ELOQUENT, INC.

                           1999 EQUITY INCENTIVE PLAN

                            Adopted October 21, 1999
                   Approved By Stockholders November 19, 1999
                       Termination Date: October 21, 2009
                 Amended by the Board of Directors March 2, 2001
                     Approved by Stockholders July 12, 2001

1. PURPOSES.

         (a) Eligible Stock Award  Recipients.  The persons  eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

         (b)  Available  Stock  Awards.  The purpose of the Plan is to provide a
means by which  eligible  recipients of Stock Awards may be given an opportunity
to benefit from  increases in value of the Common Stock  through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options,  (iii) stock bonuses and (iv) rights to acquire  restricted  stock. The
Plan also provides for non-discretionary grants of Nonstatutory Stock Options to
Non-Employee Directors of the Company.

         (c) General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the  services of new members of this group and to provide  incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2. DEFINITIONS.

         (a) "Affiliate" means any parent corporation or subsidiary  corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

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

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

         (d)  "Committee"  means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

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

         (f) "Company" means Eloquent, Inc., a Delaware corporation.

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         (g) "Consultant" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated  for such services or (ii) who is a member of the Board of Directors
of an  Affiliate.  However,  the term  "Consultant"  shall  not  include  either
Directors who are not compensated by the Company for their services as Directors
or  Directors  who are merely  paid a  director's  fee by the  Company for their
services as Directors.

         (h) "Continuous Service" means that the Participant's  service with the
Company or an Affiliate,  whether as an Employee, Director or Consultant, is not
interrupted or terminated.  The  Participant's  Continuous  Service shall not be
deemed to have  terminated  merely  because of a change in the capacity in which
the  Participant  renders service to the Company or an Affiliate as an Employee,
Consultant  or  Director  or a change in the  entity  for which the  Participant
renders such service,  provided that there is no  interruption or termination of
the Participant's  Continuous  Service.  For example, a change in status from an
Employee of the Company to a Consultant  of an Affiliate or a Director  will not
constitute  an  interruption  of  Continuous  Service.  The  Board or the  chief
executive officer of the Company, in that party's sole discretion, may determine
whether  Continuous  Service shall be considered  interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

         (i) "Covered  Employee" means the chief executive  officer and the four
(4)  other  highest   compensated   officers  of  the  Company  for  whom  total
compensation is required to be reported to stockholders  under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

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

         (k)  "Disability"  means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

         (l)  "Employee"  means  any  person  employed  by  the  Company  or  an
Affiliate.  Mere  service as a Director  or payment of a  director's  fee by the
Company or an Affiliate  shall not be sufficient to constitute  "employment"  by
the Company or an Affiliate.

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

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

                  (i) If the  Common  Stock is listed on any  established  stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap  Market,
the Fair Market  Value of a share of Common  Stock  shall be the  closing  sales
price for such stock (or the closing  bid, if no sales were  reported) as quoted
on such  exchange or market (or the exchange or market with the greatest  volume
of trading in the Common Stock) on the day of determination,  as reported in The
Wall Street Journal or such other source as the Board deems reliable.

                  (ii) In the absence of such markets for the Common Stock,  the
Fair Market Value shall be determined in good faith by the Board.

                                       2.
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         (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) "IPO Date" means the effective date of the initial public  offering
of the Company's Common Stock.

         (q)  "Non-Employee  Director"  means a Director who either (i) is not a
current  Employee or Officer of the Company or its parent or a subsidiary,  does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary  for services  rendered as a consultant or in any capacity other
than as a Director  (except  for an amount as to which  disclosure  would not be
required  under  Item  404(a) of  Regulation  S-K  promulgated  pursuant  to the
Securities Act  ("Regulation  S-K")),  does not possess an interest in any other
transaction  as to which  disclosure  would be  required  under  Item  404(a) of
Regulation  S-K  and is not  engaged  in a  business  relationship  as to  which
disclosure  would be required  under Item 404(b) of  Regulation  S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

         (r) "Non-Employee  Director Option" means a Non-Statutory  Stock Option
granted pursuant to Section 7 hereof.

         (s) "Non-Employee  Director Option Agreement" means a written agreement
between  the  Company  and a  Non-Employee  Director  evidencing  the  terms and
conditions of a Non-Employee  Director Option grant. Each Non-Employee  Director
Option Agreement shall be subject to the terms and conditions of the Plan.

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

         (u)  "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.

         (v) "Option" means an Incentive  Stock Option or a  Nonstatutory  Stock
Option granted pursuant to the Plan.

         (w) "Option  Agreement" means a written  agreement  between the Company
and an Optionholder  evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

         (x) "Optionholder" means a person to whom an Option is granted pursuant
to the Plan or, if  applicable,  such  other  person  who  holds an  outstanding
Option.

