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                                                                   EXHIBIT 10.07



                          GENELABS TECHNOLOGIES, INC.

                             2001 STOCK OPTION PLAN
              ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 23, 2001

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

     The name of this plan is the 2001 Stock Option Plan (the "Plan"). The Plan
was adopted by the Board (defined below) on April 23, 2001, subject to the
approval of the shareholders of Genelabs Technologies, Inc. (the "Company"). The
purpose of the Plan is to enable the Company to attract, retain and provide
equity incentives to selected persons to promote the financial success of the
Company.

     For purposes of the Plan, the following terms shall be defined as set forth
below:

          (1) "Administrator" means the Board, or if and to the extent the Board
     does not administer the Plan, the Committee in accordance with Section 2
     below.

          (2) "Affiliate" means any corporation that directly, or indirectly
     through one or more intermediaries, controls or is controlled by, or is
     under common control with, another corporation, where "control" (including
     the terms "controlled by" and "under common control with") means the
     possession, direct or indirect, of the power to cause the direction of the
     management and policies of the corporation, whether through the ownership
     of voting securities, by contract or otherwise.

          (3) "Board" means the Board of Directors of the Company.

          (4) "Change in Control" means a change in the ownership or control of
     the Company, effected through any of the following events:

             (a) any "person," as such term is used in Sections 13(d) and 14(d)
        of the Exchange Act (other than the Company; any trustee or other
        fiduciary holding securities under an employee benefit plan of the
        Company; or any company owned, directly or indirectly, by the
        shareholders of the Company in substantially the same proportions as
        their ownership of Common Stock of the Company) is or becomes, after the
        Effective Date (as defined herein), the "beneficial owner" (as defined
        in Rule 13d-3 under the Exchange Act), directly or indirectly, of
        securities of the Company (not including in the securities beneficially
        owned by such person any securities acquired directly from the Company
        or its affiliates) representing twenty-five percent (25%) or more of the
        combined voting power of the Company's then outstanding securities;

             (b) during any period of two consecutive years (not including any
        period prior to the Effective Date), individuals who at the beginning of
        such period constitute the Board, and any new director (other than a
        director designated by a person who has entered into an agreement with
        the Company to effect a transaction described in clause (a), (c) or (d)
        of this definition) whose election by the Board or nomination for
        election by the Company's shareholders was approved by a vote of at
        least two thirds ( 2/3) of the directors then still in office who either
        were directors at the beginning of the period or whose election or
        nomination for election was previously so approved, cease for any reason
        to constitute at least a majority thereof;

             (c) the shareholders of the Company approve a merger or
        consolidation of the Company with any other corporation, other than (A)
        a merger or consolidation which would result in the voting securities of
        the Company outstanding immediately prior thereto continuing to
        represent (either by remaining outstanding or by being converted into
        voting securities of the surviving entity), in combination with the
        ownership of any trustee or other fiduciary holding securities under an
        employee benefit plan of the Company, at least sixty percent (60%) of
        the combined voting power of the voting securities of the Company or
        such surviving entity outstanding immediately after such merger or
        consolidation or (B) a merger or consolidation effected to implement a
        recapitalization of
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        the Company (or similar transaction) in which no person acquires more
        than fifty percent (50%) of the combined voting power of the Company's
        then outstanding securities; or

             (d) the shareholders of the Company approve a plan of complete
        liquidation of the Company or an agreement for the sale or disposition
        by the Company of all or substantially all of the Company's assets.

          (5) "Code" means the Internal Revenue Code of 1986, as amended from
     time to time, or any successor thereto.

          (6) "Committee" means the Human Resources Committee of the Board plus
     such additional individuals as the Board shall designate in order to meet
     the qualifications referred to in Section 162(m) of the Code and Rule 16b-3
     as promulgated by the Securities and Exchange Commission under the Exchange
     Act or any other committee the Board may subsequently appoint to administer
     the Plan. Unless otherwise determined by the Board, the Committee shall be
     composed entirely of members who meet the qualifications referred to in
     Rule 16b-3 under the Exchange Act ("Rule 16b-3") and Section 162(m) of the
     Code. If at any time the Board shall not administer the Plan, then the
     functions of the Board specified in the Plan shall be exercised by the
     Committee.

