<PAGE>

                                                                    EXHIBIT 10.1

                               BLUE29 CORPORATION

                            2003 STOCK INCENTIVE PLAN

      1. Purposes of the Plan. The purposes of this Plan are to attract and
retain the best available personnel, to provide additional incentives 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) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

            (c) "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.

            (d) "Assumed" means that (i) pursuant to a Corporate Transaction
defined in Section 2(q)(i), 2(q)(ii) or 2(q)(iii), the contractual obligations
represented by the Award are expressly assumed (and not simply by operation of
law) by the successor entity or its Parent in connection with the Corporate
Transaction with appropriate adjustments to the number and type of securities of
the successor entity or its Parent subject to the Award and the exercise or
purchase price thereof which preserves the compensation element of the Award
existing at the time of the Corporate Transaction as determined in accordance
with the instruments evidencing the agreement to assume the Award or (ii)
pursuant to a Corporate Transaction defined in Section 2(q)(iv) or 2(q)(v), the
Award is expressly affirmed by the Company.

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

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

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

            (h) "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) performance of any
act or failure to perform any act in bad faith and to the detriment of the
Company or a Related Entity;

                                       1
<PAGE>

(ii) material breach of any agreement with the Company or a Related Entity; or
(iii) commission of a crime involving dishonesty, breach of trust, or physical
or emotional harm to any person.

            (i) "Change in Control" means a change in ownership or control of
the Company after the Registration Date effected through either of the following
transactions:

                  (i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) 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 pursuant to
a tender or exchange offer made directly to the Company's shareholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such shareholders accept, or

                  (ii) a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who are
Continuing Directors.

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

            (k) "Committee" means any committee composed of Directors of the
Board appointed by the Board to administer the Plan.

            (l) "Common Stock" means the voting common stock of the Company.

            (m) "Company" means Blue29 Corporation, a California corporation.

            (n) "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.

            (o) "Continuing Directors" means members of the Board who either (i)
have been Board members continuously for a period of at least thirty-six (36)
months, or (ii) have been Board members for less than thirty-six (36) months and
were elected or nominated for election as Board members by at least a majority
of the Board members described in clause (i) who were still in office at the
time such election or nomination was approved by the Board.

            (p) "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. In jurisdictions requiring notice in advance
of an effective termination as an Employee, Director or Consultant, Continuous
Service shall be deemed terminated upon the actual cessation of providing
services to the Company or a Related Entity notwithstanding any required notice
period that must be fulfilled before a termination as an Employee, Director or
Consultant can be effective under Applicable Laws. Continuous Service shall not
be considered

                                       2
<PAGE>

interrupted in the case of (i) any approved leave of absence, (ii) transfers
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 each
Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90)
days, and reemployment upon expiration of such leave is not guaranteed by
statute or contract, then the Incentive Stock Option shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day following
the expiration of such ninety (90) day period.

            (q) "Corporate Transaction" means any of the following transactions:

                  (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;

                  (iii) the complete liquidation or dissolution of the Company;

                  (iv) any reverse merger or series of related transactions
culminating in a reverse merger (including, but not limited to, a tender offer
followed by a 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 the initial transaction culminating in such merger but
excluding any such transaction or series of related transactions that the
Administrator determines shall not be a Corporate Transaction; or

                  (v) acquisition in a single or series of related transactions
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 or series of related
transactions that the Administrator determines shall not be a Corporate
Transaction.

            (r) "Covered Employee" means an Employee who is a "covered employee"
under Section 162(m)(3) of the Code.

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

            (t) "Disability" means as defined under the long-term disability
policy of the Company or the Related Entity to which the Grantee provides
services regardless of whether the Grantee is covered by such policy. If the
Company or the Related Entity to which the Grantee

                                       3
<PAGE>

provides service does not have a long-term disability plan in place,
"Disability" means that a Grantee is 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 for a period of not less than ninety
(90) consecutive days. 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.

            (u) "Employee" means any person, including an Officer or Director,
who is in the employ of the Company or any Related Entity, subject to the
control and direction of the Company or any Related Entity as to both the work
to be performed and the manner and method of performance. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

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

            (w) "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 Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination (or, if no closing sales price or closing bid was
reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

                  (ii) If the Common Stock is regularly quoted on an automated
quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, but selling prices are not reported, the Fair Market Value of
a share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination (or, if no such prices
were reported on that date, on the last date such prices were reported), as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or

                  (iii) In the absence of an established market for the Common
Stock of the type described in (i) and (ii), 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 which requires that consideration be given to (A) the price at which
securities of reasonably comparable corporations (if any) in the same industry
are being traded, or (B) if there are no securities of reasonably comparable
corporations in the same industry being traded, the earnings history, book value
and prospects of the issuer in light of market conditions generally.

