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                                                                    Exhibit 10.3

                         Xanodyne Pharmaceuticals, Inc.

                            2007 STOCK INCENTIVE PLAN

1.   Purpose

     The purpose of this 2007 Stock Incentive Plan (the "Plan") of Xanodyne
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who are expected to make important
contributions to the Company and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended to better align
the interests of such persons with those of the Company's stockholders. Except
where the context otherwise requires, the term "Company" shall include any of
the Company's present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a controlling interest, as determined by the Board of
Directors of the Company (the "Board").

2.   Eligibility

     All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, stock appreciation rights ("SARs"),
restricted stock, restricted stock units ("RSUs") and other stock-based awards
(each, an "Award") under the Plan. Each person who receives an Award under the
Plan is deemed a "Participant".

3.   Administration and Delegation

     (a) Administration by Board of Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may construe and interpret the terms
of the Plan and any Award agreements entered into under the Plan. The Board may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of such
expediency. All decisions by the Board shall be made in the Board's sole
discretion and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting pursuant to
the authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.

     (b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall

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mean the Board or a Committee of the Board or the officers referred to in
Section 3(c) to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or officers.

     (c) Delegation to Officers. To the extent permitted by applicable law, the
Board may delegate to one or more officers of the Company the power to grant
Awards (subject to any limitations under the Plan) to employees or officers of
the Company or any of its present or future subsidiary corporations and to
exercise such other powers under the Plan as the Board may determine, provided
that the Board shall fix the terms of the Awards to be granted by such officers
(including the exercise price of such Awards, which may include a formula by
which the exercise price will be determined) and the maximum number of shares
subject to Awards that the officers may grant; provided further, however, that
no officer shall be authorized to grant Awards to any "executive officer" of the
Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or to any "officer" of the Company (as defined by
Rule 16a-1 under the Exchange Act).

4.   Stock Available for Awards

     (a) Number of Shares. Subject to adjustment under Section 10, Awards may be
made under the Plan for up to the number of shares of common stock, $0.001 par
value per share, of the Company (the "Common Stock") that is equal to the sum
of:

          (1) 8,500,000 shares of Common Stock; plus

          (2) such additional number of shares of Common Stock (up to 1,221,501
shares) as is equal to the sum of (x) the number of shares of Common Stock
reserved for issuance under the Company's Second Amended and Restated 2001 Stock
Incentive Plan (the "Existing Plan") that remain available for grant under the
Existing Plan immediately prior to the date this plan becomes effective and (y)
the number of shares of Common Stock subject to awards granted under the
Existing Plan which awards expire, terminate or are otherwise surrendered,
canceled, forfeited or repurchased by the Company at their original issuance
price pursuant to a contractual repurchase right (subject, however, in the case
of Incentive Stock Options (as hereinafter defined) to any limitations of the
Code); plus

          (3) an annual increase to be added on the first day of each of the
Company's fiscal years during the term of the Plan beginning in fiscal year 2008
equal to the least of (i) 10,000,000 shares of Common Stock, (ii) 2.5 % of the
outstanding shares on such date or (iii) an amount determined by the Board.

     If any Award expires or is terminated, surrendered or canceled without
having been fully exercised, is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such Award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right), is settled in cash or otherwise results in any Common Stock not being
issued, the unused Common Stock covered by such Award shall again be available
for the grant of Awards under the Plan. Further, shares of Common Stock tendered
to the Company by a Participant to exercise an Award shall be added to the
number of shares of Common Stock


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available for the grant of Awards under the Plan. However, in the case of
Incentive Stock Options (as hereinafter defined), the foregoing provisions shall
be subject to any limitations under the Code. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.

     (b) Per-Participant Limit. Subject to adjustment under Section 10, the
maximum number of shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 1,000,000 per calendar year.
For purposes of the foregoing limit, the combination of an Option in tandem with
a SAR (as each is hereinafter defined) shall be treated as a single Award. The
per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code or any successor provision
thereto, and the regulations thereunder ("Section 162(m)").

