Company within
the  meaning  of Section 16 of the  Exchange  Act and the rules and  regulations
promulgated thereunder.

            p. "Option" means a stock option granted pursuant to the Plan.

            q.  "Option  Agreement"  has the  meaning  set forth in  Section  18
hereof.

            r. "Optioned Stock" means the Common Stock subject to an Option or a
Stock Purchase Right.

            s. "Optionee" means an Employee or Consultant who receives an Option
or Stock Purchase Right, other Stock-based award, or other benefit.

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

            u. "Plan" means this 2004 Stock Option Plan, as amended from time to
time in accordance with the terms hereof.

            v.  "Restricted  Stock" has the meaning  set forth in Section  11(a)
hereof.

            w. "Restricted  Stock Purchase  Agreement" has the meaning set forth
in Section 11(a) hereof.

            x.  "Share"  means a share  of the  Common  Stock,  as  adjusted  in
accordance with Section 12 below.

            y. "Stock  Purchase  Right" means the right to purchase Common Stock
pursuant to Section 11 below.

            z. "Stock  Purchase  Right  Agreement"  has the meaning set forth in
Section 18 hereof.

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

            bb.  "Ten  Percent  Shareholder"  means a person who, at the time an
Option is granted, owns, or is deemed within the meaning of Section 422(b)(6) of
the Code to own,  stock  possessing  more  than ten  percent  (10%) of the total
combined  voting  power  of all  classes  of  stock  of the  Company  (or of its
Subsidiary or parent (within the meaning of Section 424(e) of the Code)).

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      3. Stock Subject to the Plan. Subject to adjustment pursuant to Section 12
of the Plan, and effective as of April 5, 2004, the maximum  aggregate number of
shares which may be issued  pursuant to the Plan is 30,000,000  shares of Common
Stock.  Such  number of shares of  Common  Stock may be issued  under  this Plan
pursuant to Incentive Stock Options,  Nonstatutory Stock Options, Stock Purchase
Rights, other Stock-based awards, other benefits, or any combination thereof, so
long as the aggregate  number of shares so issued does not exceed such number of
shares, as adjusted.  The shares may be authorized,  but unissued, or reacquired
Common Stock. If an Option should expire or become  unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated,  become available for
future grant under the Plan.

      4. Administration of the Plan.

            a. Initial Plan Procedure. Prior to the date, if any, upon which the
      Company   becomes   subject  to  the  Exchange  Act,  the  Plan  shall  be
      administered by the Board or a committee appointed by the Board.

            b. Plan  Procedure  After the Date,  if any,  Upon Which the Company
      Becomes Subject to the Exchange Act.

                  i. Administration With Respect to Directors and Officers. With
            respect  to  grants  of  Options,   Stock  Purchase  Rights,   other
            Stock-based  awards,  or other  benefits,  to Employees who are also
            officers or directors of the Company, the Plan shall be administered
            by (A) the Board if the Board may  administer the Plan in compliance
            with Rule 16b-3  promulgated under the Exchange Act or any successor
            thereto  ("Rule  16b-3") with respect to a plan  intended to qualify
            thereunder as a discretionary plan, or (B) a committee designated by
            the  Board  to  administer  the  Plan,   which  committee  shall  be
            constituted  in such a manner as to permit  the Plan to comply  with
            Rule 16b-3 with respect to a plan intended to qualify  thereunder as
            a discretionary plan. Once appointed,  such Committee shall continue
            to serve in its designated  capacity until otherwise directed by the
            Board.  From  time to time the Board  may  increase  the size of the
            Committee and appoint  additional  members  thereof,  remove members
            (with or without  cause) and  appoint  new  members in  substitution
            therefor, fill vacancies,  however caused, and remove all members of
            the Committee and  thereafter  directly  administer the Plan, all to
            the extent  permitted by Rule 16b-3 with respect to a plan  intended
            to qualify thereunder as a discretionary plan.

                  ii.  Multiple  Administrative  Bodies.  If  permitted  by Rule
            16b-3, the Plan may be administered by different bodies with respect
            to  directors,  non-director  officers and Employees who are neither
            directors nor officers.