         (y) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an  "affiliated  corporation"  (within the meaning of
Treasury  Regulations  promulgated  under Section 162(m) of the Code),  is not a
former  employee  of  the  Company  or  an  "affiliated  corporation"  receiving
compensation  for prior  services  (other than  benefits  under a tax  qualified
pension plan), was not an officer of the Company or an "affiliated  corporation"
at any time and is not currently receiving direct or indirect  remuneration from
the Company or an

                                       3.
<PAGE>

"affiliated  corporation"  for services in any capacity other than as a Director
or (ii) is otherwise  considered  an "outside  director" for purposes of Section
162(m) of the Code.

         (z)  "Participant"  means a person  to whom a Stock  Award  is  granted
pursuant  to the  Plan  or,  if  applicable,  such  other  person  who  holds an
outstanding Stock Award.

         (aa) "Plan" means this Eloquent, Inc. 1999 Equity Incentive Plan.

         (bb) "Rule 16b-3" means Rule 16b-3  promulgated  under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

         (cc) "Securities Act" means the Securities Act of 1933, as amended.

         (dd) "Stock Award" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

         (ee) "Stock  Award  Agreement"  means a written  agreement  between the
Company and a holder of a Stock Award  evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

         (ff) "Ten Percent Stockholder" means a person who owns (or is deemed to
own  pursuant  to Section  424(d) of the Code)  stock  possessing  more than ten
percent (10%) of the total combined  voting power of all classes of stock of the
Company or of any of its Affiliates.

3. ADMINISTRATION.

         (a) Administration by Board. The Board shall administer the Plan unless
and until the Board  delegates  administration  to a  Committee,  as provided in
subsection 3(c). Any interpretation of the Plan by the Board and any decision by
the Board under the Plan shall be final and binding on all persons.

         (b) Powers of Board.  The Board  shall have the power,  subject to, and
within the limitations of, the express provisions of the Plan:

                  (i) To  determine  from  time to  time  which  of the  persons
eligible  under the Plan shall be granted Stock Awards;  when and how each Stock
Award shall be granted;  what type or  combination of types of Stock Award shall
be  granted;  the  provisions  of each Stock  Award  granted  (which need not be
identical),  including  the time or times when a person  shall be  permitted  to
receive  Common  Stock  pursuant to a Stock  Award;  and the number of shares of
Common  Stock with  respect to which a Stock Award shall be granted to each such
person.

                  (ii) To  construe  and  interpret  the Plan and  Stock  Awards
granted under it, and to establish,  amend and revoke rules and  regulations for
its  administration.  The Board, in the exercise of this power,  may correct any
defect,  omission or  inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem  necessary  or expedient to make the
Plan fully effective.

                  (iii)  To  amend  the Plan or a Stock  Award  as  provided  in
Section 13.

                                       4.
<PAGE>

                  (iv)  Generally,  to exercise  such powers and to perform such
acts as the Board deems  necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

         (c) Delegation to Committee.

                  (i) General. The Board may delegate administration of the Plan
to a Committee or  Committees  of one (1) or more members of the Board,  and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated.  If  administration  is delegated to a Committee,  the Committee
shall  have,  in  connection  with the  administration  of the Plan,  the powers
theretofore  possessed  by the  Board,  including  the  power to  delegate  to a
subcommittee  any of the  administrative  powers the  Committee is authorized to
exercise (and  references  in this Plan to the Board shall  thereafter be to the
Committee  or  subcommittee),   subject,  however,  to  such  resolutions,   not
inconsistent  with the  provisions  of the Plan,  as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.

                  (ii)  Committee  Composition  when  Common  Stock is  Publicly
Traded.  At such time as the Common Stock is publicly traded,  in the discretion
of the Board, a Committee may consist  solely of two or more Outside  Directors,
in  accordance  with Section  162(m) of the Code,  and/or  solely of two or more
Non-Employee  Directors, in accordance with Rule 16b-3. Within the scope of such
authority,  the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors,  the authority to grant
Stock Awards to eligible  persons who are either (a) not then Covered  Employees
and are not  expected  to be Covered  Employees  at the time of  recognition  of
income  resulting  from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a  committee  of one or more  members  of the Board who are not  Non-Employee
Directors  the  authority to grant Stock Awards to eligible  persons who are not
then subject to Section 16 of the Exchange Act.

4. SHARES SUBJECT TO THE PLAN.

         (a) Share Reserve.  Subject to the provisions of Section 12 relating to
adjustments  upon changes in Common  Stock,  the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate  the initial  reserve
amount set forth below (the "Initial Reserve  Amount"),  plus an annual increase
to be added each  January 1,  beginning  January 1, 2001,  equal to four percent
(4.0%) of the total number of shares of Common Stock outstanding on such January
1.  Notwithstanding  the foregoing,  the Board may designate a smaller number of
shares  of  Common  Stock to be added to the share  reserve  as of a  particular
January 1. The Initial Reserve Amount shall be equal to that number of shares of
Common Stock that,  as of the IPO Date,  is reserved  under the  Company's  1995
Equity  Incentive Plan and 1997 Equity  Incentive Plan and has not been reserved
for  outstanding  stock awards under such plans or issued under such plans.  For
purposes of  complying  with the  requirements  of Section 422 of the Code,  the
maximum  aggregate  number of shares of Common Stock that may be issued pursuant
to Incentive  Stock Options under this Plan shall be two hundred fifty  thousand
(250,000) shares  multiplied by the number of years of the term of this Plan, or
an  aggregate  of  two  million  five


                                       5.
<PAGE>

hundred thousand (2,500,000) shares.  Notwithstanding the foregoing, the Company
shall have no obligation to grant any Incentive Stock Options under the Plan.