          (7) "Common Stock" means the common stock, no par value per share, of
     the Company.

          (8) "Company" means Genelabs Technologies, Inc., a corporation
     organized under the laws of the State of California (or any successor
     corporation).

          (9) "Disability" has the meaning as set forth in Section 22(e)(3) of
     the Code.

          (10) "Disinterested Person" shall have the meaning set forth in Rule
     16b-3, and as such Rule may be amended from time to time, or any successor
     definition adopted by the SEC.

          (11) "Effective Date" shall mean the date provided pursuant to Section
     11.

          (12) "Eligible Recipient" means an employee, officer, director,
     consultant, independent contractor or advisor (provided such consultant,
     independent contractor or advisor renders bona fide services not in
     connection with the offer or sale of securities in a capital-raising
     transaction) of the Company or any Parent, Subsidiary or Affiliate of the
     Company eligible to participate in the Plan pursuant to Section 4.

          (13) "Exchange Act" means the Securities Exchange Act of 1934, as
     amended from time to time, or any successor thereto.

          (14) "Fair Market Value" means, as of any given date, the fair market
     value of a Share as determined by the Committee from time to time in good
     faith; provided that (i) if the Shares are admitted to trading on a
     national securities exchange, the fair market value of a Share on any date
     shall be the closing price per Share reported on the last date preceding
     such date on which a sale was reported, (ii) if the Shares are admitted to
     quotation on the National Association of Securities Dealers Automated
     Quotation ("Nasdaq") System or other comparable quotation system and has
     been designated as a National Market System ("NMS") security, the fair
     market value of a Share on any date shall be the closing price per Share
     reported on the last trading day preceding such date as quoted on the
     Nasdaq and as reported in the Wall Street Journal.

          (15) "Incentive Stock Option" means any Stock Option intended to be
     designated as an "incentive stock option" within the meaning of Section 422
     of the Code.

          (16) "Non-Qualified Stock Option" means any Stock Option that is not
     an Incentive Stock Option, including any Stock Option that provides (as of
     the time such Stock Option is granted) that it will not be treated as an
     Incentive Stock Option.

          (17) "Optionee" means any Eligible Recipient selected by the
     Administrator, pursuant to the Administrator's authority in Section 2
     below, to receive grants of Stock Options.
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          (18) "Parent" means any corporation (other than the Company) in an
     unbroken chain of corporations ending with the Company, if each of the
     corporations in the chain (other than the Company) owns stock possessing
     50% or more of the combined voting power of all classes of stock in one of
     the other corporations in the chain.

          (19) "SEC" means the Securities and Exchange Commission.

          (20) "Securities Act" means the Securities Act of 1933, as amended,
     from time to time, or any successor thereto.

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

          (22) "Stock Option" means an option to purchase Shares granted
     pursuant to Sections 5 and 6 below.

          (23) "Subsidiary" means any corporation (other than the Company) in an
     unbroken chain of corporations beginning with the Company, if each of the
     corporations (other than the last corporation in the unbroken chain) owns
     stock possessing 50% or more of the total combined voting power of all
     classes of stock in one of the other corporations in the chain.

          (24) "Ten Percent Shareholder" means a person who owns or is deemed to
     own (by reason of the attribution rules applicable under Section 424(d) of
     the Code) more than 10% of the combined voting power of all classes of
     stock of the Company or of any Parent or Subsidiary.

SECTION 2. ADMINISTRATION.

     The Plan shall be administered in accordance with the requirements of
Section 162(m) of the Code (but only to the extent necessary and desirable to
maintain qualification of awards under the Plan under Section 162(m) of the
Code) and, to the extent applicable, Rule 16b-3, by the Board or, at the Board's
sole discretion, by the Committee, which shall be appointed by the Board, and
which shall serve at the pleasure of the Board.