                  iii.  Administration  With  Respect to  Consultants  and Other
            Employees. With respect to grants of Options, Stock Purchase Rights,
            other  Stock-based  awards,  or  other  benefits,  to  Employees  or
            Consultants  who are neither  directors nor officers of the Company,
            the Plan shall be  administered  by (A) the Board or (B) a committee

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            designated by the Board,  which  committee  shall be  constituted in
            such a manner as to satisfy the legal  requirements  relating to the
            administration  of incentive stock option plans, if any, of Delaware
            corporate and  securities  laws, of the Code,  and of any applicable
            stock  exchange  (the  "Applicable  Laws").  Once  appointed,   such
            Committee  shall continue to serve in its designated  capacity until
            otherwise  directed  by the  Board.  From time to time the Board may
            increase the size of the  Committee and appoint  additional  members
            thereof,  remove  members  (with or without  cause) and  appoint new
            members in substitution  therefor,  fill vacancies,  however caused,
            and remove all  members of the  Committee  and  thereafter  directly
            administer the Plan,  all to the extent  permitted by the Applicable
            Laws.

                  iv.  Administration  With  Respect  to  Directors  Who Are Not
            Employees. With respect to grants of Options, Stock Purchase Rights,
            other Stock-based awards, or other benefits to directors who are not
            Employees,  the Plan shall be administered by (A) the Board or (B) a
            committee  designated by the Board;  provided that any policy of the
            Company concerning grants of Options,  Stock Purchase Rights,  other
            Stock-based  awards, or other benefits to non-Employee  directors as
            director compensation shall be approved by a majority of the members
            of the Board who are either Employees of the Company or non-Employee
            directors who have waived their right to receive such compensation.

            c. Powers of the  Administrator.  Subject to the  provisions  of the
Plan and in the case of a Committee,  the specific duties delegated by the Board
to such  Committee,  and subject to the  approval of any  relevant  authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its discretion:

                  i. to determine the Fair Market Value of the Common Stock,  in
            accordance with Section 2(k) of the Plan;

                  ii. to select the  Consultants  and Employees to whom Options,
            Stock Purchase Rights,  other Stock-based  awards, or other benefits
            may from time to time be granted hereunder;

                  iii. to determine whether and to what extent Options and Stock
            Purchase Rights or any combination thereof are granted hereunder;

                  iv. to  determine  the number of shares of Common  Stock to be
            covered by each such award granted hereunder;

                  v. to  approve  forms of  agreement  for use  under  the Plan,
            including  without  limitation,  Stock  Purchase  Right  Agreements,
            Restricted Stock Purchase  Agreements and Option  Agreements,  which
            forms need not be the same for any Optionee;

<PAGE>

                  vi. to determine the terms and  conditions,  not  inconsistent
            with the terms of the Plan,  of any Option,  Stock  Purchase  Right,
            other  Stock-based  awards,  or other  benefits  granted  hereunder,
            including without limitation  establishing vesting schedules for the
            exercise  of  Options  which  are  based  upon the  passage  of time
            performing services for the Company,  meeting specified  performance
            criteria or any other standards as may be determined  appropriate by
            the Administrator;

                  vii.  to  determine  whether and under what  circumstances  an
            Option may be settled in cash instead of Common Stock;

                  viii.  to reduce the exercise  price of any Option to the then
            current  Fair Market  Value if the Fair  Market  Value of the Common
            Stock covered by such Option shall have declined  since the date the
            Option was granted;

                  ix. to  determine  the terms and  restrictions  applicable  to
            Stock  Purchase  Rights  and  the  Restricted   Stock  purchased  by
            exercising such Stock Purchase Rights; and

                  x. to  interpret  the Plan,  establish,  amend and rescind any
            rules and  regulations  relating to the Plan, to determine the terms
            and provision of any  agreements  entered into pursuant to the Plan,
            and to make  all  other  determinations  that  may be  necessary  or
            advisable for the administration of the Plan.

            d. Effect of Administrator's  Decision.  Whether explicitly provided
elsewhere in this Plan with respect to any matter, all decisions, determinations
and interpretations of the Administrator  provided in this Plan shall be made in
the Administrator's sole and absolute discretion, and shall be final and binding
on all Optionees and any other holders of any Options,  Stock  Purchase  Rights,
other Stock-based awards, or other benefits.