         (b) Reversion of Shares to the Share Reserve.  If any Stock Award shall
for any  reason  expire or  otherwise  terminate,  in whole or in part,  without
having been  exercised in full,  the shares of Common  Stock not acquired  under
such Stock Award shall revert to and again become  available for issuance  under
the Plan. In addition, if any stock award issued under the Company's 1995 Equity
Incentive  Plan and 1997 Equity  Incentive  Plan shall for any reason  expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the shares of Common Stock not  acquired  under such stock award shall revert to
and again become available for issuance under this Plan.

         (c) Source of Shares.  The shares of Common  Stock  subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

5. ELIGIBILITY.

         (a) Eligibility for Specific Stock Awards.  Incentive Stock Options may
be granted only to Employees.  Stock Awards other than  Incentive  Stock Options
may be granted to Employees, Directors and Consultants.

         (b) Ten Percent  Stockholders.  A Ten Percent  Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one  hundred ten  percent  (110%) of the Fair  Market  Value of the Common
Stock  at the  date of  grant  and  the  Option  is not  exercisable  after  the
expiration of five (5) years from the date of grant.

         (c) Section 162(m) Limitation.  Subject to the provisions of Section 12
relating to adjustments  upon changes in the shares of Common Stock, no Employee
shall be  eligible to be granted  Options  covering  more than two million  five
hundred  thousand  (2,500,000)  shares of the Common  Stock  during any calendar
year.

         (d) Consultants.  A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8  Registration  Statement  under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services  that the  Consultant  is providing to the Company,  or because the
Consultant  is not a  natural  person,  or as  otherwise  provided  by the rules
governing the use of Form S-8, unless the Company  determines both (i) that such
grant (A) shall be registered in another  manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the  Securities Act in order to comply with the  requirements  of the Securities
Act, if applicable,  and (ii) that such grant complies with the securities  laws
of all other relevant jurisdictions.

6. OPTION PROVISIONS.

         Each  Option  shall be in such form and shall  contain  such  terms and
conditions as the Board shall deem appropriate.  All Options shall be separately
designated  Incentive Stock Options or Nonstatutory Stock Options at the time of
grant,  and, if certificates are issued, a separate  certificate or certificates
will be issued for shares of Common Stock  purchased on

                                       6.
<PAGE>

exercise of each type of Option.  The provisions of separate Options need not be
identical,  but each Option shall include  (through  incorporation of provisions
hereof by reference  in the Option or  otherwise)  the  substance of each of the
following provisions:

         (a) Term.  Subject to the  provisions of subsection  5(b) regarding Ten
Percent  Stockholders,  no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.

         (b)  Exercise  Price  of an  Incentive  Stock  Option.  Subject  to the
provisions of subsection 5(b) regarding Ten Percent  Stockholders,  the exercise
price of each Incentive  Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted.  Notwithstanding  the foregoing,  an Incentive Stock
Option may be granted  with an  exercise  price lower than that set forth in the
preceding  sentence  if such  Option is granted  pursuant  to an  assumption  or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

         (c) Exercise Price of a Nonstatutory  Stock Option.  The exercise price
of each  Nonstatutory  Stock Option shall be not less than  eighty-five  percent
(85%) of the Fair Market Value of the Common Stock  subject to the Option on the
date the Option is granted.  Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted  with an  exercise  price lower than that set forth in the
preceding  sentence  if such  Option is granted  pursuant  to an  assumption  or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

         (d) Consideration. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent  permitted by applicable  statutes and
regulations,  either (i) in cash at the time the Option is  exercised or (ii) at
the  discretion  of the  Board  at the  time  of the  grant  of the  Option  (or
subsequently in the case of a Nonstatutory  Stock Option) (1) by delivery to the
Company of other Common  Stock,  (2)  according  to a deferred  payment or other
similar  arrangement  with the  Optionholder  or (3) in any other  form of legal
consideration that may be acceptable to the Board;  provided,  however,  that at
any time that the Company is  incorporated  in  Delaware,  payment of the Common
Stock's "par value," as defined in the Delaware  General  Corporation Law, shall
not be made by deferred payment.

         In the case of any  deferred  payment  arrangement,  interest  shall be
compounded  at least  annually  and  shall be  charged  at the  minimum  rate of
interest  necessary to avoid the  treatment as  interest,  under any  applicable
provisions of the Code, of any amounts other than amounts  stated to be interest
under the deferred payment arrangement.