            (x) "Good Reason" means the occurrence after a Corporate Transaction
or Change in Control of any of the following events or conditions unless
consented to by the Grantee (and the Grantee shall be deemed to have consented
to any such event or condition

                                       4
<PAGE>

unless the Grantee provides written notice of the Grantee's non-acquiescence
within 30 days of the effective time of such event or condition):

                  (i) a change in the Grantee's responsibilities or duties which
represents a material and substantial diminution in the Grantee's
responsibilities or duties as in effect immediately preceding the consummation
of a Corporate Transaction or Change in Control;

                  (ii) a reduction in the Grantee's base salary to a level below
that in effect at any time within six (6) months preceding the consummation of a
Corporate Transaction or Change in Control or at any time thereafter; or

                  (iii) requiring the Grantee to be based at any place outside a
50-mile radius from the Grantee's job location or residence prior to the
Corporate Transaction or Change in Control except for reasonably required travel
on business which is not materially greater than such travel requirements prior
to the Corporate Transaction or Change in Control.

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

            (z) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial
interest, a foundation in which these persons (or the Grantee) control the
management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent (50%) of the voting interests.

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

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

            (cc) "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.

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

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

            (ff) "Performance-Based Compensation" means compensation qualifying
as "performance-based compensation" under Section 162(m) of the Code.

                                       5
<PAGE>

            (gg) "Plan" means this 2003 Stock Incentive Plan.

            (hh) "Post-Termination Exercise Period" means the period specified
in the Award Agreement of not less than ninety (90) 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.

            (ii) "Registration Date" means the first to occur of (i) the closing
of the first sale 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, 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; 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.

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

            (kk) "Replaced" means that (i) pursuant to a Corporate Transaction
defined in Section 2(q)(i), 2(q)(ii) or 2(q)(iii), the Award is replaced with a
comparable stock award or a cash incentive program of the successor entity 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 (or a more favorable) vesting schedule applicable to
such Award or (ii) pursuant to a Corporate Transaction defined in Section
2(q)(iv) or 2(q)(v), the Award is replaced with a comparable stock award or a
cash incentive program of the Company 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 (or a
more favorable) vesting schedule applicable to such Award. The determination of
Award comparability shall be made by the Administrator and its determination
shall be final, binding and conclusive.

            (ll) "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.

            (mm) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.

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

                                       6
<PAGE>

            (oo) "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 10 below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 6,100,000 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, canceled or expires (whether voluntarily or involuntarily) 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. 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, such Shares
shall become available for future grant under the Plan.

      4. Administration of the Plan.

            (a) Plan Administrator.

                  (i) Administration with Respect to Directors and Officers.
Prior to the Registration Date, with respect to grants of Awards to Directors or
Employees who are also Officers or Directors of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable
Laws. On or after the Registration Date, with respect to grants of Awards to
Directors or Employees who are also Officers or Directors of the Company, the
Plan shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
Applicable Laws and to permit such grants and related transactions under the
Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule
16b-3. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board.

                  (ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Awards 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 designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.

                  (iii) Administration With Respect to Covered Employees.
Notwithstanding the foregoing, as of and after the date that the exemption for
the Plan under Section 162(m) of the Code expires, as set forth in Section 20
below, grants of Awards to any Covered Employee intended to qualify as
Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,
references to the

                                       7
<PAGE>

"Administrator" or to a "Committee" shall be deemed to be references to such
Committee or subcommittee.

                  (iv) Officer Authorization to Grant Awards. The Board may
authorize one or more Officers to grant Awards subject to such limitations as
the Board determines from time to time.

            (b) Multiple Administrative Bodies. The Plan may be administered by
different bodies with respect to Directors, Officers, Consultants, and Employees
who are neither Directors nor Officers.

            (c) 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.

      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

                                       8
<PAGE>

Company or a Parent or a Subsidiary of the Company. 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) 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 of the Company)
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.

            (b) 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.

            (c) 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.