      5. Eligibility.

            a.  Nonstatutory  Stock  Options  and Stock  Purchase  Rights may be
granted  to  such   Employees  and   Consultants  as  may  be  selected  by  the
Administrator.  Incentive  Stock Options may be granted to such Employees as may
be selected by the  Administrator and may in no event be granted to someone who,
on the date of grant, is not an Employee. An Employee or Consultant who has been
granted an Option or Stock Purchase Right may, if otherwise eligible, be granted
additional  Options,  Stock Purchase Rights,  other Stock-based awards, or other
benefits.

            b. Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option.  Notwithstanding  such
designations,  to the extent that the aggregate Fair Market Value (determined as
of the date of grant of the Option) of the shares of Option  Stock with  respect
to which Options initially designated as Incentive Stock Options are exercisable
for the first time by any Optionee  during any calendar year (under all plans of

<PAGE>

the Company or any Parent or Subsidiary)  exceeds $100,000,  such excess Options
shall be treated as Nonstatutory Stock Options.

            c. For purposes of Section  5(b),  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 time the Option with respect
to such Shares is granted.

            d. The Plan  shall not  confer  upon any  Optionee  any  right  with
respect to  continuation  of  employment  or  consulting  relationship  with the
Company,  nor  shall  it  interfere  in any way  with  his or her  right  or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

            e. Non-Uniform  Determinations.  The Administrator's  determinations
under the Plan (including  without  limitation  determinations of the persons to
receive  awards,  the form,  amount  and  timing of such  awards,  the terms and
provisions  of such  awards  and the  agreements  evidencing  same)  need not be
uniform and may be made by it  selectively  among  persons who  receive,  or are
eligible  to receive,  awards  under the Plan,  whether or not such  persons are
similarly situated.

            f. Newly Eligible Employees.  The Administrator shall be entitled to
make such rules, regulations,  determinations and awards as it deems appropriate
in respect of any Employee who becomes  eligible to  participate  in the Plan or
any portion thereof after the commencement of an award or incentive period.

            g. Leaves of Absence.  The  Administrator  shall be entitled to make
such rules,  regulations and  determinations  as it deems  appropriate under the
Plan in  respect of any leave of absence  taken by the  recipient  of any award.
Without  limiting the generality of the foregoing,  the  Administrator  shall be
entitled  to  determine  (i)  whether  or not any such  leave of  absence  shall
constitute a termination  of employment  within the meaning of the Plan and (ii)
the  impact,  if any,  of any such  leave of  absence  on awards  under the Plan
theretofore made to any recipient who takes such leave of absence.

      6. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company as described in Section 19 of the Plan. It shall  continue in effect
for a term of ten (10) years unless  sooner  terminated  under Section 15 of the
Plan.

      7. Term of Option. The term of each Option shall be the term stated in the
Option  Agreement;  provided,  however,  that the term shall be no more than ten
(10) years from the date of grant thereof.  However, in the case of an Incentive
Stock Option granted to a Ten Percent  Shareholder  the term of the Option shall
be five (5) years from the date of grant  thereof or such shorter term as may be
provided in the Option Agreement.

      8. Option Exercise Price and Consideration.

<PAGE>

      a. The per share  exercise  price for the Shares to be issued  pursuant to
exercise of an Option shall be such price as is determined by the Administrator;
t 12 provided  however,  that with respect to any Incentive  Stock  Option,  the
price shall be:

                  i. no less than 110% of the Fair Market Value per Share on the
            date of grant, if granted to a Ten Percent Shareholder;

                  ii. no less than  100% of the Fair  Market  Value per Share on
            the date of grant,  if granted to a person  other than a Ten Percent
            Shareholder.

            b. The  consideration  to be paid for the  Shares to be issued  upon
exercise of an Option,  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)  and may  consist  entirely  of (1) cash,  (2)
check,  (3)  promissory  note,  (4) other Shares which (x) in the case of Shares
acquired  upon  exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired,  directly or
indirectly,  from the  Company,  and (y) have a Fair Market Value on the date of
surrender  equal to the aggregate  exercise price of the Shares as to which said
Option shall be exercised,  (5) delivery of a properly  executed exercise notice
together with such other  documentation as the  Administrator and the broker, if
applicable,  shall  require to effect an exercise of the Option and  delivery to
the Company of the sale or loan proceeds  required to pay the exercise price, or
(6)  any  combination  of the  foregoing  methods  of  payment.  In  making  its
determination as to the type of consideration to accept, the Administrator shall
consider if  acceptance  of such  consideration  may be  reasonably  expected to
benefit the Company.