     (c) Substitute Awards. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Awards in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Awards
contained in the Plan. Substitute Awards shall not count against the overall
share limit set forth in Section 4(a), except as may be required by reason of
Section 422 and related provisions of the Code.

5.   Stock Options

     (a) General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

     (b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of Xanodyne Pharmaceuticals,
Inc., any of Xanodyne Pharmaceuticals, Inc.'s present or future parent or
subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and
any other entities the employees of which are eligible to receive Incentive
Stock Options under the Code, and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the Code. The Company shall
have no liability to a Participant, or any other party, if an Option (or any
part thereof) that is intended to be an Incentive Stock Option is not an
Incentive Stock Option or for any action taken by the Board, including without
limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock
Option.

     (c) Exercise Price. The Board shall establish the exercise price of each
Option and specify the exercise price in the applicable option agreement. The
exercise price shall be not less than 100% of the Fair Market Value (as defined
below) on the date the Option is granted; provided that if the Board approves
the grant of an Option with an exercise price to be


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determined on a future date, the exercise price shall be not less than 100% of
the Fair Market Value on such future date.

     (d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.

     (e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised. Shares of Common Stock subject to the Option will be
delivered by the Company as soon as practicable following exercise.

     (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

          (1) in cash or by check, payable to the order of the Company;

          (2) except as may otherwise be provided in the applicable option
agreement, by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price and any required tax withholding;

          (3) to the extent provided for in the applicable option agreement or
approved by the Board, in its sole discretion, by delivery (either by actual
delivery or attestation) of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved by)
the Board ("Fair Market Value"), provided (i) such method of payment is then
permitted under applicable law, (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant for such minimum period of time,
if any, as may be established by the Board in its discretion and (iii) such
Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements;

          (4) to the extent permitted by applicable law and provided for in the
applicable option agreement or approved by the Board, in its sole discretion, by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or

          (5) by any combination of the above permitted forms of payment.

     (g) Fair Market Value. "Fair Market Value" of a share of Common Stock for
purposes of the Plan will be determined as follows:


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          (1) if the Common Stock trades on a national securities exchange, the
closing sale price (for the primary trading session) on the date of grant; or

          (2) if the Common Stock does not trade on any such exchange, the
average of the closing bid and asked prices as reported by an authorized OTCBB
market data vendor as listed on the OTCBB website (otcbb.com) on the date of
grant; or

          (3) if the Common Stock is not publicly traded, the Board will
determine the Fair Market Value for purposes of the Plan using any measure of
value it determines to be appropriate (including, as it considers appropriate,
relying on appraisals) in a manner consistent with the valuation principles
under Code Section 409A, except as the Board may expressly determine otherwise.

     For any date that is not a trading day, the Fair Market Value of a share of
Common Stock for such date will be determined by using the closing sale price or
average of the bid and asked prices, as appropriate, for the immediately
preceding trading day and with the timing in the formulas above adjusted
accordingly. The Board can substitute a particular time of day or other measure
of "closing sale price" or "bid and asked prices" if appropriate because of
exchange or market procedures or can, in its sole discretion, use weighted
averages either on a daily basis or such longer period as complies with Code
Section 409A.

     The Board has sole discretion to determine the Fair Market Value for
purposes of this Plan, and all Awards are conditioned on the Participants'
agreement that the Board's determination is conclusive and binding even though
others might make a different determination.

