TORNADO GOLD INTERNATIONAL CORP.

                                 2005 STOCK PLAN


         1. Purposes of the Plan. The purposes of this 2005 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants and
to promote the success of the Company's business. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant of an Option and subject to the
applicable provisions of Section 422 of the Code and the regulations and
interpretations promulgated thereunder. Stock purchase rights may also be
granted under the Plan.

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

                  (a) "Administrator" means the Board or its Committee
appointed pursuant to Section 4 of the Plan.

                  (b) "Affiliate" means an entity other than a Subsidiary (as
defined below) which, together with the Company, is under common control of a
third person or entity.

                  (c) "Applicable Laws" means the legal requirements relating to
the administration of stock option and restricted stock purchase plans,
including under applicable U.S. state corporate laws, U.S. federal and
applicable state securities laws, other U.S. federal and state laws, the Code,
any Stock Exchange rules or regulations and the applicable laws, rules and
regulations of any other country or jurisdiction where Options or Stock Purchase
Rights are granted under the Plan, as such laws, rules, regulations and
requirements shall be in place from time to time.

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

                  (e) "Cause" for termination of a Participant's Continuous
Service Status will exist if the Participant is terminated by the Company for
any of the following reasons: (i) Participant's willful failure substantially to
perform his or her duties and responsibilities to the Company or deliberate
violation of a Company policy; (ii) Participant's commission of any act of
fraud, embezzlement, dishonesty or any other willful misconduct that has caused
or is reasonably expected to result in material injury to the Company; (iii)
unauthorized use or disclosure by Participant of any proprietary information or
trade secrets of the Company or any other party to whom the Participant owes an
obligation of nondisclosure as a result of his or her relationship with the
Company; or (iv) Participant's willful breach of any of his or her obligations
under any written agreement or covenant with the Company. The determination as
to whether a Participant is being terminated for Cause shall be made in good
faith by the Company and shall be final and binding on the Participant. The
foregoing definition does not in any way limit the Company's ability to
terminate a Participant's employment or consulting relationship at any time as
provided in Section 5(d) below, and the term "Company" will be interpreted to
include any Subsidiary, Parent or Affiliate, as appropriate.

                  (f) "Change of Control" means (1) a sale of all or
substantially all of the Company's assets, or (2) any merger, consolidation or
other business combination transaction of the Company with or into another
corporation, entity or person, other than a transaction in which the holders of
at least a majority of the shares of voting capital stock of the Company
outstanding immediately prior to such transaction continue to hold (either by
such shares remaining outstanding or by their being converted into shares of
voting capital stock of the surviving entity) a majority of the total voting
power represented by the shares of voting capital stock of the Company (or the
surviving entity) outstanding immediately after such transaction, or (3) the
direct or indirect acquisition (including by way of a tender or exchange offer)
by any person, or persons acting as a group, of beneficial ownership or a right
to acquire beneficial ownership of shares representing a majority of the voting
power of the then outstanding shares of capital stock of the Company.


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<PAGE>

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

                  (h) "Committee" means one or more committees or subcommittees
of the Board appointed by the Board to administer the Plan in accordance with
Section 4 below.

                  (i) "Common Stock" means the Common Stock of the Company.

                  (j) "Company" means Tornado Gold International Corp., a Nevada
corporation.

                  (k) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent, Subsidiary or Affiliate to render
services and is compensated for such services, and any director of the Company
whether compensated for such services or not.

                  (l) "Continuous Service Status" means the absence of any
interruption or termination of service as an Employee or Consultant. Continuous
Service Status as an Employee or Consultant shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of
absence approved by the Administrator, provided that such leave is for a period
of not more than ninety (90) days, unless reemployment upon the expiration of
such leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its Parents,
Subsidiaries, Affiliates or their respective successors. A change in status from
an Employee to a Consultant or from a Consultant to an Employee will not
constitute an interruption of Continuous Service Status.

                  (m) "Corporate Transaction" means a sale of all or
substantially all of the Company's assets, or a merger, consolidation or other
capital reorganization or business combination transaction of the Company with
or into another corporation, entity or person, or the direct or indirect
acquisition (including by way of a tender or exchange offer) by any person, or
persons acting as a group, of beneficial ownership or a right to acquire
beneficial ownership of shares representing a majority of the voting power of
the then outstanding shares of capital stock of the Company.