         (e)  Transferability  of an Incentive Stock Option.  An Incentive Stock
Option  shall not be  transferable  except by will or by the laws of descent and
distribution  and shall be exercisable  during the lifetime of the  Optionholder
only by the Optionholder.  Notwithstanding the foregoing,  the Optionholder may,
by  delivering  written  notice to the Company,  in a form  satisfactory  to the
Company,  designate  a  third  party  who,  in the  event  of the  death  of the
Optionholder, shall thereafter be entitled to exercise the Option.

                                       7.
<PAGE>

         (f)  Transferability  of a  Nonstatutory  Stock Option.  A Nonstatutory
Stock  Option  shall  be  transferable  to the  extent  provided  in the  Option
Agreement.   If  the   Nonstatutory   Stock   Option   does  not   provide   for
transferability,  then the  Nonstatutory  Stock Option shall not be transferable
except  by  will  or by the  laws of  descent  and  distribution  and  shall  be
exercisable  during the lifetime of the Optionholder  only by the  Optionholder.
Notwithstanding  the  foregoing,  the  Optionholder  may, by delivering  written
notice to the Company, in a form satisfactory to the Company,  designate a third
party who, in the event of the death of the  Optionholder,  shall  thereafter be
entitled to exercise the Option.

         (g)  Vesting  Generally.  The total  number  of shares of Common  Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic  installments  that may,  but need not,  be equal.  The  Option  may be
subject to such other terms and  conditions  on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem  appropriate.  The vesting  provisions of individual  Options may vary. The
provisions  of  this  subsection  6(g)  are  subject  to any  Option  provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

         (h) Termination of Continuous  Service.  In the event an Optionholder's
Continuous  Service  terminates  (other  than upon the  Optionholder's  death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the  Optionholder  was  entitled  to  exercise  such  Option  as of the  date of
termination)  but only  within  such period of time ending on the earlier of (i)
the date  three (3)  months  following  the  termination  of the  Optionholder's
Continuous  Service (or such longer or shorter  period  specified  in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination,  the Optionholder does not exercise his
or her Option  within the time  specified  in the Option  Agreement,  the Option
shall terminate.

         (i) Extension of Termination Date. An  Optionholder's  Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's  Continuous Service (other than upon the Optionholder's death
or  Disability)  would be prohibited at any time solely  because the issuance of
shares of Common Stock would  violate the  registration  requirements  under the
Securities  Act,  then the  Option  shall  terminate  on the  earlier of (i) the
expiration  of the term of the Option set forth in  subsection  6(a) or (ii) the
expiration  of a  period  of three  (3)  months  after  the  termination  of the
Optionholder's  Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

         (j)  Disability of  Optionholder.  In the event that an  Optionholder's
Continuous Service terminates as a result of the Optionholder's  Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise  such Option as of the date of  termination),  but only
within  such  period of time  ending on the  earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option  Agreement)  or (ii) the  expiration of the term of the Option as set
forth in the Option Agreement. If, after termination,  the Optionholder does not
exercise his or her Option within the time  specified  herein,  the Option shall
terminate.

                                       8.
<PAGE>

         (k)  Death  of  Optionholder.   In  the  event  (i)  an  Optionholder's
Continuous Service  terminates as a result of the  Optionholder's  death or (ii)
the  Optionholder  dies  within  the  period  (if any)  specified  in the Option
Agreement after the termination of the  Optionholder's  Continuous Service for a
reason  other than death,  then the Option may be  exercised  (to the extent the
Optionholder  was  entitled to exercise  such Option as of the date of death) by
the  Optionholder's  estate,  by a person who acquired the right to exercise the
Option by bequest or  inheritance  or by a person  designated  to  exercise  the
option upon the  Optionholder's  death pursuant to subsection  6(e) or 6(f), but
only  within the period  ending on the  earlier  of (1) the date  eighteen  (18)
months  following the date of death (or such longer or shorter period  specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option  Agreement.  If,  after death,  the Option is not  exercised
within the time specified herein, the Option shall terminate.

         (l) Early Exercise.  The Option may, but need not,  include a provision
whereby  the  Optionholder  may  elect at any  time  before  the  Optionholder's
Continuous  Service  terminates  to exercise the Option as to any part or all of
the shares of Common  Stock  subject to the Option  prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase  option in favor of the Company or to any other restriction the Board
determines to be appropriate.

         (m) Re-Load  Options.  Without in any way limiting the authority of the
Board to make or not to make grants of Options  hereunder,  the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision  entitling the Optionholder to a further Option (a "Re-Load Option")
in the event the  Optionholder  exercises  the  Option  evidenced  by the Option
Agreement,  in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option  Agreement.
Any such Re-Load Option shall (i) provide for a number of shares of Common Stock
equal to the number of shares of Common Stock  surrendered as part or all of the
exercise price of such Option; (ii) have an expiration date which is the same as
the  expiration  date of the  Option  the  exercise  of which  gave rise to such
Re-Load  Option;  and (iii) have an exercise price which is equal to one hundred
percent  (100%) of the Fair  Market  Value of the  Common  Stock  subject to the
Re-Load Option on the date of exercise of the original  Option.  Notwithstanding
the foregoing,  a Re-Load Option shall be subject to the same exercise price and
term provisions heretofore described for Options under the Plan.