6.   Director Options.

     (a) Initial Grant. After the effective date of this Plan, upon the
commencement of service on the Company's Board of Directors by any individual
who is not then an employee of the Company or any subsidiary of the Company, the
Company shall grant to such person a Nonstatutory Stock Option to purchase
100,000 shares of Common Stock (subject to adjustment under Section 10). In
addition, on the effective date of this Plan, the Company shall grant to each
individual who is not then an employee of the Company or any subsidiary of the
Company and who is serving on the Board on such date (each, a "Current
Director"), other than (i) Current Directors who are serving on the Board as
representatives of entities that have invested in the Company (each, a "Current
Investor Director") and (ii) the Chairman of the Company's Board of Directors, a
Nonstatutory Stock Option to purchase 100,000 shares of Common Stock (subject to
adjustment under Section 10). On the first day the Common Stock trades on a
national securities exchange (the "First Public Trading Day"), the Company shall
grant to each Current Investor Director who is serving on the Board on the First
Public Trading Day and has not tendered a resignation from the Board on or prior
to the First Public Trading Day a Nonstatutory Stock Option to purchase 100,000
shares of Common Stock (subject to adjustment under Section 10). An Option
granted under this Section 6(a) shall become vested as to one-third (1/3) of the
original number of shares of Common Stock subject to the Option on the first
anniversary of the day of grant of the Option (the "First Vesting Date") and as
to one-thirty-sixth (1/36) of such


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shares on each monthly anniversary of the First Vesting Date (the First Vesting
Date and each monthly anniversary of the First Vesting Date, a "Vesting Date"),
provided that the individual is serving on the Company's Board of Directors on
such Vesting Date.

     (b) Annual Grant. On the date of each annual meeting of stockholders of the
Company, the Company shall grant to each member of the Company's Board of
Directors who is both serving as a director of the Company immediately prior to
and immediately following such annual meeting and who is not then an employee of
the Company or any of its subsidiaries, a Nonstatutory Stock Option to purchase
35,000 shares of Common Stock (subject to adjustment under Section 10);
provided, however, that a director shall not be eligible to receive an option
grant under this Section 6(b) until such director has served on the Company's
Board of Directors for at least six months. An Option granted under this Section
6(b) shall be fully vested when granted.

     (c) Terms of Director Options. Options granted under this Section 6 shall
(i) have an exercise price equal to the Fair Market Value of Common Stock on the
date the Option is granted, (ii) expire on the earlier of 10 years from the date
of grant or one year following cessation of service on the Board and (iii)
contain such other terms and conditions as the Board shall determine.

     (d) Board Discretion. The Board retains the specific authority to from time
to time increase or decrease the number of shares subject to Options granted
under this Section 6, to issue SARs, Restricted Stock Awards, or Other
Stock-Based Awards in lieu of some or all of the Options otherwise issuable
under this Section 6 and to provide for accelerated vesting in the case of
death, disability, or change in control.

     (e) Other Agreements. If so determined by the Board, the obligation to
grant options to an individual under this Section 6 shall be reduced to the
extent the Company is otherwise obligated to grant, or the Board otherwise
grants or has granted, options to such individual.

7.   Stock Appreciation Rights.

     (a) General. The Board may grant Awards consisting of SARs entitling the
holder, upon exercise, to receive an amount of Common Stock determined by
reference to appreciation, from and after the date of grant, in the fair market
value of a share of Common Stock over the exercise price established pursuant to
Section 7(c). The date as of which such appreciation is determined shall be the
exercise date.

     (b) Grants. SARs may be granted in tandem with, or independently of,
Options granted under the Plan.

          (1) Tandem Awards. When SARs are expressly granted in tandem with
Options, (i) the SAR will be exercisable only at such time or times, and to the
extent, that the related Option is exercisable (except to the extent designated
by the Board in connection with a Reorganization Event or a Change in Control
Event ) and will be exercisable in accordance with the procedure required for
exercise of the related Option; (ii) the SAR will terminate and no


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longer be exercisable upon the termination or exercise of the related Option,
except to the extent designated by the Board in connection with a Reorganization
Event or a Change in Control Event and except that a SAR granted with respect to
less than the full number of shares covered by an Option will not be reduced
until the number of shares as to which the related Option has been exercised or
has terminated exceeds the number of shares not covered by the SAR; (iii) the
Option will terminate and no longer be exercisable upon the exercise of the
related SAR; and (iv) the SAR will be transferable only with the related Option.