     Pursuant to the terms of the Plan, the Administrator shall have the power
and authority to grant Stock Options to Eligible Recipients pursuant to the
terms of the Plan. The Administrator may delegate to officers of the Company the
authority to grant Stock Options under this Plan to Eligible Recipients who are
not officers or directors of the Company whose transactions in the Company's
Common Stock are subject to Section 16(b) of the Exchange Act.

     Additionally, subject to the terms and provisions of the Plan, the
Administrator's powers shall include, without limitation, the authority to:

          (1) select those Eligible Recipients who shall be Optionees;

          (2) determine whether and to what extent Stock Options are to be
     granted hereunder to Optionees including whether a Stock Option is to be an
     Incentive Stock Option or a Non-Qualified Stock Option;

          (3) determine the number of Shares to be covered by each such Stock
     Option granted hereunder, the exercise price of a Stock Option and the
     period during which the Stock Option may be exercised;

          (4) determine other terms and conditions, not inconsistent with the
     terms of the Plan, of each Stock Option granted hereunder;

          (5) determine whether an Optionee has ceased to be employed or
     retained by the Company or any Parent, Subsidiary or Affiliate of the
     Company and the effective date on which such employment terminated and
     whether an Optionee who is a director, consultant, independent contractor
     or advisor is employed or retained by the Company or any Parent, Subsidiary
     or Affiliate of the Company;

          (6) adopt, alter and repeal such administrative rules, guidelines and
     practices governing the Plan as it shall from time to time deem advisable;
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          (7) interpret the terms and provisions of the Plan and any award
     issued under the Plan (and any agreements relating thereto); and

          (8) otherwise supervise the administration of the Plan.

     All decisions and interpretations made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on the Company and
all persons having an interest in any Stock Option or any Shares purchased
pursuant to a Stock Option.

SECTION 3. STOCK SUBJECT TO PLAN.

     The total number of Shares reserved and available for issuance under the
Plan shall be 2,500,000. Such Shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares. No one Optionee shall be
eligible to receive more than 500,000 Shares during any single calendar year
during the term of this Plan pursuant to the grant of Stock Options hereunder.
Upon shareholder approval of the Plan, (1) the Company's 1995 Stock Option Plan
(the "1995 Plan") shall be merged and incorporated into the Plan, effective
immediately prior to the 2001 annual meeting of the shareholders of the Company,
(2) all outstanding options under the 1995 Plan shall be treated as outstanding
under the Plan; provided however, that each outstanding option so incorporated
shall be governed solely by the express terms and conditions of the 1995 Plan
and all other instruments evidencing the grant of such options, and (3) all
available shares for grant under the 1995 Plan as of such date shall be
available for grant hereunder, and any and all shares that would otherwise be
returned to the 1995 Plan by reason of expiration of its term or cancellation
upon termination of employment or service shall be available again for grant
hereunder as of such date of cancellation or termination. Effective immediately
prior to the 2001 annual meeting of the shareholders of the Company, and subject
to shareholder approval of the Plan at such meeting, the 1995 Plan shall
terminate and no further option grants shall be made therefrom.

     Consistent with the provisions of Section 162(m) of the Code, as from time
to time applicable, to the extent that a Stock Option expires or is otherwise
terminated without being exercised, such Shares shall again be available for
issuance in connection with future awards granted under the Plan. If any Shares
have been pledged as collateral for indebtedness incurred by an Optionee in
connection with the exercise of a Stock Option and such Shares are returned to
the Company in satisfaction of such indebtedness, such Shares shall again be
available for issuance in connection with future awards granted under the Plan.