         Any  such  Re-Load  Option  may  be  an  Incentive  Stock  Option  or a
Nonstatutory  Stock Option,  as the Board may designate at the time of the grant
of the original Option;  provided,  however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar  ($100,000)  annual  limitation on the  exercisability of Incentive Stock
Options  described in subsection  11(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load  Option.  Any such Re-Load Option shall
be  subject to the  availability  of  sufficient  shares of Common  Stock  under
subsection  4(a) and the "Section  162(m)  Limitation"  on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent  with the express  provisions
of the Plan regarding the terms of Options.

                                       9.
<PAGE>

7. NON-EMPLOYEE DIRECTOR STOCK OPTIONS.

         Without any further  action of the Board,  each  Non-Employee  Director
shall be granted Nonstatutory Stock Options as described in subsections 7(a) and
7(b) (collectively, "Non-Employee Director Options"). Each Non-Employee Director
Option shall  include the substance of the terms set forth in  subsections  7(c)
through 7(k).

         (a) Initial  Grants.  After the IPO Date, each person who is elected or
appointed for the first time to be a Non-Employee Director  automatically shall,
upon the date of his or her initial election or appointment to be a Non-Employee
Director  by the Board or  stockholders  of the  Company,  be granted an Initial
Grant to purchase  fifty thousand  (50,000)  shares of Common Stock on the terms
and conditions set forth herein. For purposes of the foregoing sentence,  on the
IPO Date,  each person then serving as a  Non-Employee  Director and who has not
previously  been granted options to acquire Common Stock shall be deemed to have
been initially elected as a Non-Employee Director on such date.

         (b)  Annual  Grants.   After  the  IPO  Date,  each  person  who  is  a
Non-Employee  Director  on the Board on the day after the  annual  stockholders'
meeting,  shall,  on that date, be granted an Annual Grant to purchase up to ten
thousand  (10,000)  shares of Common Stock on the terms and conditions set forth
herein, provided, that for the year 2001 only, the Annual Grant shall be a stock
option to purchase up to fifty thousand  (50,000)  shares of Common Stock on the
terms and conditions set forth herein. Notwithstanding the foregoing, the number
of shares of Common Stock subject to an Annual Grant to a Non-Employee  Director
that has not served in that  capacity for the entire  period since the preceding
annual  stockholders'  meeting shall be reduced, pro rata, for each full quarter
the person did not serve during such period.

         (c) Term.  Each  Non-Employee  Director Option shall have a term of ten
(10) years from the date it is granted.

         (d) Exercise Price.  The exercise price of each  Non-Employee  Director
Option shall be one hundred percent (100%) of the Fair Market Value of the stock
subject   to  the   Non-Employee   Director   Option   on  the  date  of  grant.
Notwithstanding  the foregoing,  a Non-Employee  Director  Option may be granted
with an exercise  price lower than that set forth in the  preceding  sentence if
such  Non-Employee  Director  Option is granted  pursuant  to an  assumption  or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

         (e) Vesting.  Each Initial  Grant shall vest  one-third  (1/3) per year
from the date on which it is granted. Each Annual Grant shall vest one year from
the date on which it is granted.

         (f)  Consideration.  The purchase price of stock acquired pursuant to a
Non-Employee  Director Option may be paid, to the extent permitted by applicable
statutes and regulations, in any combination of (i) cash or check, (ii) delivery
to the Company of other Common Stock,  (ii)  deferred  payment or (iv) any other
form of legal  consideration that may be acceptable to the Board and provided in
the Non-Employee Director Option Agreement;  provided, however, that at any time
that the Company is incorporated in Delaware, payment of the Common Stock's "par
value," as defined in the Delaware General Corporation Law, shall not

                                      10.
<PAGE>

be made by deferred  payment.  In the case of any deferred payment  arrangement,
interest  shall be  compounded  at least  annually  and shall be  charged at the
minimum rate of interest necessary to avoid the treatment as interest, under any
applicable  provisions of the Code, of any amounts other than amounts  stated to
be interest under the deferred payment arrangement.

         (g)  Transferability.  A  Non-Employee  Director  Option  shall  not be
transferable except by will or by the laws of descent and distribution and shall
be  exercisable  during the lifetime of the  Non-Employee  Director  only by the
Non-Employee Director.  Notwithstanding the foregoing, the Non-Employee Director
may, by delivering written notice to the Company,  in a form satisfactory to the
Company,  designate  a  third  party  who,  in the  event  of the  death  of the
Non-Employee Director, shall thereafter be entitled to exercise the Non-Employee
Director Option.

         (h)  Termination  of Continuous  Service.  In the event a  Non-Employee
Director's  Continuous  Service  terminates  (other  than upon the  Non-Employee
Director's death or Disability),  the Non-Employee  Director may exercise his or
her Non-Employee  Director Option (to the extent that the Non-Employee  Director
was entitled to exercise it as of the date of termination)  but only within such
period of time ending on the earlier of (i) the date three (3) months  following
the termination of the Non-Employee  Director's  Continuous Service, or (ii) the
expiration of the term of the  Non-Employee  Director Option as set forth in the
Non-Employee Director Option Agreement. If, after termination,  the Non-Employee
Director does not exercise his or her  Non-Employee  Director  Option within the
time specified in the Non-Employee  Director Option Agreement,  the Non-Employee
Director Option shall terminate.