            (d) Deferral of Award Payment. The Administrator may establish one
or more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award (but only to the extent that such deferral programs would not result in an
accounting compensation charge unless otherwise determined by the
Administrator). The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program.

                                       9
<PAGE>

            (e) 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.

            (f) Individual Option Limit. Following the date that the exemption
from application of Section 162(m) of the Code described in Section 20 (or any
exemption having similar effect) ceases to apply to Awards, the maximum number
of Shares with respect to which Options may be granted to any Grantee in any
fiscal year of the Company shall be three million (3,000,000) Shares. In
connection with a Grantee's commencement of Continuous Service, a Grantee may be
granted Options for up to an additional one million (1,000,000) Shares which
shall not count against the limit set forth in the previous sentence. The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company's capitalization pursuant to Section 10, below. To the
extent required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitations with respect to a Grantee, if any Option is
canceled, the canceled Option shall continue to count against the maximum number
of Shares with respect to which Options may be granted to the Grantee. For this
purpose, the repricing of an Option shall be treated as the cancellation of the
existing Option and the grant of a new Option.

            (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 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 of the
Company, 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) by will or by the laws of descent and distribution, or (ii) to
the extent and in the manner authorized by the Administrator by gift to members
of the Grantee's Immediate Family. 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.
Notwithstanding the foregoing, the Grantee may designate a member of the
Grantee's Immediate Family as a beneficiary of the Grantee's Incentive Stock
Option or Non-Qualified Stock Option in the event of the Grantee's death on a
beneficiary designation form provided by the Administrator.

                                       10
<PAGE>

            (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.

      7. Award Exercise or Purchase Price, Consideration and Taxes.

            (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 of the Company, 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 of the
Company, 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 Awards intended to qualify as
Performance-Based Compensation, the exercise or purchase price, if any, shall be
not less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.

                  (iv) 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 of the Company, the per Share purchase 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.

                                       11
<PAGE>

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

                  (vi) Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(c), above, the
exercise or purchase price for the Award shall be determined in accordance with
the provisions of the relevant instrument evidencing the agreement to issue such
Award.

            (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 (but only to the extent that the acceptance or terms
of the promissory note would not violate an Applicable Law and would not result
in an accounting compensation charge with respect to the use of such promissory
note to pay the exercise price unless otherwise determined by the
Administrator);

                  (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 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; generally an
accounting charge will result if the Shares used to pay the exercise price were
acquired less than six months before the exercise);

                  (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 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

                                       12
<PAGE>

Shares or the disqualifying disposition 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.

      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 has been made,
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 10 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 portion of the Grantee's Award that was vested at the
date of such termination or such other portion of the Grantee's Award 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's Award was unvested at the date of termination, or if the Grantee does
not exercise the vested portion of the Grantee's Award within the
Post-Termination Exercise Period, the Award shall terminate.

                                       13
<PAGE>

            (c) Disability of Grantee. In the event of termination of a
Grantee's Continuous Service as a result of his or her Disability, such Grantee
may, but only within twelve (12) months from the date of such termination (but
in no event later than the expiration date of the term of such Award as set
forth in the Award Agreement), exercise the portion of the Grantee's Award that
was vested 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's
Award was unvested at the date of termination, or if Grantee does not exercise
the vested portion of the Grantee's Award 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
portion of the Grantee's Award that was vested 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's Award was unvested, or if
the Grantee's estate or a person who acquired the right to exercise the Award by
bequest or inheritance does not exercise the vested portion of the Grantee's
Award within the time specified herein, the Award shall terminate.

      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. 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, the maximum number of Shares with respect to which Options
may be granted to any Grantee in any fiscal year of the Company, 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

                                       14
<PAGE>

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 including a corporate merger, consolidation, acquisition of property or
stock, separation (including a spin-off or other distribution of stock or
property), reorganization, liquidation (whether partial or complete) or any
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.

      11. Corporate Transactions and Changes in Control.

            (a) Termination of Award to Extent Not Assumed in Corporate
Transaction. Effective upon the consummation of a Corporate Transaction, all
outstanding Awards under the Plan shall terminate. However, all such Awards
shall not terminate to the extent they are Assumed in connection with the
Corporate Transaction.

            (b) Acceleration of Award Upon Corporate Transaction or Change in
Control.

