CATAPULT COMMUNICATIONS CORPORATION

                                 1998 STOCK PLAN

                   (As Amended and Restated October 30, 2001)

     1. Purposes of the Plan. The purposes of this Stock Plan are:

          o    to attract and retain the best available personnel for positions
               of substantial responsibility,

          o    to provide additional incentive to Employees, Directors and
               Consultants, and

          o    to promote the success of the Company's business.

     Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.

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

     (a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.

     (b) "Applicable Laws" means the requirements relating to the administration
of stock option plans under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or jurisdiction where Options or Stock Purchase Rights are, or will be, granted
under the Plan.

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

     (d) "Change in Control" means the occurrence of any of the following
events:

          (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
     the Exchange Act), other than (A) a trustee or other fiduciary holding
     securities under an employee benefit plan of the Company acting in such
     capacity, (B) a corporation owned directly or indirectly by the
     stockholders of the Company in substantially the same proportions as their
     ownership of stock of the Company or (C) Richard A. or Nancy H. Karp,
     becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange
     Act), directly or indirectly, of securities of the Company representing
     fifty percent (50%) or more of the total voting power represented by the
     Company's then outstanding voting securities; or


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          (ii) The consummation of the sale or disposition by the Company of all
     or substantially all of the Company's assets; or

          (iii) The consummation of a merger or consolidation of the Company
     with any other corporation, other than 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 or its parent) at least fifty percent (50%) of the total voting
     power represented by the voting securities of the Company or such surviving
     entity or its parent outstanding immediately after such merger or
     consolidation.

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

     (f) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.

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

     (h) "Company" means Catapult Communication Corporation, a Nevada
corporation.

     (i) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.

     (j) "Director" means a member of the Board.

     (k) "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.

     (l) "Employee" means any person, including Officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company. A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.

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

     (n) "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


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     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 for the last market
     trading day prior to the time of determination, as reported in The Wall
     Street Journal or such other source as the Administrator deems reliable;

          (ii) If the Common Stock is regularly quoted 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 last market trading day prior
     to the day of determination, 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,
     the Fair Market Value shall be determined in good faith by the
     Administrator.

     (o) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     (p) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.

     (q) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.

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

     (s) "Option" means a stock option granted pursuant to the Plan.

     (t) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

     (u) "Option Exchange Program" means a program whereby outstanding Options
are surrendered in exchange for Options with a lower exercise price.

     (v) "Optioned Stock" means the Common Stock subject to an Option or Stock
Purchase Right.

     (w) "Optionee" means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.

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

     (y) "Plan" means this 1998 Stock Plan.


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     (z) "Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of Stock Purchase Rights under Section 11 of the Plan.

     (aa) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

     (bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

     (cc) "Section 16(b) " means Section 16(b) of the Exchange Act.

     (dd) "Service Provider" means an Employee, Director or Consultant.

     (ee) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.

     (ff) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

     (gg) "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. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 1,800,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

     If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

     4. Administration of the Plan.

     (a) Procedure.

          (i) Multiple Administrative Bodies. The Plan may be administered by
     different Committees with respect to different groups of Service Providers.

          (ii) Section 162(m). To the extent that the Administrator determines
     it to be desirable to qualify Options granted hereunder as
     "performance-based compensation" within the


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     meaning of Section 162(m) of the Code, the Plan shall be administered by a
     Committee of two or more "outside directors" within the meaning of Section
     162(m) of the Code.

          (iii) Rule 16b-3. To the extent desirable to qualify transactions
     hereunder as exempt under Rule 16b-3, the transactions contemplated
     hereunder shall be structured to satisfy the requirements for exemption
     under Rule 16b-3.

          (iv) Other Administration. Other than as provided above, the Plan
     shall be administered by (A) the Board or (B) a Committee, which committee
     shall be constituted to satisfy Applicable Laws.

     (b) Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

          (i) to determine the Fair Market Value;

          (ii) to select the Service Providers to whom Options and Stock
     Purchase Rights may be granted hereunder;

          (iii) to determine the number of shares of Common Stock to be covered
     by each Option and Stock Purchase Right granted hereunder;

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

          (v) to determine the terms and conditions, not inconsistent with the
     terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
     Such terms and conditions include, but are not limited to, the exercise
     price, the time or times when Options or Stock Purchase Rights may be
     exercised (which may be based on performance criteria), any vesting
     acceleration or waiver of forfeiture restrictions, and any restriction or
     limitation regarding any Option or Stock Purchase Right or the shares of
     Common Stock relating thereto, based in each case on such factors as the
     Administrator, in its sole discretion, shall determine;

          (vi) to reduce the exercise price of any Option or Stock Purchase
     Right to the then current Fair Market Value if the Fair Market Value of the
     Common Stock covered by such Option or Stock Purchase Right shall have
     declined since the date the Option or Stock Purchase Right was granted;

          (vii) to institute an Option Exchange Program;

          (viii) to construe and interpret the terms of the Plan and awards
     granted pursuant to the Plan;