          (2) Independent SARs. A SAR not expressly granted in tandem with an
Option will become exercisable at such time or times, and on such conditions, as
the Board may specify in the SAR Award.

     (c) Exercise Price. The Board shall establish the exercise price of each
SAR and specify it in the applicable SAR agreement. The exercise price shall not
be less than 100% of the Fair Market Value on the date the SAR is granted;
provided that if the Board approves the grant of a SAR with an exercise price to
be determined on a future date, the exercise price shall be not less than 100%
of the Fair Market Value on such future date.

     (d) Duration of SARs. Each SAR shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
SAR agreement.

     (e) Exercise of SARs. SARs may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board, together with any
other documents required by the Board.

8.   Restricted Stock; Restricted Stock Units.

     (a) General. The Board may grant Awards entitling recipients to acquire
shares of Common Stock ("Restricted Stock"), subject to the right of the Company
to repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award. Instead
of granting Awards for Restricted Stock, the Board may grant Awards entitling
the recipient to receive shares of Common Stock or cash to be delivered at the
time such Award vests ("Restricted Stock Units") (Restricted Stock and
Restricted Stock Units are each referred to herein as a "Restricted Stock
Award").

     (b) Terms and Conditions for All Restricted Stock Awards. The Board shall
determine the terms and conditions of a Restricted Stock Award, including the
conditions for vesting and repurchase (or forfeiture) and the issue price, if
any.

     (c) Additional Provisions Relating to Restricted Stock.


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          (1) Dividends. Participants holding shares of Restricted Stock will be
entitled to all ordinary cash dividends paid with respect to such shares, unless
otherwise provided by the Board. Unless otherwise provided by the Board, if any
dividends or distributions are paid in shares, or consist of a dividend or
distribution to holders of Common Stock other than an ordinary cash dividend,
the shares, cash or other property will be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Stock with
respect to which they were paid. Each dividend payment will be made no later
than the end of the calendar year in which the dividends are paid to
shareholders of that class of stock or, if later, the 15th day of the third
month following the date the dividends are paid to shareholders of that class of
stock.

          (2) Stock Certificates. The Company may require that any stock
certificates issued in respect of shares of Restricted Stock shall be deposited
in escrow by the Participant, together with a stock power endorsed in blank,
with the Company (or its designee). At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or if the
Participant has died, to the beneficiary designated, in a manner determined by
the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant's death (the "Designated
Beneficiary"). In the absence of an effective designation by a Participant,
"Designated Beneficiary" shall mean the Participant's estate.

     (d) Additional Provisions Relating to Restricted Stock Units.

          (1) Settlement. Upon the vesting of and/or lapsing of any other
restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the
Participant shall be entitled to receive from the Company one share of Common
Stock or an amount of cash equal to the Fair Market Value of one share of Common
Stock, as provided in the applicable Award agreement. The Board may, in its
discretion, provide that settlement of Restricted Stock Units shall be deferred,
on a mandatory basis or at the election of the Participant.

          (2) Voting Rights. A Participant shall have no voting rights with
respect to any Restricted Stock Units.

          (3) Dividend Equivalents. To the extent provided by the Board, in its
sole discretion, a grant of Restricted Stock Units may provide Participants with
the right to receive an amount equal to any dividends or other distributions
declared and paid on an equal number of outstanding shares of Common Stock
("Dividend Equivalents"). Dividend Equivalents may be paid currently or credited
to an account for the Participants, may be settled in cash and/or shares of
Common Stock and may be subject to the same restrictions on transfer and
forfeitability as the Restricted Stock Units with respect to which paid, as
determined by the Board in its sole discretion, subject in each case to such
terms and conditions as the Board shall establish, in each case to be set forth
in the applicable Award agreement.