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

                  (o) "Employee" means any person employed by the Company or any
Parent, Subsidiary or Affiliate, with the status of employment determined based
upon such factors as are deemed appropriate by the Administrator in its
discretion, subject to any requirements of the Code or the Applicable Laws. The
payment by the Company of a director's fee to a Director shall not be sufficient
to constitute "employment" of such Director by the Company.

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

                  (q) "Fair Market Value" means, as of any date, the fair market
value of the Common Stock, as determined by the Administrator in good faith on
such basis as it deems appropriate and applied consistently with respect to
Participants. Whenever possible, the determination of Fair Market Value shall be
based upon the closing price for the Shares as reported in the Wall Street
Journal for the applicable date.

                  (r) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable Option Agreement.

                   (s) "Listed Security" means any security of the Company that
is listed or approved for listing on a national securities exchange or
designated or approved for designation as a national market system security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc.



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<PAGE>


                  (t) "Named Executive" means any individual who, on the last
day of the Company's fiscal year, is the chief executive officer of the Company
(or is acting in such capacity) or among the four most highly compensated
officers of the Company (other than the chief executive officer). Such officer
status shall be determined pursuant to the executive compensation disclosure
rules under the Exchange Act.

                  (u) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.

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

                  (w) "Option Agreement" means a written document, the form(s)
of which shall be approved from time to time by the Administrator, reflecting
the terms of an Option granted under the Plan and includes any documents
attached to or incorporated into such Option Agreement, including, but not
limited to, a notice of stock option grant and a form of exercise notice.

                  (x) "Option Exchange Program" means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price or are amended to decrease the exercise price as a result of a
decline in the Fair Market Value of the Common Stock.

                  (y) "Optioned Stock" means the Common Stock subject to an
Option.

                  (z) "Optionee" means an Employee or Consultant who receives an
Option.

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

                  (bb) "Participant" means any holder of one or more Options or
Stock Purchase Rights, or the Shares issuable or issued upon exercise of such
awards, under the Plan.

                  (cc) "Plan" means this 2005 Stock Option Plan.

                  (dd) "Reporting Person" means an officer, Director, or greater
than ten percent stockholder of the Company within the meaning of Rule 16a-2
under the Exchange Act, who is required to file reports pursuant to Rule 16a-3
under the Exchange Act.

                  (ee) "Restricted Stock" means Shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.



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<PAGE>


                  (ff) "Restricted Stock Purchase Agreement" means a written
document, the form(s) of which shall be approved from time to time by the
Administrator, reflecting the terms of a Stock Purchase Right granted under the
Plan and includes any documents attached to such agreement.

                  (gg) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act, as amended from time to time, or any successor provision.

                  (hh) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 14 of the Plan.

                  (ii) "Stock Exchange" means any stock exchange or consolidated
stock price reporting system on which prices for the Common Stock are quoted at
any given time.

                  (jj) "Stock Purchase Right" means the right to purchase
Common Stock pursuant to Section 11 below.

                  (kk) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.

                  (ll) "Ten Percent Holder" means a person who owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary.

         3. Stock Subject to the Plan. Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of Shares that may be sold under the
Plan is (a) 6,707,400 Shares of Common Stock, (no greater than 30% of the
current issued and outstanding ), or (b) such lesser number of Shares as the
Board shall determine. The Shares may be authorized, but unissued, or reacquired
Common Stock. If an award should expire or become unexercisable for any reason
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares that were subject thereto shall, unless
the Plan shall have been terminated, become available for future grant under the
Plan. In addition, any Shares of Common Stock which are retained by the Company
upon exercise of an award in order to satisfy the exercise or purchase price for
such award or any withholding taxes due with respect to such exercise or
purchase shall be treated as not issued and shall continue to be available under
the Plan. Shares issued under the Plan and later repurchased by the Company
pursuant to any repurchase right which the Company may have shall be available
for future grant under the Plan; provided, however, that no more than 7,038,681
Shares may be granted under the Plan pursuant to Incentive Stock Options.

         4. Administration of the Plan.

                  (a) General. The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may be
administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.