      9. Exercise of Option.

            a.  Procedure  for  Exercise;  Rights as a  Shareholder.  Any Option
granted  hereunder  shall be exercisable at such times and under such conditions
as determined by the Administrator,  including performance criteria with respect
to the Company and/or the Optionee,  and as shall be permissible under the terms
of the Plan.

                  i. An Option may not be exercised for a fraction of a Share.

                  ii. An Option  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 Option  Agreement  by the person  entitled  to
            exercise  the Option and full payment for the Shares with respect to
            which the Option is exercised has been received by the Company. Full
            payment  may, as  authorized  by the  Administrator,  consist of any
            consideration  and method of payment allowable under Section 8(b) of
            the Plan. 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  the  Optioned  Stock,
            notwithstanding  the exercise of the Option. The Company shall issue

<PAGE>

            (or  cause  to be  issued)  such  stock  certificate  promptly  upon
            exercise of the Option. 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 Section 12 of the Plan.

                  iii.  Exercise  of an Option in any manner  shall  result in a
            decrease in the number of Shares which  thereafter may be available,
            both for purposes of the Plan and for sale under the Option,  by the
            number of Shares as to which the Option is exercised.

            b. Withholding  Taxes.  Whenever the Company proposes or is required
to issue or transfer  shares of Common Stock under the Plan,  the Company  shall
have the  right to  require  the  grantee  to remit  to the  Company  an  amount
sufficient  to  satisfy  any  federal,   state  and/or  local   withholding  tax
requirements  prior to the delivery of any certificate or certificates  for such
shares.  Alternatively,  the Company may issue or transfer such shares of Common
Stock net of the number of shares  sufficient  to satisfy  the  withholding  tax
requirements.  For withholding tax purposes, the shares of Common Stock shall be
valued on the date the withholding obligation is incurred.

      t 12 c. Termination or Lapse of Options Issued to Employees. The following
provisions  of this  Section  9(c) and Section  9(e) shall apply to every Option
unless the Option  Agreement  explicitly  specifies that such  provisions do not
apply to the Option evidenced by that Option Agreement. Any portion of an Option
which is not otherwise  exercisable as of the date of an Optionee's  termination
of employment with the Company and any Parent or Subsidiary  shall terminate and
not be  exercisable.  Any portion of an Option which was  exercisable  as of the
date of termination of any such employment  shall be exercisable  following such
termination  of employment  only as  hereinafter  provided in this Section 9(c),
subject to Section 9(e).

                  i.  Termination  of  Employment;  Generally.  In the  event of
            termination  of an  Optionee's  employment  with the Company and any
            Parent or Subsidiary under any situation not described in paragraphs
            2) or 3) of this Section 9(c),  the Optionee may exercise any Option
            to  the  extent  the  Option  was  exercisable  as of  the  date  of
            termination  of  employment  until the  earlier of the date which is
            three (3) months after the date of  termination of employment or the
            expiration  the  term  of the  Option  as set  forth  in the  Option
            Agreement,  whereupon  the Option shall  terminate  and no longer be
            exercisable.   For  purposes  of  this  paragraph,   a  transfer  of
            employment  relationship  between  or  among  the  Company  and/or a
            related  entity shall not be deemed to constitute a cessation of the
            employment  relationship  with  the  Company  or any of its  related
            entities. For purposes of this paragraph,  with respect to Incentive
            Stock  Options,  employment  shall be deemed to  continue  while the
            Optionee is on military  leave,  sick leave or other bona fide leave
            of absence  (as  determined  by the  Administrator).  The  foregoing
            notwithstanding,  employment  shall not be deemed to continue beyond
            the first 90 days of such leave, unless the Optionee's  reemployment
            rights are guaranteed by statute or by contract.