     In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, combination or other change in
the capital structure of the Company, as may be determined by the Administrator,
in its sole discretion and subject to any required action by the Board or
shareholders of the Company and compliance with applicable securities laws, a
substitution or adjustment shall be made in (i) the aggregate number of Shares
reserved for issuance under the Plan and (ii) the kind, number and option price
of Shares subject to outstanding Stock Options granted under the Plan; provided,
however, that the number of shares subject to any award shall always be a whole
number; and provided further, that the exercise price may not be decreased to
below the par value, if any, for the Shares. Such other substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. In connection with any event described in this paragraph, the
Administrator may provide, in its sole discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.

SECTION 4. ELIGIBILITY.

     Non-Qualified Stock Options may be granted to employees, directors,
consultants, officers, independent contractors and advisors (provided such
consultants, independent contractors and advisors render bona fide services not
in connection with the offer or sale of securities in a capital-raising
transaction) of the Company or any Parent, Subsidiary or Affiliate of the
Company. Incentive Stock Options may be granted only to employees (including
officers and directors who are also employees) of the Company or a Parent or
Subsidiary of the Company.
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SECTION 5. STOCK OPTIONS.

     The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. The Administrator shall have
the authority to grant to any Eligible Recipient Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options. To the extent that
any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option. More than one Stock Option may
be granted to the same Optionee and be outstanding concurrently hereunder.

     Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve, and the provisions of Stock Option
awards need not be the same with respect to each Optionee. Stock Options granted
under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable:

          (1) Form of Stock Option Grant. Optionees who are granted Stock
     Options shall enter into a stock option agreement with the Company, in such
     form (which need not be the same for each Optionee) as the Administrator
     shall from time to time approve, which stock option agreement shall comply
     with and be subject to the terms and conditions of this Plan.

          (2) Date of Grant. The date of grant of a Stock Option shall be the
     date on which the Administrator makes the determination to grant such Stock
     Option unless otherwise specified by the Administrator. The stock option
     agreement representing the Stock Option will be delivered to the Optionee
     with a copy of this Plan within a reasonable time after the granting of the
     Stock Option.

          (3) Exercise Price. The option price per Share purchasable under a
     Stock Option shall be determined by the Administrator, in its sole
     discretion, on the date the Stock Option is granted; provided that (i) the
     exercise price of a Non-Qualified Stock Option shall not be less than 85%
     of the Fair Market Value of the Shares on the date the Stock Option is
     granted; (ii) the exercise price of an Incentive Stock Option shall be not
     less than 100% of the Fair Market Value of the Shares on the date the Stock
     Option is granted; and (iii) if an Incentive Stock Option is granted to a
     Ten Percent Shareholder, the exercise price of such Incentive Stock Option,
     to the extent required at the time of grant by the Code, shall be no less
     than 110% of the Fair Market Value of the Common Stock on the date such
     Incentive Stock Option is granted.

          (4) Exercise Period. Subject to this Section 5 and Section 10 herein,
     Stock Options shall be exercisable within the times or upon the events
     determined by the Administrator as set forth in the respective stock option
     agreement; provided, however, that no Stock Option shall be exercisable
     after the expiration of ten (10) years from the date the Stock Option is
     granted and provided, further, that no Incentive Stock Option granted to a
     Ten Percent Shareholder shall be exercisable after the expiration of five
     (5) years from the date the Stock Option is granted.