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<PAGE>

                  (b) Committee Composition. If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee administering
the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of
the Code, to the extent permitted or required by such provisions. The Committee
shall in all events conform to any requirements of the Applicable Laws.

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

                           (i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(q) of the Plan, provided that such
determination shall be applied consistently with respect to Participants under
the Plan;

                           (ii) to select the Employees and Consultants to whom
Plan awards may from time to time be granted;

                           (iii) to determine whether and to what extent Plan
awards are granted;

                           (iv) to determine the number of Shares of Common
Stock to be covered by each award granted;

                           (v) to approve the form(s) of agreement(s) used under
the Plan;

                           (vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder, which
terms and conditions include but are not limited to the exercise or purchase
price, the time or times when awards may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, any pro rata adjustment to vesting as a result of a Participant's
transitioning from full- to part-time service (or vice versa), and any
restriction or limitation regarding any Option, Optioned Stock, Stock Purchase
Right or Restricted Stock, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

                           (vii) to determine whether and under what
circumstances an Option may be settled in cash under Section 10(c) instead of
Common Stock;

                           (viii) to implement an Option Exchange Program on
such terms and conditions as the Administrator in its discretion deems
appropriate, provided that no amendment or adjustment to an Option that would
materially and adversely affect the rights of any Optionee shall be made without
the prior written consent of the Optionee;

                           (ix) to adjust the vesting of an Option held by an
Employee or Consultant as a result of a change in the terms or conditions under
which such person is providing services to the Company;

                           (x) to construe and interpret the terms of the Plan
and awards granted under the Plan, which constructions, interpretations and
decisions shall be final and binding on all Participants; and

                           (xi) in order to fulfill the purposes of the Plan and
without amending the Plan, to modify grants of Options or Stock Purchase Rights
to Participants who are foreign nationals or employed outside of the United
States in order to recognize differences in local law, tax policies or customs.



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         5. Eligibility.

                  (a) Recipients of Grants. Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees, provided that Employees of Affiliates
shall not be eligible to receive Incentive Stock Options.

                  (b) Type of Option. Each Option shall be designated in the
Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.

                  (c) ISO $100,000 Limitation. Notwithstanding any designation
under Section 5(b), to the extent that the aggregate Fair Market Value of Shares
with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year (under
all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options shall be treated as Nonstatutory Stock Options. For purposes of
this Section 5(c), Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares
subject to an Incentive Stock Option shall be determined as of the date of the
grant of such Option.

                  (d) No Employment Rights. The Plan shall not confer upon any
Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way with
such Participant's right or the Company's right to terminate the employment or
consulting relationship at any time for any reason.

         6. Term of Plan. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 16 of the Plan.

         7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided that the term shall be no more than ten (10)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement and provided further that, in the case of an Incentive
Stock Option granted to a person who at the time of such grant is a Ten Percent
(10%) Holder, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.

         8. Limitation on Grants to Employees. Subject to adjustment as provided
in Section 14 below, the maximum number of Incentive Shares that may be subject
to Options and Stock Purchase Rights granted to any one Employee under this Plan
as Incentive Stock Options for any fiscal year of the Company shall be $100,000.

         9. Option Exercise Price and Consideration.



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<PAGE>


                  (a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator and set forth in the Option Agreement, but shall
be subject to the following:

                           (i) In the case of an Incentive Stock Option

                           (A) granted to an Employee who at the time of grant
is a Ten Percent Holder, the per Share exercise price shall be no less than 110%
of the Fair Market Value per Share on the date of grant; or

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

                           (ii) In the case of a Nonstatutory Stock Option

                           (A) granted on any date on which the Common Stock is
not a Listed Security to a person who is at the time of grant is a Ten Percent
Holder, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant if required by the Applicable Laws
and, if not so required, shall be such price as is determined by the
Administrator;

                           (B) granted on any date on which the Common Stock is
not a Listed Security to any other eligible person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant if required by the Applicable Laws and, if not so required, shall be such
price as is determined by the Administrator; or

                           (C) granted on any date on which the Common Stock is
a Listed Security to any eligible person, the per share Exercise Price shall be
such price as determined by the Administrator provided that if such eligible
person is, at the time of the grant of such Option, a Named Executive of the
Company, the per share Exercise Price shall be no less than 100% of the Fair
Market Value on the date of grant if such Option is intended to qualify as
performance-based compensation under Section 162(m) of the Code.