9.   Other Stock-Based Awards

     Other Awards of shares of Common Stock, and other Awards that are valued in
whole or in part by reference to, or are otherwise based on, shares of Common
Stock or other property,


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may be granted hereunder to Participants ("Other Stock-Based Awards"), including
without limitation Awards entitling recipients to receive shares of Common Stock
to be delivered in the future. Such Other Stock-Based Awards shall also be
available as a form of payment in the settlement of other Awards granted under
the Plan or as payment in lieu of compensation to which a Participant is
otherwise entitled. Other Stock-Based Awards may be paid in shares of Common
Stock or cash, as the Board shall determine. Subject to the provisions of the
Plan, the Board shall determine the terms and conditions of each Other
Stock-Based Award, including any purchase price applicable thereto.

10.  Adjustments for Changes in Common Stock and Certain Other Events.

     (a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any dividend or distribution to holders of Common Stock other than
an ordinary cash dividend, (i) the number and class of securities available
under this Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii)
the number and class of securities and exercise price per share of each
outstanding Option and each Option issuable under Section 6, (iv) the share- and
per-share provisions and the exercise price of each SAR, (v) the number of
shares subject to and the repurchase price per share subject to each outstanding
Restricted Stock Award, and (vi) the share- and per-share-related provisions and
the purchase price, if any, of each outstanding Other Stock-Based Award, shall
be equitably adjusted by the Company (or substituted Awards may be made, if
applicable) in the manner determined by the Board. Without limiting the
generality of the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to an outstanding Option are adjusted as of the date of
the distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

     (b) Reorganization Events.

          (1) Definition. A "Reorganization Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash, securities or other
property pursuant to a share exchange transaction or (c) any liquidation or
dissolution of the Company.

          (2) Consequences of a Reorganization Event on Awards Other than
Restricted Stock Awards. In connection with a Reorganization Event, the Board
may take any one or more of the following actions as to all or any (or any
portion of) outstanding Awards other than Restricted Stock Awards on such terms
as the Board determines: (i) provide that Awards shall be assumed, or
substantially equivalent Awards shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon written notice to a
Participant, provide


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that the Participant's unexercised Awards will terminate immediately prior to
the consummation of such Reorganization Event unless exercised by the
Participant within a specified period following the date of such notice, (iii)
provide that outstanding Awards shall become exercisable, realizable, or
deliverable, or restrictions applicable to an Award shall lapse, in whole or in
part prior to or upon such Reorganization Event, (iv) in the event of a
Reorganization Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share surrendered in
the Reorganization Event (the "Acquisition Price"), make or provide for a cash
payment to a Participant equal to the excess, if any, of (A) the Acquisition
Price times the number of shares of Common Stock subject to the Participant's
Awards (to the extent the exercise price does not exceed the Acquisition Price)
over (B) the aggregate exercise price of all such outstanding Awards and any
applicable tax withholdings, in exchange for the termination of such Awards, (v)
provide that, in connection with a liquidation or dissolution of the Company,
Awards shall convert into the right to receive liquidation proceeds (if
applicable, net of the exercise price thereof and any applicable tax
withholdings) and (vi) any combination of the foregoing. In taking any of the
actions permitted under this Section 10(b), the Board shall not be obligated by
the Plan to treat all Awards, all Awards held by a Participant, or all Awards of
the same type, identically.

          For purposes of clause (i) above, an Option shall be considered
assumed if, following consummation of the Reorganization Event, the Option
confers the right to purchase, for each share of Common Stock subject to the
Option immediately prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property) received as a result
of the Reorganization Event by holders of Common Stock for each share of Common
Stock held immediately prior to the consummation of the Reorganization Event
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a result
of the Reorganization Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Reorganization Event.

          (3) Consequences of a Reorganization Event on Restricted Stock Awards.
Upon the occurrence of a Reorganization Event other than a liquidation or
dissolution of the Company, the repurchase and other rights of the Company under
each outstanding Restricted Stock Award shall inure to the benefit of the
Company's successor and shall, unless the Board determines otherwise, apply to
the cash, securities or other property which the Common Stock was converted into
or exchanged for pursuant to such Reorganization Event in the same manner and to
the same extent as they applied to the Common Stock subject to such Restricted
Stock Award. Upon the occurrence of a Reorganization Event involving the
liquidation or dissolution of the Company, except to the extent specifically
provided to the contrary in the instrument evidencing any Restricted Stock Award
or any other agreement between a Participant and the


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Company, all restrictions and conditions on all Restricted Stock Awards then
outstanding shall automatically be deemed terminated or satisfied.