          (5) Limitations on Incentive Stock Options. The aggregate Fair Market
     Value (determined as of the time the Incentive Stock Option is granted) of
     Shares with respect to which Incentive Stock Options are exercisable for
     the first time by an Optionee during any calendar year (under this Plan or
     under any other incentive stock option plan of the Company or of any Parent
     or Subsidiary) shall not exceed $100,000. If the Fair Market Value of
     Shares with respect to which Incentive Stock Options are exercisable for
     the first time by an Optionee during any calendar year exceeds $100,000,
     the Stock Options for the first $100,000 worth of Shares to become
     exercisable in such year shall be Incentive Stock Options and the Stock
     Options for the amount in excess of $100,000 that become exercisable in
     that year shall be Non-Qualified Stock Options. In the event that the Code
     or the regulations promulgated thereunder are amended after the effective
     date of this Plan to provide for a different limit on the Fair Market Value
     of Shares permitted to be subject to Incentive Stock Options, such
     different limit shall be incorporated herein and shall apply to any Stock
     Options granted after the effective date of such amendment.
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          (6) Stock Options Non-Transferable. Stock Options granted under this
     Plan, and any interest therein, shall not be transferable or assignable by
     an Optionee, and may not be made subject to execution, attachment or
     similar process, otherwise than by will or by the laws of descent and
     distribution, and shall be exercisable during the lifetime of the Optionee
     only by such Optionee; provided, however, that Non-Qualified Stock Options
     may be transferred to such family members, trusts and charitable
     institutions as the Administrator, in its sole discretion, shall approve at
     the time of the grant of such Stock Option.

          (7) Assumed Stock Options. In the event the Company assumes a stock
     option granted by another company unless otherwise determined by the
     Administrator, the terms and conditions of such option shall remain
     unchanged (except the exercise price and the number and nature of shares
     issuable upon exercise, which will be adjusted appropriately pursuant to
     Section 424(a) of the Code). In the event the Company elects to grant a new
     stock option rather than assuming an existing option, such new option may
     be granted with a similarly adjusted exercise price.

          (8) Exercise of Stock Options.

             (a) Notice. Stock Options may be exercised only by delivery
        (including electronic delivery or other delivery method approved by the
        Administrator) to the Company of a written stock option exercise
        agreement in a form approved by the Administrator (which need not be the
        same for each Optionee), stating the number of Shares being purchased,
        the restrictions imposed on the Shares, if any, and such representations
        and agreements regarding the Optionee's investment intent and access to
        information, if any, as may be required by the Company to comply with
        applicable securities laws, together with payment in full of the
        exercise price for the number of Shares being purchased.

             (b) Payment. Payment for the Shares may be made in cash (by check)
        or, where approved by the Administrator in its sole discretion at the
        time of grant and where permitted by law: (i) by cancellation of
        indebtedness of the Company to the Optionee; (ii) by surrender of Shares
        having a Fair Market Value equal to the applicable exercise price of the
        Stock Options that have been owned by the Optionee for more than six (6)
        months (and which have been paid for within the meaning of SEC Rule 144
        and, if such Shares were purchased from the Company by use of a
        promissory note, such note has been fully paid with respect to such
        shares), or were obtained by the Optionee in the open public market;
        (iii) by tender of a full recourse promissory note having such terms as
        may be approved by the Administrator and bearing interest at the market
        rate on the date such promissory note is executed; provided, however,
        that such rate is sufficient to avoid imputation of income under
        Sections 483 and 1274 of the Code; (iv) by waiver of compensation due or
        accrued to the Optionee for services rendered; (v) provided that a
        public market for the Company's stock exists, through a "same day sale"
        commitment from the Optionee and a broker-dealer that is a member of the
        National Association of Securities Dealers (an "NASD Dealer") whereby
        the Optionee irrevocably elects to exercise the Stock Option and to sell
        a portion of the Shares so purchased to pay for the exercise price and
        whereby the NASD Dealer irrevocably commits upon receipt of such Shares
        to forward the exercise price directly to the Company; (vi) provided
        that a public market for the Company's stock exists, through a "margin"
        commitment from the Optionee and an NASD Dealer whereby the Optionee
        irrevocably elects to exercise the Stock Option and to pledge the Shares
        so purchased to the NASD Dealer in a margin account as security for a
        loan from the NASD Dealer in the amount of the exercise price, and
        whereby the NASD Dealer irrevocably commits upon receipt of such Shares
        to forward the exercise price directly to the Company; (vii) by any
        combination of the foregoing; or (viii) by any other method approved by
        the Administrator. Optionees who are not employees of the Company shall
        not be entitled to purchase Shares with a promissory note unless the
        note is adequately secured by collateral other than the Shares.