                           (iii) Notwithstanding the foregoing, Options may be
granted with a per Share
exercise price other than as required above pursuant to a merger or other
corporate transaction.

                  (b) Permissible Consideration. The consideration to be paid
for the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant) and may
consist entirely of (1) cash; (2) check; (3) subject to any requirements of the
Applicable Laws, delivery of Optionee's promissory note having such recourse,
interest, security and redemption provisions as the Administrator determines to
be appropriate after taking into account the potential accounting consequences
of permitting an Optionee to deliver a promissory note; (4) cancellation of
indebtedness; (5) other Shares that have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option is exercised, provided that in the case of Shares acquired, directly or
indirectly, from the Company, such Shares must have been owned by the Optionee
for more than six months on the date of surrender (or such other period as may
be required to avoid the Company's incurring an adverse accounting charge); (6)
if, as of the date of exercise of an Option the Company then is permitting
employees to engage in a "same-day sale" cashless brokered exercise program
involving one or more brokers, through such a program that complies with the
Applicable Laws (including without limitation the requirements of Regulation T
and other applicable regulations promulgated by the Federal Reserve Board) and
that ensures prompt delivery to the Company of the amount required to pay the
exercise price and any applicable withholding taxes; or (7) any combination of
the foregoing methods of payment. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company and the
Administrator may, in its sole discretion, refuse to accept a particular form of
consideration at the time of any Option exercise.



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<PAGE>

         10. Exercise of Option.

                  (a)      General.

                           (i) Exercisability. Any Option granted hereunder
shall be exercisable at such times and under such conditions as determined by
the Administrator, consistent with the term of the Plan and reflected in the
Option Agreement, including vesting requirements and/or performance criteria
with respect to the Company and/or the Optionee.

                           (ii) Leave of Absence. The Administrator shall have
the discretion to determine whether and to what extent the vesting of Options
shall be tolled during any unpaid leave of absence; provided, however, that in
the absence of such determination, vesting of Options shall be tolled during any
such unpaid leave (unless otherwise required by the Applicable Laws). In the
event of military leave, vesting shall toll during any unpaid portion of such
leave, provided that, upon a Participant's returning from military leave (under
conditions that would entitle him or her to protection upon such return under
the Uniform Services Employment and Reemployment Rights Act), he or she shall be
given vesting credit with respect to Options to the same extent as would have
applied had the Participant continued to provide services to the Company
throughout the leave on the same terms as he or she was providing services
immediately prior to such leave.

                           (iii) Minimum Exercise Requirements. An Option may
not be exercised for a fraction of a Share. The Administrator may require that
an Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent an Optionee from exercising the full number of
Shares as to which the Option is then exercisable.

                           (iv) Procedures for and Results of Exercise. An
Option shall be deemed exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and the Company has received full payment for
the Shares with respect to which the Option is exercised. Full payment may, as
authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 9(b) of the Plan, provided that the
Administrator may, in its sole discretion, refuse to accept any form of
consideration at the time of any Option exercise.

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

                           (v) Rights as Stockholder. Until the issuance of the
Shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 14 of the
Plan.

                  (b) Termination of Employment or Consulting Relationship.
Except as otherwise set forth in this Section 10(b), the Administrator shall
establish and set forth in the applicable Option Agreement the terms and
conditions upon which an Option shall remain exercisable, if at all, following
termination of an Optionee's Continuous Service Status, which provisions may be
waived or modified by the Administrator at any time. Unless the Administrator
otherwise provides in the Option Agreement, to the extent that the Optionee is
not vested in Optioned Stock at the date of termination of his or her Continuous
Service Status, or if the Optionee (or other person entitled to exercise the
Option) does not exercise the Option to the extent so entitled within the time
specified in the Option Agreement or below (as applicable), the Option shall
terminate and the Optioned Stock underlying the unexercised portion of the
Option shall revert to the Plan. In no event may any Option be exercised after
the expiration of the Option term as set forth in the Option Agreement (and
subject to Section 7).