<PAGE>

                  ii. Disability of Optionee.  In the event of termination of an
            Optionee's  employment with the Company and any Parent or Subsidiary
            due to  Disability,  the  Optionee  may  exercise  any Option to the
            extent the Option was  exercisable  as of the date of termination of
            employment until the earlier of the date which is twelve (12) months
            from the date of such  termination  or the expiration of the term of
            the  Option  as set forth in the  Option  Agreement,  whereupon  the
            Option shall terminate and no longer be exercisable.

                  iii.  Death of  Optionee.  In the event of  termination  of an
            Optionee's  employment with the Company and any Parent or Subsidiary
            as a result of the death of an Optionee, the Option may be exercised
            to the extent the  Option  was  exercisable  as of the date of death
            until the  earlier of the date which is twelve  (12) months from the
            date of death or the  expiration  of the term of the  Option  as set
            forth in the Option Agreement,  whereupon the Option shall terminate
            and no longer be exercisable.

            d. Termination of Options issued to Consultants. The conditions upon
which an  Option  granted  to a  Consultant  will  terminate  as a result of the
Consultants'  termination  of  services to the  Company,  whether as a result of
death, disability,  voluntary termination,  termination for cause, or nonrenewal
of any  consulting  agreement,  shall be as  determined  by the  Company and the
Consultant  at the time of  grant  of the  Option  as set  forth  in the  Option
Agreement.

            e. Termination of Options due to Termination for Cause. In the event
an Optionee is terminated as an Employee or Consultant for cause,  as determined
by the Administrator in its sole discretion,  or breaches any agreement with the
Company,  before  or  after  termination,  including  any  noncompete  covenant,
confidentiality agreement, or employment agreement, then any Options held by the
Optionee shall immediately terminate.  As used herein, "cause" shall mean fraud;
dishonesty;  negligence;  willful  misconduct  in the  performance  of a persons
duties as an Employee or  Consultant;  commission of a felony;  commission of an
act of moral turpitude (e.g. theft, embezzlement and the like) which in the good
faith determination of the Administrator, is materially injurious to the Company
or any  Parent or  Subsidiary;  inattention  to or  substandard  performance  of
duties;  failure  to  perform a properly  assigned  duty;  failure to follow the
lawful  written  policies,  rules or  directives of the Company or any Parent of
Subsidiary which failures, in the good faith determination of the Administrator,
are materially  injurious to the Company or any Parent or Subsidiary;  violating
any restrictive  covenant in favor of the Company or any Parent of Subsidiary or
any other  material  breach of any  employment or consulting  agreement with the
Company or any Parent or Subsidiary.

            f. Rule 16b-3.  Options  granted to persons subject to Section 16(b)
of the  Exchange  Act must  comply  with  Rule  16b-3  and  shall  contain  such
additional  conditions or restrictions as may be determined by the Administrator
to be required  thereunder to qualify for the maximum  exemption from Section 16
of the Exchange Act with respect to Plan transactions.

<PAGE>

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

      10.  Non-Transferability of Options and Stock Purchase Rights. Options and
Stock  Purchase  Rights  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
Optionee, only by the Optionee.

      11. Stock Purchase Rights.

            a. Rights to Purchase.  Stock  Purchase  Rights may be issued to any
Employee or Consultant.  After the  Administrator  determines that it will offer
Stock Purchase  Rights under the Plan, it shall advise the offeree in writing of
the terms,  conditions  and  restrictions  related to the offer,  including  the
number of Shares that such person shall be entitled to purchase, the price to be
paid, and the time within which such person must accept such offer,  which shall
in no event  exceed  sixty (60) days from the date upon which the  Administrator
made the  determination  to grant the Stock Purchase  Right.  The offer shall be
accepted by  execution  of a  restricted  stock  purchase  agreement in the form
determined by the Administrator ("Restricted Stock Purchase Agreement").  Shares
purchased  pursuant to the grant of a Stock  Purchase Right shall be referred to
herein as "Restricted Stock")

            b. Repurchase Option. Unless the Administrator determines otherwise,
the  Restricted  Stock Purchase  Agreement  shall grant the Company a repurchase
option  exercisable  upon  the  voluntary  or  involuntary  termination  of  the
purchaser's  employment  with the  Company  for any reason  (including  death or
Disability).   The  purchase  price  for  Shares  repurchased  pursuant  to  the
Restricted  Stock  Purchase  Agreement  shall be the original  price paid by the
purchaser and may be paid by cancellation  of any  indebtedness of the purchaser
to  the  Company.  The  repurchase  option  shall  lapse  at  such  rate  as the
Administrator may determine.