         (i) Extension of Termination  Date. If the exercise of the Non-Employee
Director  Option  following  the  termination  of  the  Non-Employee  Director's
Continuous  Service  (other  than  upon  the  Non-Employee  Director's  death or
Disability)  would be  prohibited  at any time solely  because  the  issuance of
shares would violate the  registration  requirements  under the Securities  Act,
then the Non-Employee  Director Option shall terminate on the earlier of (i) the
expiration  of the  term  of the  Non-Employee  Director  Option  set  forth  in
subsection 7(c) or (ii) the expiration of a period of three (3) months after the
termination of the Non-Employee  Director's  Continuous Service during which the
exercise of the Non-Employee Director Option would not violate such registration
requirements.

         (j) Disability of  Non-Employee  Director.  In the event a Non-Employee
Director's  Continuous  Service  terminates  as a  result  of  the  Non-Employee
Director's  Disability,  the  Non-Employee  Director  may  exercise  his  or her
Non-Employee  Director Option (to the extent that the Non-Employee  Director was
entitled  to exercise  it as of the date of  termination),  but only within such
period  of time  ending  on the  earlier  of (i) the  date  twelve  (12)  months
following  such   termination  or  (ii)  the  expiration  of  the  term  of  the
Non-Employee  Director Option as set forth in the  Non-Employee  Director Option
Agreement.  If, after termination,  the Non-Employee  Director does not exercise
his or her Non-Employee  Director Option within the time specified  herein,  the
Non-Employee Director Option shall terminate.

         (k) Death of  Non-Employee  Director.  In the event (i) a  Non-Employee
Director's  Continuous  Service  terminates  as a  result  of  the  Non-Employee
Director's death or (ii) the  Non-Employee  Director dies within the three-month
period after the termination of the Non-


                                      11.
<PAGE>

Employee  Director's  Continuous Service for a reason other than death, then the
Non-Employee  Director  Option may be exercised (to the extent the  Non-Employee
Director  was entitled to exercise the  Non-Employee  Director  Option as of the
date of death) by the Non-Employee  Director's  estate, by a person who acquired
the right to exercise the Non-Employee Director Option by bequest or inheritance
or by a person designated to exercise the Non-Employee  Director Option upon the
Non-Employee  Director's death, but only within the period ending on the earlier
of (1) the date  eighteen  (18)  months  following  the date of death or (2) the
expiration of the term of such Non-Employee  Director Option as set forth in the
Non-Employee  Director  Option  Agreement.  If,  after death,  the  Non-Employee
Director  Option  is  not  exercised  within  the  time  specified  herein,  the
Non-Employee Director Option shall terminate.

8. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

         (a) Stock Bonus  Awards.  Each stock bonus  agreement  shall be in such
form and shall  contain  such  terms and  conditions  as the  Board  shall  deem
appropriate.  The terms and conditions of stock bonus agreements may change from
time to time, and the terms and  conditions of separate  stock bonus  agreements
need not be identical,  but each stock bonus  agreement  shall include  (through
incorporation  of provisions  hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

                  (i)   Consideration.   A  stock   bonus  may  be   awarded  in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.

                  (ii)  Vesting.  Shares of Common Stock awarded under the stock
bonus  agreement may, but need not, be subject to a share  repurchase  option in
favor of the Company in accordance  with a vesting  schedule to be determined by
the Board.

                  (iii) Termination of Participant's  Continuous Service. In the
event a Participant's  Continuous Service terminates,  the Company may reacquire
any or all of the shares of Common Stock held by the Participant  which have not
vested  as of the  date of  termination  under  the  terms  of the  stock  bonus
agreement.

                  (iv) Transferability. Rights to acquire shares under the stock
bonus agreement  shall be  transferable by the Participant  only upon such terms
and conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its  discretion,  so long as Common Stock  awarded  under the stock
bonus agreement remains subject to the terms of the stock bonus agreement.

         (b) Restricted Stock Awards.  Each restricted stock purchase  agreement
shall be in such form and shall  contain such terms and  conditions as the Board
shall  deem  appropriate.  The  terms and  conditions  of the  restricted  stock
purchase  agreements  may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted  stock purchase  agreement shall include  (through  incorporation  of
provisions  hereof by reference in the agreement or otherwise)  the substance of
each of the following provisions:

                  (i) Purchase  Price.  The purchase price under each restricted
stock purchase  agreement  shall be such amount as the Board shall determine and
designate in such restricted


                                      12.
<PAGE>

stock purchase agreement.  The purchase price shall not be less than eighty-five
percent (85%) of the Common  Stock's Fair Market Value on the date such award is
made or at the time the purchase is consummated.