     (c) Change in Control Events

          (1) Definitions. A "Change in Control Event" shall mean an event or
occurrence set forth in any one or more of subsections (A) through (D) below
(including without limitation an event or occurrence that constitutes a Change
in Control Event under one of such subsections but is specifically exempted from
another such subsection):

               (A)  the acquisition by an individual, entity or group (within
                    the meaning of Section 13(d)(3) or 14(d)(2) of the
                    Securities Exchange Act of 1934, as amended (the "Exchange
                    Act")) (a "Person") of beneficial ownership of any capital
                    stock of the Company if, after such acquisition, such Person
                    beneficially owns (within the meaning of Rule 13d-3
                    promulgated under the Exchange Act) 50% or more of either
                    (x) the then-outstanding As-Converted Common Stock (as
                    defined below) of the Company (such outstanding shares, the
                    "Outstanding As-Converted Company Common Stock") or (y) the
                    combined voting power of the then-outstanding securities of
                    the Company entitled to vote generally in the election of
                    directors (the "Outstanding Company Voting Securities");
                    provided, however, that for purposes of this subsection (A),
                    the following acquisitions shall not constitute a Change in
                    Control Event: (1) any acquisition directly from the Company
                    (excluding an acquisition pursuant to the exercise,
                    conversion or exchange of any security exercisable for,
                    convertible into or exchangeable for common stock or voting
                    securities of the Company, unless the Person exercising,
                    converting or exchanging such security acquired such
                    security directly from the Company or an underwriter or
                    agent of the Company), (2) any acquisition by the Company,
                    (3) any acquisition by any employee benefit plan (or related
                    trust) sponsored or maintained by the Company or any
                    corporation controlled by the Company, or (4) any
                    acquisition by any corporation pursuant to a transaction
                    which complies with clauses (x) and (y) of subsection (C) of
                    this definition; or

               (B)  such time as the Continuing Directors (as defined below) do
                    not constitute a majority of the Board (or, if applicable,
                    the Board of Directors of a successor corporation to the
                    Company), where the term "Continuing Director" means at


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<PAGE>

                    any date a member of the Board (x) who was a member of the
                    Board on the date of the initial adoption of this Plan by
                    the Board or (y) who was nominated or elected subsequent to
                    such date by at least a majority of the directors who were
                    Continuing Directors at the time of such nomination or
                    election or whose election to the Board was recommended or
                    endorsed by at least a majority of the directors who were
                    Continuing Directors at the time of such nomination or
                    election; provided, however, that there shall be excluded
                    from this clause (y) any individual whose initial assumption
                    of office occurred as a result of an actual or threatened
                    election contest with respect to the election or removal of
                    directors or other actual or threatened solicitation of
                    proxies or consents, by or on behalf of a person other than
                    the Board; or

               (C)  the consummation of a merger, consolidation, reorganization,
                    recapitalization or statutory share exchange involving the
                    Company or a sale or other disposition of all or
                    substantially all of the assets of the Company in one or a
                    series of related transactions (a "Business Combination"),
                    unless, immediately following such Business Combination,
                    each of the following two conditions is satisfied: (x) all
                    or substantially all of the individuals and entities who
                    were the beneficial owners of the Outstanding As-Converted
                    Company Common Stock and Outstanding Company Voting
                    Securities immediately prior to such Business Combination
                    beneficially own, directly or indirectly, more than 50% of
                    the then-outstanding As-Converted Common Stock and the
                    combined voting power of the then-outstanding securities
                    entitled to vote generally in the election of directors,
                    respectively, of the resulting or acquiring corporation in
                    such Business Combination (which shall include, without
                    limitation, a corporation which as a result of such
                    transaction owns the Company or substantially all of the
                    Company's assets either directly or through one or more
                    subsidiaries) (such resulting or acquiring corporation is
                    referred to herein as the "Acquiring Corporation") in
                    substantially the same proportions as their ownership,
                    immediately prior to such Business Combination, of the
                    Outstanding As-Converted Company Common Stock and
                    Outstanding Company Voting Securities, respectively; and (y)
                    no Person (excluding any employee benefit plan (or related
                    trust) maintained or sponsored by the Company or by the