            c. Other Provisions.  The Restricted Stock Purchase  Agreement shall
contain such other terms,  provisions and conditions not  inconsistent  with the
Plan as may be  determined  by the  Administrator  in its  sole  discretion.  In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

            d.  Rights  as a  Shareholder.  Once  the  Stock  Purchase  Right is
exercised,  the  purchaser  shall  have  the  rights  equivalent  to  those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized  transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.

<PAGE>

      12. Other Awards

            a. Other  Stock-Based  Awards.  Other awards,  valued in whole or in
part by reference  to, or otherwise  based on,  shares of Stock,  may be granted
either alone or in addition to or in  conjunction  with any awards  described in
this Plan for such  consideration,  if any,  and in such amounts and having such
terms and conditions as the Board may determine.

            b. Other  Benefits.  The Board shall have the right to provide types
of  benefits  under the Plan in addition to those  specifically  listed,  if the
Board believe that such  benefits  would further the purposes for which the Plan
was established.

      13. Adjustments Upon Changes in Capitalization or Change in Control.

            a. Changes in Capitalization. If the shares of Common Stock shall be
subdivided  or combined  into a greater or smaller  number of shares,  or if the
Company  shall  issue  any  shares of Common  Stock as a stock  dividend  on its
outstanding  Common Stock, the number of shares of Option Stock deliverable upon
the  exercise  of an  Option  or Stock  Purchase  Right  shall be  appropriately
increased or decreased  proportionately,  and appropriate  adjustments  shall be
made in the purchase price per share to reflect such subdivision, combination or
stock dividend, all as determined by the Administrator in its discretion. Except
as expressly  provided herein,  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  thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option,  Stock  Purchase
Right, other Stock-based awards, or other benefits. Upon the happening of any of
the events described in this paragraph, the class and aggregate number of shares
set forth in Section 3 hereof  shall also be  appropriately  adjusted to reflect
such events.  The Administrator  shall determine the specific  adjustments to be
made under this paragraph.

            b.  Change  in  Control.  In  the  event  of  (1) a  dissolution  or
liquidation of the Company,  (2) a merger or  consolidation in which the Company
is not the surviving  corporation  (other than a merger or consolidation  with a
wholly-owned  subsidiary,  a  reincorporation  of  the  Company  in a  different
jurisdiction,  or other  transaction in which there is no substantial  change in
the stockholders of the Company or their relative stock holdings and the Options
granted  under this Plan are  assumed,  converted  or replaced by the  successor
corporation,  which  assumption  will be binding on Optionees),  (3) a merger in
which the Company is the surviving  corporation but after which the stockholders
of the Company immediately prior to such merger (other than any stockholder that
merges,  or which owns or controls  another  corporation  that merges,  with the
Company in such  merger)  cease to own their  shares or equity  interests in the
Company), (4) the sale of substantially all of the assets of the Company; or (5)
the acquisition, sale, or transfer of more than 50% of the outstanding shares of
the Company by tender offer or similar  transaction  (any of the foregoing shall
be referred to as a "Corporate  Transaction"),  any or all outstanding  Options,
Stock  Purchase  Rights,  other  Stock-based  awards,  or other  benefits may be
assumed,  converted or replaced by the  successor  corporation  (if any),  which