                  (i) Corporate Transaction. Except as provided otherwise in an
individual Award Agreement, in the event of a Corporate Transaction and:

                        (A) for the portion of each Award that is Assumed or
Replaced, then such Award (if Assumed), the replacement Award (if Replaced), or
the cash incentive program (if Replaced) automatically shall become fully
vested, exercisable and payable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at Fair Market
Value) for all of the Shares at the time represented by such Assumed or Replaced
portion of the Award, immediately upon termination of the Grantee's Continuous
Service if such Continuous Service is terminated by the successor company or the
Company without Cause or voluntarily by the Grantee with Good Reason within
twelve (12) months of the Corporate Transaction; and

                        (B) for the portion of each Award that is neither
Assumed nor Replaced, such portion of the Award shall automatically become fully
vested and exercisable and be released from any repurchase or forfeiture rights
(other than repurchase rights exercisable at Fair Market Value) for all of the
Shares at the time represented by such portion of the Award, immediately prior
to the specified effective date of such Corporate Transaction.

                  (ii) Change in Control. Except as provided otherwise in an
individual Award Agreement, following a Change in Control (other than a Change
in Control which also is a Corporate Transaction) and upon the termination of
the Continuous Service of a Grantee if such Continuous Service is terminated by
the Company or Related Entity without Cause or voluntarily by the Grantee with
Good Reason within twelve (12) months of a Change in Control, each Award of such
Grantee which is at the time outstanding under the Plan automatically shall
become fully vested and exercisable and be released from any repurchase or
forfeiture rights

                                       15
<PAGE>

(other than repurchase rights exercisable at Fair Market Value), immediately
upon the termination of such Continuous Service.

                  (c) Effect of Acceleration on Incentive Stock Options. Any
Incentive Stock Option accelerated under this Section 11 in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Stock Option under the Code only to the extent the $100,000 dollar
limitation of Section 422(d) of the Code is not exceeded. To the extent such
dollar limitation is exceeded, a proportional fraction of each share subject to
such Option will be allocated as part Incentive Stock Option and part
Non-Qualified Stock Option.

      12. Repurchase Rights. 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);

                  (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 12(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 12(c), shall terminate on the Registration Date.

      13. 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 18 below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

      14. 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.

                                       16
<PAGE>

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

                  (c) No suspension or termination of the Plan (including
termination of the Plan under Section 13, above) shall adversely affect any
rights under Awards already granted to a Grantee.

      15. 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.

      16. 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 right of the Company or a Related Entity to terminate the Grantee's
Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the
employment of a Grantee who is employed at will is in no way affected by its
determination that the Grantee's Continuous Service has been terminated for
Cause for the purposes of this Plan.

      17. 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.

      18. 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 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.

      19. 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.

      20. Effect of Section 162(m) of the Code. Section 162(m) of the Code does
not apply to the Plan prior to the Registration Date or such earlier time that
the Company first becomes

                                       17
<PAGE>

subject to the reporting obligations of Section 12 of the Exchange Act.
Following the Registration Date or such earlier time that the Company first
becomes subject to the reporting obligations of Section 12 of the Exchange Act,
the Plan, and all Awards (except Awards of Restricted Stock that vest over time)
issued thereunder, are intended to be exempt from the application of Section
162(m) of the Code, which restricts under certain circumstances the Federal
income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The exemption is based on Treasury
Regulation Section 1.162-27(f), in the form existing on the effective date of
the Plan, with the understanding that such regulation generally exempts from the
application of Section 162(m) of the Code compensation paid pursuant to a plan
that existed before a company becomes publicly held. Under such Treasury
Regulation, this exemption is available to the Plan for the duration of the
period that lasts until the earliest of (i) the expiration of the Plan, (ii) the
material modification of the Plan, (iii) the exhaustion of the maximum number of
shares of Common Stock available for Awards under the Plan, as set forth in
Section 3(a), (iv) the first meeting of shareholders at which directors are to
be elected that occurs after the close of the third calendar year following the
calendar year in which the Company first becomes subject to the reporting
obligations of Section 12 of the Exchange Act, or (v) such other date required
by Section 162(m) of the Code and the rules and regulations promulgated
thereunder. To the extent that the Administrator determines as of the date of
grant of an Award that (i) the Award is intended to qualify as Performance-Based
Compensation and (ii) the exemption described above is no longer available with
respect to such Award, such Award shall not be effective until any shareholder
approval required under Section 162(m) of the Code has been obtained.

                                       18