                                      -12-

<PAGE>

                    Acquiring Corporation) beneficially owns, directly or
                    indirectly, 50% or more of the then-outstanding As-Converted
                    Common Stock of the Acquiring Corporation, or of the
                    combined voting power of the then-outstanding securities of
                    such corporation entitled to vote generally in the election
                    of directors (except to the extent that such ownership
                    existed prior to the Business Combination); or

               (D)  approval by the stockholders of the Company of a complete
                    liquidation or dissolution of the Company.

          (B)  "As-Converted Common Stock" means the outstanding shares of
               common stock of an entity together with all shares of common
               stock then issuable upon the conversion or exchange of any
               outstanding securities convertible into or exchangeable for
               common stock of such entity, but excluding any common stock
               issuable upon the exercise of any outstanding securities (such as
               options and warrants) exercisable for common stock of such
               entity.

          (C)  "Good Reason" shall mean any significant diminution in the
               Participant's title, authority, or responsibilities from and
               after such Reorganization Event or Change in Control Event, as
               the case may be, or any reduction in the annual cash compensation
               payable to the Participant from and after such Reorganization
               Event or Change in Control Event, as the case may be, or the
               relocation of the place of business at which the Participant is
               principally located to a location that is greater than 50 miles
               from its location immediately prior to such Reorganization Event
               or Change in Control Event.

          (D)  "Cause" shall mean any (i) willful failure by the Participant to
               perform his or her material responsibilities to the Company or
               (ii) willful misconduct by the Participant which affects the
               business reputation of the Company.

          (2) Effect on Options. Notwithstanding the provisions of Section
10(b), except to the extent specifically provided to the contrary in the
instrument evidencing any Option or any other agreement between a Participant
and the Company, each such Option shall be immediately exercisable in full if,
on or prior to the first anniversary of the date of the consummation of the
Change in Control Event, the Participant's employment with the Company or the
acquiring or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the acquiring or
succeeding corporation.

          (3) Effect on Restricted Stock Awards. Notwithstanding the provisions
of Section 10(b), except to the extent specifically provided to the contrary in
the instrument


                                      -13-

<PAGE>

evidencing any Restricted Stock Award or any other agreement between a
Participant and the Company, each such Restricted Stock Award shall immediately
become free from all conditions or restrictions if, on or prior to the first
anniversary of the date of the consummation of the Change in Control Event, the
Participant's employment with the Company or the acquiring or succeeding
corporation is terminated for Good Reason by the Participant or is terminated
without Cause by the Company or the acquiring or succeeding corporation.

          (4) Effect on SARs and Other Stock-Based Awards. The Board may specify
in an Award at the time of the grant the effect of a Change in Control Event on
any SAR and Other Stock-Based Award.

11.  General Provisions Applicable to Awards

     (a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or, other than in the case of an Incentive Stock Option, pursuant
to a qualified domestic relations order, and, during the life of the
Participant, shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

     (b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

     (c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.

     (d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, termination or other cessation of employment,
authorized leave of absence or other change in the employment or other status of
a Participant and the extent to which, and the period during which, the
Participant, or the Participant's legal representative, conservator, guardian or
Designated Beneficiary, may exercise rights under the Award.