             (c) Loans. The Company may make loans available to Optionees in
        connection with the exercise of outstanding Stock Options, as the
        Administrator, in its sole discretion, may determine. Such loans shall
        (i) be evidenced by a full recourse promissory note entered into by the
        Optionee in favor of the Company, (ii) be subject to the terms and
        conditions set forth in this Section 5 and such other terms and
        conditions, not inconsistent with the Plan, as the Administrator shall
        determine,
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        (iii) bear interest at such rate as the Administrator shall determine
        but in no event less than the market rate on the date such promissory
        note is executed; provided, however, that such rate is sufficient to
        avoid imputation of income under Sections 483 and 1274 of the Code and
        (iv) be subject to Board approval (or to approval by the Administrator
        to the extent the Board may delegate such authority). In no event may
        the principal amount of any such loan exceed the sum of (x) the exercise
        price less the par value of the Shares covered by the Stock Option, or
        portion thereof, exercised by the Optionee, and (y) any Federal, state,
        and local income tax attributable to such exercise. The initial term of
        the loan, the schedule of payments of principal and interest under the
        loan and the conditions upon which the loan will become payable in the
        event of the holder's termination of employment or service to the
        Company or to any Subsidiary shall be determined by the Administrator,
        provided, however, that the term of the loan, including extensions,
        shall not exceed seven years. Unless the Administrator determines
        otherwise, when a loan is made, Shares having a Fair Market Value at
        least equal to the principal amount of the loan shall be pledged by the
        Optionee to the Company as security for payment of the unpaid balance of
        the loan, and such pledge shall be evidenced by a pledge agreement, the
        terms of which shall be determined by the Administrator, in its sole
        discretion; provided, however, that each loan shall comply with all
        applicable laws, regulations and rules of the Board of Governors of the
        Federal Reserve System and any other governmental agency having
        jurisdiction.

             (d) Withholding Taxes. Prior to issuance of the Shares upon
        exercise of a Stock Option, the Optionee shall pay to the Company, or
        make arrangements satisfactory to the Administrator regarding payment
        of, any Federal, state, or local taxes of any kind required by law to be
        withheld with respect to such Stock Option. The obligations of the
        Company under the Plan shall be conditional on the making of such
        payments or arrangements, and the Company shall, to the extent permitted
        by law, have the right to deduct any such taxes from any payment of any
        kind otherwise due to the Optionee.

             (e) Limitations on Exercise. The exercisability of a Stock Option
        shall be subject to the following:

                (i) The Administrator may specify a reasonable minimum number of
           Shares that may be purchased on any exercise of a Stock Option,
           provided that such minimum number will not prevent an Optionee from
           exercising the full number of Shares as to which the Stock Option is
           then exercisable.

                (ii) A Stock Option shall not be exercisable unless such
           exercise is in compliance with the Securities Act, all applicable
           state securities laws and the requirements of any stock exchange or
           national market system upon which the Shares may then be listed, as
           they are in effect on the date of exercise. The Company shall be
           under no obligation to register the Shares with the SEC or to effect
           compliance with the registration, qualification or listing
           requirements of any state securities laws, stock exchange or national
           market system, and the Company shall have no liability for any
           inability or failure to do so.

          (9) Termination of Employment or Service Other Than Due to Death or
     Disability. Unless otherwise provided in the applicable stock option
     agreement, if an Optionee ceases to be employed or retained by the Company
     or any Parent, Subsidiary or Affiliate of the Company for any reason except
     death or Disability, the Optionee may exercise such Optionee's Incentive
     Stock Options or Non-Qualified Stock Options, to the extent that they are
     exercisable on the date of termination, within three (3) months after the
     date of termination or such other time period as may be specified in the
     applicable stock option agreement (but in no event later than the
     expiration date of the term of such Stock Option as set forth in Section
     5(4) above). To the extent an Optionee was not entitled to exercise a Stock
     Option at the date of termination, or if an Optionee does not exercise such
     Stock Option to the extent so entitled within the time specified herein,
     the Stock Option shall terminate unless as otherwise provided in the
     applicable stock option agreement.
<PAGE>