                  (ii)  Consideration.   The  purchase  price  of  Common  Stock
acquired  pursuant to the  restricted  stock  purchase  agreement  shall be paid
either:  (i) in cash at the  time of  purchase;  (ii) at the  discretion  of the
Board,  according to a deferred  payment or other similar  arrangement  with the
Participant;  or (iii) in any  other  form of  legal  consideration  that may be
acceptable to the Board in its discretion;  provided,  however, that at any time
that the Company is incorporated in Delaware, then payment of the Common Stock's
"par value," as defined in the Delaware  General  Corporation  Law, shall not be
made by deferred payment.

                  (iii)  Vesting.  Shares of  Common  Stock  acquired  under the
restricted  stock  purchase  agreement  may, but need not, be subject to a share
repurchase  option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

                  (iv) Termination of Participant's  Continuous  Service. In the
event a Participant's Continuous Service terminates,  the Company may repurchase
or  otherwise  reacquire  any or all of the  shares of Common  Stock held by the
Participant  which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.

                  (v)  Transferability.  Rights  to  acquire  shares  under  the
restricted  stock purchase  agreement  shall be  transferable by the Participant
only upon such terms and  conditions  as are set forth in the  restricted  stock
purchase agreement,  as the Board shall determine in its discretion,  so long as
Common Stock awarded  under the  restricted  stock  purchase  agreement  remains
subject to the terms of the restricted stock purchase agreement.

9. COVENANTS OF THE COMPANY.

         (a) Availability of Shares.  During the terms of the Stock Awards,  the
Company  shall keep  available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

         (b)  Securities Law  Compliance.  The Company shall seek to obtain from
each  regulatory  commission  or agency having  jurisdiction  over the Plan such
authority  as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided,  however, that this
undertaking  shall not require the Company to register  under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts,  the Company is unable to obtain
from any such  regulatory  commission or agency the authority  which counsel for
the Company  deems  necessary  for the lawful  issuance and sale of Common Stock
under the Plan,  the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon  exercise of such Stock Awards unless and until
such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

         Proceeds  from the sale of Common Stock  pursuant to Stock Awards shall
constitute general funds of the Company.

                                      13.
<PAGE>

11. MISCELLANEOUS.

         (a) Acceleration of  Exercisability  and Vesting.  The Board shall have
the power to  accelerate  the time at which a Stock Award may first be exercised
or the  time  during  which a Stock  Award  or any  part  thereof  will  vest in
accordance  with the Plan,  notwithstanding  the  provisions  in the Stock Award
stating the time at which it may first be  exercised or the time during which it
will vest.

         (b) Stockholder Rights. No Participant shall be deemed to be the holder
of, or to have any of the  rights of a holder  with  respect  to,  any shares of
Common Stock subject to such Stock Award unless and until such  Participant  has
satisfied  all  requirements  for  exercise of the Stock  Award  pursuant to its
terms.

         (c) No Employment or other Service  Rights.  Nothing in the Plan or any
instrument  executed or Stock Award granted  pursuant  thereto shall confer upon
any  Participant  any right to continue to serve the Company or an  Affiliate in
the  capacity in effect at the time the Stock Award was granted or shall  affect
the right of the Company or an Affiliate to terminate  (i) the  employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate,  and any applicable  provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

         (d) Incentive Stock Option $100,000 Limitation.  To the extent that the
aggregate  Fair Market Value  (determined  at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by Participant  during any calendar year (under all plans of the Company and its
Affiliates)  exceeds one hundred  thousand  dollars  ($100,000),  the Options or
portions  thereof which exceed such limit  (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.

         (e) Investment Assurances. The Company may require a Participant,  as a
condition of exercising or acquiring  Common Stock under any Stock Award, (i) to
give  written  assurances  satisfactory  to the Company as to the  Participant's
knowledge and  experience in financial and business  matters  and/or to employ a
purchaser   representative   reasonably  satisfactory  to  the  Company  who  is
knowledgeable  and experienced in financial and business  matters and that he or
she  is  capable  of   evaluating,   alone  or  together   with  the   purchaser
representative,  the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the  Participant's  own
account and not with any present intention of selling or otherwise  distributing
the Common Stock. The foregoing requirements,  and any assurances given pursuant
to such  requirements,  shall be inoperative if (iii) the issuance of the shares
of Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award  has  been  registered  under  a  then  currently  effective  registration
statement under the Securities Act or (iv) as to any particular  requirement,  a
determination  is made by counsel for the Company that such requirement need not
be met in the  circumstances  under the then  applicable  securities  laws.  The
Company  may,  upon  advice of counsel to the  Company,  place  legends on stock
certificates   issued  under  the  Plan  as  such  counsel  deems  necessary  or
appropriate in order to comply with


                                      14.
<PAGE>

applicable securities laws,  including,  but not limited to, legends restricting
the transfer of the Common Stock.