                  The following provisions (1) shall apply to the extent an
Option Agreement does not specify the terms and conditions upon which an Option
shall terminate upon termination of an Optionee's Continuous Service Status, and
(2) establish the minimum post-termination exercise periods that may be set
forth in an Option Agreement:

                           (i) Termination other than Upon Disability or Death
or for Cause. In the event of termination of Optionee's Continuous Service
Status other than under the circumstances set forth in subsections (ii) through
(iv) below, such Optionee may exercise an Option for thirty (30) days following
such termination to the extent the Optionee was vested in the Optioned Stock as
of the date of such termination. No termination shall be deemed to occur and
this Section 10(b)(i) shall not apply if (i) the Optionee is a Consultant who
becomes an Employee, or (ii) the Optionee is an Employee who becomes a
Consultant.



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                           (ii) Disability of Optionee. In the event of
termination of an Optionee's Continuous Service Status as a result of his or her
disability (including a disability within the meaning of Section 22(e)(3) of the
Code), such Optionee may exercise an Option at any time within six months
following such termination to the extent the Optionee was vested in the Optioned
Stock as of the date of such termination.

                           (iii) Death of Optionee. In the event of the death of
an Optionee during the period of Continuous Service Status since the date of
grant of the Option, or within thirty (30) days following termination of
Optionee's Continuous Service Status, the Option may be exercised by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance at any time within twelve months following the date of death, but
only to the extent the Optionee was vested in the Optioned Stock as of the date
of death or, if earlier, the date the Optionee's Continuous Service Status
terminated.

                           (iv) Termination for Cause. In the event of
termination of an Optionee's Continuous Service Status for Cause, any Option
(including any exercisable portion thereof) held by such Optionee shall
immediately terminate in its entirety upon first notification to the Optionee of
termination of the Optionee's Continuous Service Status. If an Optionee's
employment or consulting relationship with the Company is suspended pending an
investigation of whether the Optionee shall be terminated for Cause, all the
Optionee's rights under any Option likewise shall be suspended during the
investigation period and the Optionee shall have no right to exercise any
Option. This Section 10(b)(iv) shall apply with equal effect to vested Shares
acquired upon exercise of an Option granted on any date on which the Common
Stock is not a Listed Security to a person other than an officer, Director or
Consultant, in that the Company shall have the right to repurchase such Shares
from the Participant upon the following terms: (A) the repurchase is made within
ninety (90) days of termination of the Participant's Continuous Service Status
for Cause at the Fair Market Value of the Shares as of the date of termination,
(B) consideration for the repurchase consists of cash or cancellation of
purchase money indebtedness, and (C) the repurchase right terminates upon the
effective date of the Company's initial public offering of its Common Stock.
With respect to vested Shares issued upon exercise of an Option granted to any
officer, Director or Consultant, the Company's right to repurchase such Shares
upon termination of the Participant's Continuous Service Status for Cause shall
be made at the Participant's original cost for the Shares and shall be effected
pursuant to such terms and conditions, and at such time, as the Administrator
shall determine. Nothing in this Section 10(b)(iv) shall in any way limit the
Company's right to purchase unvested Shares issued upon exercise of an Option as
set forth in the applicable Option Agreement.

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

         11. Stock Purchase Rights.

                  (a) Rights to Purchase. When the Administrator determines that
it will offer Stock Purchase Rights under the Plan, it shall advise the offeree
in writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. In the case of a Stock Purchase Right granted prior to the date, if any,
on which the Common Stock becomes a Listed Security and if required by the
Applicable Laws at that time, the purchase price of Shares subject to such Stock
Purchase Rights shall not be less than 85% of the Fair Market Value of the
Shares as of the date of the offer, or, in the case of a Ten Percent Holder, the
price shall not be less than 100% of the Fair Market Value of the Shares as of
the date of the offer. If the Applicable Laws do not impose the requirements set
forth in the preceding sentence and with respect to any Stock Purchase Rights
granted after the date, if any, on which the Common Stock becomes a Listed
Security, the purchase price of Shares subject to Stock Purchase Rights shall be
as determined by the Administrator. The offer to purchase Shares subject to
Stock Purchase Rights shall be accepted by execution of a Restricted Stock
Purchase Agreement in the form determined by the Administrator.