          (10) Termination of Employment or Service Due to Death or
     Disability. Unless otherwise provided in the applicable stock option
     agreement, if an Optionee's employment or retention with the Company or any
     Parent, Subsidiary or Affiliate of the Company is terminated because of the
     Optionee's death or Disability, the Optionee may exercise such Optionee's
     Incentive Stock Options or Non-Qualified Stock Options, to the extent that
     they are exercisable on the date of termination, by the Optionee (or the
     Optionee's legal representative) within twelve (12) months after the date
     of termination or such other time period as may be specified in the
     applicable stock option agreement (but in no event later than the
     expiration date of the term of such Stock Option as set forth in Section
     5(4) above). To the extent an Optionee was not entitled to exercise a Stock
     Option at the date of termination, or if an Optionee does not exercise such
     Stock Option to the extent so entitled within the time specified herein,
     the Stock Option shall terminate unless as otherwise provided in the
     applicable stock option agreement.

SECTION 6. OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS.

     (1) Eligibility Generally. Non-employee directors of the Company or any
Parent, Subsidiary or Affiliate of the Company shall be granted automatic Stock
Options pursuant and subject to Sections 6(2) and (3) below. In addition to the
foregoing, Stock Options may be granted to such non-employee directors of the
Company or any Parent, Subsidiary or Affiliate of the Company as the
Administrator shall select from time to time in its sole discretion, and subject
to such terms and conditions as the Administrator shall determine, in its sole
discretion. Directors may be granted more than one Stock Option under the Plan.

     (2) Eligibility for Automatic Stock Options. Each non-employee director,
upon his or her first election or appointment to the Board, will be granted a
Stock Option to purchase 30,000 Shares. At the Company's Annual Meeting of
Shareholders following the second anniversary of his or her election or
appointment to the Board, and at each subsequent Annual Meeting of Shareholders,
each such director will be granted an additional Stock Option to purchase 15,000
Shares.

     (3) Terms and Conditions of Automatic Stock Options. The terms and
conditions of the automatic Stock Option grants to non-employee directors of the
Company or any Parent, Subsidiary or Affiliate of the Company pursuant to
Section 6(2) and this Section 6(3) are as follows:

          (a) Date of Grant. The dates of grant of the automatic Stock Options
     shall be the dates described in Section 6(2) above. The stock option
     agreement representing the Stock Option will be delivered to the Optionee
     within a reasonable time after the granting of the Stock Option.

          (b) Exercise Price. The exercise price of the automatic Stock Option
     shall be the Fair Market Value of the Shares at the time that the Stock
     Option is granted.

          (c) Vesting and Exercise Period. The automatic Stock Options shall be
     fully vested and exercisable in their entirety immediately upon grant for
     the term set forth in the applicable stock option agreement; provided,
     however, that no Stock Option shall be exercisable after the expiration of
     ten (10) years from the date the Stock Option is granted.

          (d) Limitation on Exercise. If the Optionee ceases to be a director
     for any reason except death, the Optionee may exercise his or her Stock
     Options, to the extent (and only to the extent) that they are exercisable
     on the date of termination until the expiration dates of the Stock Options,
     which shall be ten (10) years from the dates the Stock Options are granted.
     If the Optionee ceases to be a director because of death, the Optionee's
     legal representative may exercise his or her Stock Options to the extent
     (and only to the extent) that they are exercisable on the date of
     termination, within twelve (12) months after the date of termination, but
     not after the expiration of ten (10) years from the date the Stock Options
     are granted. To the extent an Optionee or an Optionee's legal
     representative was not entitled to exercise a Stock Option at the date of
     termination, or if an Optionee or an Optionee's legal representative does
     not exercise such Stock Option to the extent so entitled within the time
     specified herein, the Stock Option shall terminate unless as otherwise
     provided in the applicable stock option agreement.
<PAGE>

SECTION 7. MODIFICATION, EXTENSION AND RENEWAL OF STOCK OPTIONS.