         (f) Withholding  Obligations.  To the extent provided by the terms of a
Stock Award Agreement,  the Participant may satisfy any federal,  state or local
tax  withholding  obligation  relating to the exercise or  acquisition of Common
Stock  under a Stock  Award by any of the  following  means (in  addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means:  (i) tendering a cash payment;  (ii)
authorizing  the Company to withhold  shares of Common  Stock from the shares of
Common Stock  otherwise  issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; or (iii) delivering to the
Company owned and unencumbered  shares of the Common Stock.  Notwithstanding the
foregoing,  the Company  shall not be  authorized  to withhold  shares of Common
Stock at rates in excess of the minimum statutory  withholding rates for federal
and state tax purposes, including payroll taxes.

12. ADJUSTMENTS UPON CHANGES IN STOCK.

         (a)  Capitalization  Adjustments.  If any  change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration  by the Company (through  merger,  consolidation,  reorganization,
recapitalization,  reincorporation,  stock dividend,  dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares,  change in corporate  structure or other  transaction  not involving the
receipt  of  consideration  by the  Company),  the  Plan  will be  appropriately
adjusted in the class(es) and maximum  number of securities  subject to the Plan
pursuant to subsection  4(a), the maximum number of securities  subject to award
to any person  pursuant to  subsection  5(c),  the  prescribed  number of shares
subject to award to any person pursuant to Section 7, and the outstanding  Stock
Awards will be appropriately  adjusted in the class(es) and number of securities
and price per share of Common Stock  subject to such  outstanding  Stock Awards.
The Board shall make such  adjustments,  and its  determination  shall be final,
binding and conclusive.  (The  conversion of any  convertible  securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)

         (b) Change in Control.  In the event of (i) a dissolution,  liquidation
or sale of  substantially  all of the  assets of the  Company,  (ii) a merger or
consolidation  in which the Company is not the surviving  corporation or (iii) a
reverse merger in which the Company is the surviving  corporation but the shares
of Common Stock  outstanding  immediately  preceding the merger are converted by
virtue of the merger  into other  property,  whether in the form of  securities,
cash or  otherwise,  then, to the extent  permitted by  applicable  law: (i) any
surviving  corporation shall assume any Stock Awards  outstanding under the Plan
or shall substitute similar stock awards (including an award to acquire the same
consideration  paid to the  stockholders  in the  transaction  described in this
subsection  12(b))  for those  outstanding  under the Plan,  or (ii) such  Stock
Awards  shall  continue  in full force and  effect.  In the event any  surviving
corporation  refuses to assume or continue such Stock  Awards,  or to substitute
similar stock awards for those  outstanding under the Plan, then with respect to
Stock Awards held by Participants  whose Continuous  Service has not terminated,
the time during which such Stock Awards may be exercised  shall be  accelerated,
and the Stock Awards terminated if not exercised prior to such event.

                                      15.
<PAGE>

13. AMENDMENT OF THE PLAN AND STOCK AWARDS.

         (a)  Amendment of Plan.  The Board at any time,  and from time to time,
may amend the Plan.  However,  except as  provided  in  Section 12  relating  to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent  stockholder  approval
is necessary to satisfy the  requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

         (b) Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for  stockholder  approval,  including,  but not
limited to,  amendments  to the Plan  intended to satisfy  the  requirements  of
Section  162(m)  of the  Code  and  the  regulations  thereunder  regarding  the
exclusion  of  performance-based   compensation  from  the  limit  on  corporate
deductibility of compensation paid to certain executive officers.

         (c)  Contemplated  Amendments.  It is expressly  contemplated  that the
Board may amend the Plan in any respect the Board deems  necessary  or advisable
to provide  eligible  Employees  with the  maximum  benefits  provided  or to be
provided  under  the  provisions  of the  Code and the  regulations  promulgated
thereunder  relating to Incentive  Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

         (d) No  Impairment  of Rights.  Rights  under any Stock  Award  granted
before  amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the  Company  requests  the consent of the  Participant  and (ii) the
Participant consents in writing.

         (e) Amendment of Stock Awards.  The Board at any time, and from time to
time,  may amend the terms of any one or more Stock Awards;  provided,  however,
that the  rights  under  any  Stock  Award  shall  not be  impaired  by any such
amendment  unless (i) the Company  requests the consent of the  Participant  and
(ii) the Participant consents in writing.

14. TERMINATION OR SUSPENSION OF THE PLAN.

         (a) Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner  terminated,  the Plan shall terminate on the day before the tenth
(10th)  anniversary  of the date the Plan is adopted by the Board or approved by
the  stockholders of the Company,  whichever is earlier.  No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

         (b) No Impairment  of Rights.  Suspension  or  termination  of the Plan
shall not impair rights and obligations  under any Stock Award granted while the
Plan is in effect, except with the written consent of the Participant.

15. EFFECTIVE DATE OF PLAN.

         The Plan shall  become  effective on the date on which it is adopted by
the Board,  but no Stock  Award shall be  exercised  (or, in the case of a stock
bonus,  shall be  granted)  unless and until the Plan has been  approved  by the
stockholders  of the Company,  which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

                                      16.
<PAGE>

16. CHOICE OF LAW.

         The law of the State of Delaware shall govern all questions  concerning
the construction,  validity and  interpretation of this Plan,  without regard to
such state's conflict of laws rules.



                                      17.