                  (b)      Repurchase Option.

                           (i) General. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). Subject to any requirements of the Applicable Laws (including
without limitation Section 260.140.42(h) of the Rules of the California
Corporations Commissioner), the terms of the Company's repurchase option
(including without limitation the price at which, and the consideration for
which, it may be exercised, and the events upon which it shall lapse) shall be
as determined by the Administrator in its sole discretion and reflected in the
Restricted Stock Purchase Agreement.



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                           (ii) Leave of Absence. The Administrator shall have
the discretion to determine whether and to what extent the lapsing of Company
repurchase rights shall be tolled during any unpaid leave of absence; provided,
however, that in the absence of such determination, such lapsing shall be tolled
during any such unpaid leave (unless otherwise required by the Applicable Laws).
In the event of military leave, the lapsing of Company repurchase rights shall
toll during any unpaid portion of such leave, provided that, upon a
Participant's returning from military leave (under conditions that would entitle
him or her to protection upon such return under the Uniform Services Employment
and Reemployment Rights Act), he or she shall be given "vesting" credit with
respect to Shares purchased pursuant to the Restricted Stock Purchase Agreement
to the same extent as would have applied had the Participant continued to
provide services to the Company throughout the leave on the same terms as he or
she was providing services immediately prior to such leave.

                           (iii) Termination for Cause. In the event of
termination of a Participant's Continuous Service Status for Cause, the Company
shall have the right to repurchase from the Participant vested Shares issued
upon exercise of a Stock Purchase Right granted to any person other than an
officer, Director or Consultant prior to the date, if any, upon which the Common
Stock becomes a Listed Security upon the following terms: (A) the repurchase
must be made within 90 days of termination of the Participant's Continuous
Service Status for Cause at the Fair Market Value of the Shares as of the date
of termination, (B) consideration for the repurchase consists of cash or
cancellation of purchase money indebtedness, and (C) the repurchase right
terminates upon the effective date of the Company's initial public offering of
its Common Stock. With respect to vested Shares issued upon exercise of a Stock
Purchase Right granted to any officer, Director or Consultant, the Company's
right to repurchase such Shares upon termination of such Participant's
Continuous Service Status for Cause shall be made at the Participant's original
cost for the Shares and shall be effected pursuant to such terms and conditions,
and at such time, as the Administrator shall determine. Nothing in this Section
11(b)(ii) shall in any way limit the Company's right to purchase unvested Shares
as set forth in the applicable Restricted Stock Purchase Agreement.

                  (c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

                  (d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

         12. Taxes.

                  (a) As a condition of the grant, vesting or exercise of an
Option or Stock Purchase Right granted under the Plan, the Participant (or in
the case of the Participant's death, the person exercising the Option or Stock
Purchase Right) shall make such arrangements as the Administrator may require
for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with such grant,
vesting or exercise of the Option or Stock Purchase Right or the issuance of
Shares. The Company shall not be required to issue any Shares under the Plan
until such obligations are satisfied. If the Administrator allows the
withholding or surrender of Shares to satisfy a Participant's tax withholding
obligations under this Section 12 (whether pursuant to Section 12(c), (d) or
(e), or otherwise), the Administrator shall not allow Shares to be withheld in
an amount that exceeds the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes.

                  (b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option or Stock Purchase Right.

                  (c) This Section 12(c) shall apply only after the date, if
any, upon which the Common Stock becomes a Listed Security. In the case of
Participant other than an Employee (or in the case of an Employee where the next
payroll payment is not sufficient to satisfy such tax obligations, with respect
to any remaining tax obligations), in the absence of any other arrangement and
to the extent permitted under the Applicable Laws, the Participant shall be
deemed to have elected to have the Company withhold from the Shares to be issued
upon exercise of the Option or Stock Purchase Right that number of Shares having
a Fair Market Value determined as of the applicable Tax Date (as defined below)
equal to the amount required to be withheld. For purposes of this Section 12,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined under the
Applicable Laws (the "Tax Date").