<PAGE>

assumption,  conversion or replacement will be binding on all Optionees.  In the
alternative,  the successor corporation may substitute equivalent Options, Stock
Purchase  Rights  other  Stock-based   awards,  or  other  benefits  or  provide
substantially similar consideration to Optionees as was provided to stockholders
(after taking into account the existing  provisions of the Options and the Stock
Purchase  Rights).  In the event such successor  corporation (if any) refuses to
assume or substitute such Options,  as provided  above,  pursuant to a Corporate
Transaction  described  in this  paragraph,  then any  Options,  Stock  Purchase
Rights,  other  Stock-based  awards,  or other  benefits which are not exercised
prior to the  consummation  of the  Corporate  Transaction  shall  terminate  in
accordance  with the  provisions  of this  Plan.  In the  event  of a  Corporate
Transaction, the Administrator is authorized, in its sole discretion, but is not
obligated,  to waive any vesting  schedule in some or all of the Options,  Stock
Purchase Rights,  other  Stock-based  awards,  or other benefits,  such that the
vesting of any such Options and Stock Purchase Rights be accelerated so that all
or part of the  previously  unvested  portion of such  Options,  Stock  Purchase
Rights, other Stock-based awards, or other benefits are exercisable prior to the
consummation of such Corporate  Transaction at such times and on such conditions
as the Administrator  determines.  In addition, the Administrator is authorized,
but not  obligated,  at the time  any  Options,  Stock  Purchase  Rights,  other
Stock-based  awards,  or other  benefits  is  granted  or  thereafter,  to grant
Optionees  the right to receive a cash payment equal to the  difference  between
the exercise price of the Options,  Stock  Purchase  Rights,  other  Stock-based
awards,  or other  benefits  and the price per share of the Common Stock paid in
connection with the Corporate  Transaction on such terms and conditions that the
Administrator may approve at the time.

      14. Time of Granting Options and Stock Purchase Rights.  The date of grant
of an Option,  Stock Purchase Right, other Stock-based awards, or other benefits
shall,  for all  purposes,  be the date on which  the  Administrator  makes  the
determination  granting such Option or Stock Purchase  Right, or such other date
as is  determined by the  Administrator.  Notice of the  determination  shall be
given to each Employee or Consultant to whom an Option,  Stock  Purchase  Right,
other  Stock-based  awards,  or other benefits is so granted within a reasonable
time after the date of such grant.

      15. Amendment and Termination of the Plan.

            a.  Amendment  and  Termination.  The Board  may at any time  amend,
      alter,  suspend or  discontinue  the Plan,  but no amendment,  alteration,
      suspension or discontinuation  shall be made which would impair the rights
      of any  Optionee  under any grant  theretofore  made,  without  his or her
      consent. In addition, to the extent necessary and desirable to comply with
      Rule 16b-3 under the  Exchange Act or with Section 422 of the Code (or any
      other applicable law or regulation, including the requirements of the NASD
      or an established  stock exchange),  the Company shall obtain  shareholder
      approval  of any Plan  amendment  in such a manner and to such a degree as
      required.

            b.  Effect  of  Amendment  or  Termination.  Any such  amendment  or
      termination of the Plan shall not affect Options,  Stock Purchase  Rights,
      other  Stock-based  awards,  or other  benefits  already  granted and such
      Options and Stock Purchase Rights shall remain in full force and effect as

<PAGE>

      if this Plan had not been amended or terminated,  unless  mutually  agreed
      otherwise between the Optionee and the Administrator, which agreement must
      be in writing and signed by the Optionee and the Company.

      16.  Conditions  Upon  Issuance  of  Shares.  Shares  shall  not be issued
pursuant to the exercise of an Option,  Stock Purchase Right,  other Stock-based
awards,  or other benefits  unless the exercise of such Option or Stock Purchase
Right and the issuance and delivery of such Shares pursuant thereto shall comply
with  all  relevant  provisions  of  law,  including,  without  limitation,  the
Securities Act of 1933, as amended,  the Exchange Act, the rules and regulations
promulgated  thereunder,  and the  requirements of any stock exchange upon which
the Shares may then be listed,  and shall be further  subject to the approval of
counsel for the Company with respect to such compliance.

            As a condition to the exercise of an Option,  Stock Purchase  Right,
other  Stock-based  awards, or other benefits the Company may require the person
exercising  such Option or Stock  Purchase Right 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 of the aforementioned relevant provisions of law.