     The Administrator shall have the power to modify, extend or renew
outstanding Stock Options and to authorize the grant of new Stock Options in
substitution therefor, provided that any such action may not, without the
written consent of an Optionee, impair any rights under any Stock Option
previously granted except as provided in Section 3 hereof. Any outstanding
Incentive Stock Option that is modified, extended, renewed or otherwise altered
shall be treated in accordance with Section 424(h) of the Code. The
Administrator shall not have the power to reduce the exercise price of
outstanding Stock Options.

SECTION 8. PRIVILEGES OF STOCK OWNERSHIP.

     No Optionee shall have any of the rights of a shareholder with respect to
any Shares subject to a Stock Option until such Stock Option is properly
exercised. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to such date, except as provided in
this Plan. Upon written request, the Company shall provide to each Optionee a
copy of the annual financial statements of the Company at such time after the
close of each fiscal year of the Company as such statements are released by the
Company to its common shareholders generally.

SECTION 9. NO OBLIGATION TO EMPLOY.

     Nothing in this Plan nor any Stock Option granted under this Plan shall
confer on any Optionee any right to continue in the employ of, as a director of,
or other relationship with, the Company or any Parent, Subsidiary or Affiliate
of the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Optionee's employment or
other relationship at any time, with or without cause.

SECTION 10. CHANGE IN CONTROL; ASSUMPTION OF STOCK OPTIONS BY SUCCESSORS.

     In the event of a Change in Control, any or all outstanding Stock Options
shall, unless otherwise provided in an applicable stock option agreement or
other agreement, accelerate and become exercisable in full upon the occurrence
of the Change in Control and shall expire immediately following the occurrence
of the Change in Control. To the extent required by applicable law, the
aggregate Fair Market Value of Incentive Stock Options which first become
exercisable in the year of such Change in Control cannot exceed $100,000, and
any remaining accelerated options shall be treated as Non-Qualified Stock
Options.

SECTION 11. ADOPTION AND SHAREHOLDER APPROVAL.

     This Plan shall become effective on April 23, 2001, the date the Plan was
adopted by the Board (the "Effective Date"). This Plan shall be approved by the
shareholders of the Company, in any manner permitted by applicable corporate
law, within twelve months before or after the date this Plan was adopted by the
Board. Upon the Effective Date, the Board may grant Stock Options pursuant to
this Plan; provided that, in the event that shareholder approval is not obtained
within the time period provided herein, all Stock Options granted hereunder
shall terminate. No Stock Option that is issued as a result of any increase in
the number of shares authorized to be issued under this Plan shall be exercised
prior to the time such increase has been approved by the shareholders of the
Company and all such Stock Options granted pursuant to such increase shall
similarly terminate if such shareholder approval is not obtained.

SECTION 12. TERM OF PLAN.

     Stock Options may be granted pursuant to this Plan from time to time within
a period of ten (10) years from the Effective Date.

SECTION 13. AMENDMENT OR TERMINATION OF PLAN.

     Subject to Section 7 above, the Administrator may at any time terminate or
amend this Plan in any respect, including but not limited to, amendment of any
form of grant, exercise agreement or instrument to be
<PAGE>

executed pursuant to this Plan; provided, however, that the Administrator shall
not, without the approval of the shareholders of the Company, amend this Plan in
any manner that requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder or pursuant to the Exchange Act or Rule 16b-3
(or its successor) promulgated thereunder, to the extent the Administrator
intends the Plan to comply with such foregoing requirement or law.

SECTION 14. UNFUNDED STATUS OF PLAN.

     The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to an Optionee by the
Company, nothing contained herein shall give any Optionee or persons any rights
that are greater than those of a general creditor of the Company.