          (ix) to prescribe, amend and rescind rules and regulations relating to
     the Plan, including rules and regulations relating to sub-plans established
     for the purpose of qualifying for preferred tax treatment under foreign tax
     laws;



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          (x) to modify or amend each Option or Stock Purchase Right (subject to
     Section 15(c) of the Plan), including the discretionary authority to extend
     the post-termination exercisability period of Options longer than is
     otherwise provided for in the Plan;

          (xi) to allow Optionees to satisfy withholding tax obligations by
     electing to have the Company withhold from the Shares to be issued upon
     exercise of an Option or Stock Purchase Right that number of Shares having
     a Fair Market Value equal to the amount required to be withheld. The Fair
     Market Value of the Shares to be withheld shall be determined on the date
     that the amount of tax to be withheld is to be determined. All elections by
     an Optionee to have Shares withheld for this purpose shall be made in such
     form and under such conditions as the Administrator may deem necessary or
     advisable;

          (xii) to authorize any person to execute on behalf of the Company any
     instrument required to effect the grant of an Option or Stock Purchase
     Right previously granted by the Administrator;

          (xiii) to make all other determinations deemed necessary or advisable
     for administering the Plan.

     (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

     5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

     6. Limitations.

     (a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.

     (b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.

     (c) On the date grants of Options under the Plan are required to comply
with Section 162(m) of the Code, the following limitations shall apply to grants
of Options:

          (i) No Service Provider shall be granted, in any fiscal year of the
     Company, Options to purchase more than 225,000 Shares.



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          (ii) In connection with his or her initial service, a Service Provider
     may be granted Options to purchase up to an additional 225,000 Shares which
     shall not count against the limit set forth in subsection (i) above.

          (iii) The foregoing limitations shall be adjusted proportionately in
     connection with any change in the Company's capitalization as described in
     Section 13.

          (iv) If an Option is canceled in the same fiscal year of the Company
     in which it was granted (other than in connection with a transaction
     described in Section 13), the canceled Option will be counted against the
     limits set forth in subsections (i) and (ii) above. For this purpose, if
     the exercise price of an Option is reduced, the transaction will be treated
     as a cancellation of the Option and the grant of a new Option.

     7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.

     8. Term of Option. The term of each Option shall be stated in the Option
Agreement, provided, however, that prior to the date the Common Stock is listed
on a national securities exchange or a national market system which qualifies
under Section 25100(o) of the Corporations Code of California, the term of each
Option shall be no more than ten (10) years from the date of grant. In the case
of an Incentive Stock Option, the term shall be ten (10) years from the date of
grant or such shorter term as may be provided in the Option Agreement. Moreover,
in the case of an Incentive Stock Option granted to an Optionee who, at the time
the Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such shorter term as may be
provided in the Option Agreement.

     9. Option Exercise Price and Consideration.

     (a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

          (i) In the case of an Incentive Stock Option

               (A) granted to an Employee who, at the time the Incentive Stock
          Option is granted, owns stock representing more than ten percent (10%)
          of the voting power of all classes of stock of the Company or any
          Parent or Subsidiary, the per Share exercise price shall be no less
          than 110% of the Fair Market Value per Share on the date of grant.

               (B) granted to any Employee other than an Employee described in
          paragraph (A) immediately above, the per Share exercise price shall be
          no less than 100% of the Fair Market Value per Share on the date of
          grant.

          (ii) In the case of a Nonstatutory Stock Option granted:


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               (A) prior to the date the Common Stock is listed on a national
          securities exchange or a national market system which qualifies under
          Section 25100(o) of the Corporations Code of California:

               (1) to a Service Provider who, at the time the Nonstatutory Stock
          Option is granted, owns stock representing more than ten percent (10%)
          of the voting power of all classes of stock of the Company or any
          Parent or Subsidiary, the per Share exercise price shall be no less
          than 110% of the Fair Market Value per Share on the date of grant.

               (2) granted to any other Service Provider the per Share exercise
          price shall be no less than 85% of the Fair Market Value per Share on
          the date of grant.

               (B) on or after the date the Common Stock is listed on a national
          securities exchange or a national market system which qualifies under
          Section 25100(o) of the Corporations Code of California to any Service
          Provider, the per Share exercise price shall be determined by the
          Administrator. In the case of a Nonstatutory Stock Option intended to
          qualify as "performance-based compensation" within the meaning of
          Section 162(m) of the Code, the per Share exercise price shall be no
          less than 100% of the Fair Market Value per Share on the date of
          grant.

               (iii) Notwithstanding the foregoing, Options may be granted with
          a per Share exercise price of less than 100% of the Fair Market Value
          per Share on the date of grant pursuant to a merger or other corporate
          transaction.

     (b) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions which must be satisfied before the Option may
be exercised; provided, however, that prior to the date the Common Stock is
listed on a national securities exchange or a national market system which
qualifies under Section 25100(o) of the Corporations Code of California, except
in the case of Options granted to Officers, Directors, and Consultants, Options
shall become exercisable at a rate of no less than 20% per year over five (5)
years from the date the Options are granted.