            The Company shall be under no obligation to any person  receiving an
Award  under the Plan to  register  for  offering  or resale or to  qualify  for
exemption  under the  Securities  Act,  or to  register  or qualify  under state
securities laws, any shares of Common Stock,  security or interest in a security
paid or issued under, or created by, the Plan, or to continue in effect any such
registrations or qualifications if made. The Company may issue  certificates for
shares  with such  legends  and subject to such  restrictions  or  transfer  and
stop-transfer  instructions  as  counsel  for the  Company  deems  necessary  or
desirable for compliance by the Company with federal and state securities laws.

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

            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.

      18. Agreements.  The grant of any Option shall be evidenced by the Company
and the Optionee  entering into a written  agreement (an "Option  Agreement") in
such form as the Administrator  shall from time to time approve.  The grant of a
Stock Purchase Right shall be evidenced by written  agreement (a "Stock Purchase
Right Agreement") in such form as the  Administrator  shall approve from time to
time.  The  grant of any  other  Stock-based  award or  other  benefit  shall be
evidenced in such form as the Administrator shall approve from time to time.

<PAGE>

      19.  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 state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.

      20.  Information  to  Optionees  and  Purchasers.  The Company  shall make
available to each Optionee and to each  individual who acquired  Shares pursuant
to the Plan,  during the  period  such  Optionee  or  purchaser  has one or more
Options,  Stock Purchase Rights,  other  Stock-based  awards,  or other benefits
outstanding,  and, in the case of an individual who acquired  Shares pursuant to
the Plan,  during the period such individual owns such Shares,  copies of annual
financial  statements.  The  Company  shall  not be  required  to  provide  such
statements to key employees  whose duties in connection  with the Company assure
their access to equivalent information.

      21. Certain Tax Matters.

            a. The  Administrator  may require  the holder of any Option,  Stock
      Purchase Right,  Option Stock, other Stock-based awards, or other benefits
      to remit to the Company,  regardless  of when such  liability  arises,  an
      amount sufficient to satisfy any Federal,  state and local tax withholding
      requirements  associated with such Stock Right. The Administrator  may, in
      its  discretion,  permit the holder of a Stock  Right to satisfy  any such
      obligation by having withheld from the shares (or where applicable,  cash)
      to be  delivered  to the  holder  of upon  exercise  of an Option or Stock
      Purchase Right a number of shares (or, where  applicable,  amount of cash)
      sufficient to meet any such withholding requirement.

            b. If a  Participant  makes an election  under  Section 83(b) of the
      Code with respect to the  acquisition of any Option Stock,  or disposes of
      Option  Stock  acquired  pursuant to the  exercise of an  Incentive  Stock
      Option in a transaction  deemed to be a  disqualifying  disposition  under
      Section 421 of the Code,  then,  within  thirty (30) days of such  Section
      83(b) election or disqualifying disposition,  the Participant shall inform
      the Company of such actions.

      22. Miscellaneous

            a. Upon receipt of any shares of Common Stock under the Plan, if the
Company requires its shareholders to enter into a shareholders  agreement at the
time of their  acquisition of Common Stock,  then, as a condition to the receipt
of shares under the Plan, the  Administrator  may require the holder of an Award
to execute and deliver to the Company a shareholders  agreement in substantially
the form in use at the time of exercise or receipt of shares.  This  requirement
shall not apply if either:  (i) the holder of the Award has previously  executed
and delivered such shareholder agreement, it is in effect at the time the holder
of Award receives the shares,  and the  shareholders  agreement  would cover the
shares received under the Plan; or (ii) such shareholders agreement is no longer
in effect with respect to other holders of Common Stock.

<PAGE>

            b. The  Administrator  may, in its discretion,  subject any Award to
repurchase rights provisions.  The terms and conditions of any repurchase rights
will be established by the Administrator in its sole discretion and shall be set
forth in the agreement  representing  the Award. To ensure that shares of Common
Stock  subject to a repurchase  right under this Section 22(b) will be available
for repurchase,  the Administrator may require the holder of an Award to deposit
the certificate or certificates  evidencing such shares with an agent designated
by the  Administrator  under the terms and  conditions  of escrow  and  security
agreements approved by the Administrator.

            c. The  Administrator  may,  in its  discretion,  subject  any Award
consisting of Common Stock to right of first refusal  provisions.  The terms and
conditions of any right of first refusal  provisions  will be established by the
Administrator in its sole discretion and set forth in the agreement representing
the Award.