     (e) Withholding. The Participant must satisfy all applicable federal,
state, and local or other income and employment tax withholding obligations
before the Company will deliver stock certificates or otherwise recognize
ownership of Common Stock under an Award. The Company may decide to satisfy the
withholding obligations through additional withholding on salary or wages. If
the Company elects not to or cannot withhold from other compensation, the
Participant must pay the Company the full amount, if any, required for
withholding or have a broker tender to the Company cash equal to the withholding
obligations. Payment of withholding obligations is due before the Company will
issue any shares on exercise or release from forfeiture of an Award or, if the
Company so requires, at the same time as is payment of the exercise price unless
the Company determines otherwise. If provided for in an Award or approved by the
Board in its sole discretion, a Participant may satisfy such tax obligations in


                                      -14-

<PAGE>

whole or in part by delivery of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their Fair Market
Value; provided, however, except as otherwise provided by the Board, that the
total tax withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company's minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income). Shares surrendered to satisfy tax withholding requirements cannot be
subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.

     (f) Amendment of Award.

          (1) The Board may amend, modify or terminate any outstanding Award,
including but not limited to, substituting therefor another Award of the same or
a different type, changing the date of exercise or realization, and converting
an Incentive Stock Option to a Nonstatutory Stock Option. The Participant's
consent to such action shall be required unless (i) the Board determines that
the action, taking into account any related action, would not materially and
adversely affect the Participant's rights under the Plan or (ii) the change is
permitted under Section 10 hereof.

          (2) The Board may, without stockholder approval, amend any outstanding
Award granted under the Plan to provide an exercise price per share that is
lower than the then-current exercise price per share of such outstanding Award.
The Board may also, without stockholder approval, cancel any outstanding award
(whether or not granted under the Plan) and grant in substitution therefor new
Awards under the Plan covering the same or a different number of shares of
Common Stock and having an exercise price per share lower than the then-current
exercise price per share of the cancelled award.

     (g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

     (h) Acceleration. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.

12.  Miscellaneous

     (a) No Right to Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company


                                      -15-

<PAGE>

expressly reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under the Plan,
except as expressly provided in the applicable Award.

     (b) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.

     (c) Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board. No Awards shall be granted under the
Plan after the expiration of 10 years from the earlier of (i) the date on which
the Plan was adopted by the Board or (ii) the date the Plan was approved by the
Company's stockholders, but Awards previously granted may extend beyond that
date.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time provided that (i) to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders if required by
Section 162(m) (including the vote required under Section 162(m)); and (ii) if,
and for so long as, the Company's securities are traded on The NASDAQ Stock
Market, no amendment that would require stockholder approval under the rules of
The NASDAQ Stock Market may be made effective unless and until such amendment
shall have been approved by the Company's stockholders. In addition, if at any
time the approval of the Company's stockholders is required as to any other
modification or amendment under Section 422 of the Code or any successor
provision with respect to Incentive Stock Options, the Board may not effect such
modification or amendment without such approval. Unless otherwise specified in
the amendment, any amendment to the Plan adopted in accordance with this Section
12(d) shall apply to, and be binding on the holders of, all Awards outstanding
under the Plan at the time the amendment is adopted, provided the Board
determines that such amendment does not materially and adversely affect the
rights of Participants under the Plan. No Award shall be made that is
conditioned upon stockholder approval of any amendment to the Plan.

     (e) Provisions for Foreign Participants. The Board may modify Awards
granted to Participants who are foreign nationals or employed outside the United
States or establish subplans or procedures under the Plan to recognize
differences in laws, rules, regulations or customs of such foreign jurisdictions
with respect to tax, securities, currency, employee benefit or other matters.

     (f) Compliance with Code Section 409A. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code, unless the
Board, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code. The Company shall have no
liability to a Participant, or any other party, if an Award that is intended to
be exempt from, or compliant with, Section 409A is not so exempt or compliant or
for any action taken by the Board.


                                      -16-

<PAGE>

     (g) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, excluding choice-of-law principles of the law of such state that would
require the application of the laws of a jurisdiction other than such state.


                                      -17-