     (c) Form of Consideration. The Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:

               (i) cash;

               (ii) check;

               (iii) promissory note;

               (iv) other Shares which (A) in the case of Shares acquired upon
          exercise of an option, have been owned by the Optionee for more than
          six months on the date of surrender, and (B) have a Fair Market Value
          on the date of surrender equal to the aggregate exercise price of the
          Shares as to which said Option shall be exercised;



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               (v) consideration received by the Company under a cashless
          exercise program implemented by the Company in connection with the
          Plan;

               (vi) a reduction in the amount of any Company liability to the
          Optionee, including any liability attributable to the Optionee's
          participation in any Company-sponsored deferred compensation program
          or arrangement;

               (vii) any combination of the foregoing methods of payment; or

               (viii) such other consideration and method of payment for the
          issuance of Shares to the extent permitted by Applicable Laws.

     10. Exercise of Option.

     (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted to Officers and Directors hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.

     An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 13 of the Plan.

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

     (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for thirty (30) days following the Optionee's termination. Prior to the date the
Common Stock is listed on a national securities exchange or a national market
system which qualifies under Section 25100(o) of the Corporations Code of

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California, such Option must remain exercisable for a period of at least thirty
(30) days after the Optionee ceases to be a Service Provider. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

     (c) Disability of Optionee. If an Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. Prior to the date the Common Stock is listed on a national
securities exchange or a national market system which qualifies under Section
25100(o) of the Corporations Code of California, such Option must remain
exercisable for a period of at least six (6) months after the Optionee ceases to
be a Service Provider due to Optionee's disability. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

     (d) Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. Prior
to the date the Common Stock is listed on a national securities exchange or a
national market system which qualifies under Section 25100(o) of the
Corporations Code of California, such Option must remain exercisable for a
period of at least six (6) months after the Optionee ceases to be a Service
Provider. If, at the time of death, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

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

     11. Stock Purchase Rights.

     (a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it


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shall advise the offeree in writing or electronically, by means of a Notice of
Grant, of the terms, conditions and restrictions related to the offer, including
the number of Shares that the offeree shall be entitled to purchase, the price
to be paid, and the time within which the offeree must accept such offer. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement in
the form determined by the Administrator. Prior to the date the Common Stock is
listed on a national securities exchange or a national market system which
qualifies under Section 25100(o) of the Corporations Code of California, the
terms of the offer of Stock Purchase Rights under the Plan shall comply in all
respects with Section 260.140.42 of Title 10 of the California Code of
Regulations.

     (b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
service with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator; provided, however,
that prior to the date the Common Stock is listed on a national securities
exchange or a national market system which qualifies under Section 25100(o) of
the Corporations Code of California, that except with respect to Shares
purchased by Officers, Directors and Consultants, the repurchase option shall in
no case lapse at a rate of less than 20% per year over five (5) years from the
date of purchase.

     (c) Other Provisions. The Restricted Stock Purchase Agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion.

     (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

     12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

     13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale, or Change in Control

     (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted


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or which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; 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 Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Stock Purchase Right.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon
as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Optionee to have the right to
exercise his or her Option until ten (10) days prior to such transaction as to
all of the Optioned Stock covered thereby, including Shares as to which the
Option would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option or Stock Purchase Right will terminate immediately prior to
the consummation of such proposed action.

     (c) Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully vested and exercisable for a period of fifteen
(15) days from the date of such notice, and the Option or Stock Purchase Right
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its


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<PAGE>

Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option or
Stock Purchase Right, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

     (d) Additional Vesting for Certain Directors Upon Change in Control. Unless
the Option shall have become fully exercisable pursuant to Sections 13(b) or
13(c) of the Plan, in the event of a Change in Control each outstanding option
granted to a Director who is not an Employee shall become vested and exercisable
as to an additional number of Shares equal to the number of Shares which had
become vested and exercisable immediately prior to the Change in Control;
provided, however, that in no event shall the Option become vested and
exercisable pursuant to this provision for a number of Shares greater in the
aggregate than the number of Shares subject to the Option. The Administrator
shall notify the Director in writing or electronically not less than fifteen
(15) days prior to the Change in Control that the vesting of the Option shall
accelerate and the Director shall be entitled to exercise the Option as to the
additional Shares concurrently with the Change in Control.

     14. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.

     15. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

     (b) Shareholder Approval. The Company shall obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

     (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

     16. Conditions Upon Issuance of Shares.

     (a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Option or Stock Purchase Right unless the exercise of such Option or Stock
Purchase Right and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.



                                      -13-
<PAGE>

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

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

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

     19. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

     Information to Optionees and Purchasers. Prior to the date the Common Stock
is listed on a national securities exchange or a national market system which
qualifies under Section 25100(o) of the Corporations Code of California, the
Company shall provide to each Optionee and to each individual who acquires
Shares pursuant to the Plan, not less frequently than annually during the period
such Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and, in the case of an individual who acquires Shares pursuant to
the Plan, during the period such individual owns such Shares, copies of annual
financial statements. The Company shall not be required to provide such
statements to key employees whose duties in connection with the Company assure
their access to equivalent information.


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