                                       10
<PAGE>


                  (d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option or Stock Purchase Right by surrendering to the Company Shares that
have a Fair Market Value determined as of the applicable Tax Date equal to the
amount required to be withheld. In the case of shares previously acquired from
the Company that are surrendered under this Section 12(d), such Shares must have
been owned by the Participant for more than six (6) months on the date of
surrender (or such other period of time as is required for the Company to avoid
adverse accounting charges).

                  (e) Any election or deemed election by a Participant to have
Shares withheld to satisfy tax withholding obligations under Section 12(c) or
(d) above shall be irrevocable as to the particular Shares as to which the
election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by a Participant under Section 12(d) above must be
made on or prior to the applicable Tax Date.

                  (f) In the event an election to have Shares withheld is made
by a Participant and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Participant
shall receive the full number of Shares with respect to which the Option or
Stock Purchase Right is exercised but such Participant shall be unconditionally
obligated to tender back to the Company the proper number of Shares on the Tax
Date.

         13. Non-Transferability of Options and Stock Purchase Rights.

                  (a) General. Except as set forth in this Section 13, Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution. The designation of a beneficiary by an Optionee will
not constitute a transfer. An Option or Stock Purchase Right may be exercised,
during the lifetime of the holder of an Option or Stock Purchase Right, only by
such holder or a transferee permitted by this Section 13.

                  (b) Limited Transferability Rights. Notwithstanding anything
else in this Section 13, the Administrator may in its discretion grant
Nonstatutory Stock Options that may be transferred by instrument to an inter
vivos or testamentary trust in which the Options are to be passed to
beneficiaries upon the death of the trustor (settlor) or by gift or pursuant to
domestic relations orders to "Immediate Family Members" (as defined below) of
the Optionee. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships), a trust in which these persons
have more than fifty percent of the beneficial interest, a foundation in which
these persons (or the Optionee) control the management of assets, and any other
entity in which these persons (or the Optionee) own more than fifty percent of
the voting interests.

         14. Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

                  (a) Changes in Capitalization. Subject to any action required
under Applicable Laws by the stockholders of the Company, the number of Shares
of Common Stock covered by each outstanding award, the numbers of Shares set
forth in Sections 3 and 8 above, and the number of Shares of Common Stock that
have been authorized for issuance under the Plan but as to which no awards have
yet been granted or that have been returned to the Plan upon cancellation or
expiration of an award, as well as the price per Share of Common Stock covered
by each such outstanding award, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination,
recapitalization or reclassification of the Common Stock, or any other increase
or decrease in the number of issued Shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Administrator, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares of Common Stock subject to an
award.


                                       11
<PAGE>


                  (b) Dissolution or Liquidation. In the event of the
dissolution or liquidation of the Company, each Option and Stock Purchase Right
will terminate immediately prior to the consummation of such action, unless
otherwise determined by the Administrator.

                  (c) Corporate Transaction. In the event of a Corporate
Transaction (including without limitation a Change of Control), each outstanding
Option or Stock Purchase Right shall be assumed or an equivalent option or right
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation (the "Successor Corporation"), unless the Successor
Corporation does not agree to assume the award or to substitute an equivalent
option or right, in which case such Option or Stock Purchase Right shall
terminate upon the consummation of the transaction.

                  For purposes of this Section 14(c), an Option or a Stock
Purchase Right shall be considered assumed, without limitation, if, at the time
of issuance of the stock or other consideration upon a Corporate Transaction or
a Change of Control, as the case may be, each holder of an Option or Stock
Purchase Right would be entitled to receive upon exercise of the award the same
number and kind of shares of stock or the same amount of property, cash or
securities as such holder would have been entitled to receive upon the
occurrence of the transaction if the holder had been, immediately prior to such
transaction, the holder of the number of Shares of Common Stock covered by the
award at such time (after giving effect to any adjustments in the number of
Shares covered by the Option or Stock Purchase Right as provided for in this
Section 14); provided that if such consideration received in the transaction is
not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon exercise of the award to be solely common stock of the
Successor Corporation equal to the Fair Market Value of the per Share
consideration received by holders of Common Stock in the transaction.

                  (d) Certain Distributions. In the event of any distribution to
the Company's stockholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without receipt
of consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such
distribution.

         15. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator,
provided that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee's employment relationship with the Company. Notice of the determination
shall be given to each Employee or Consultant to whom an Option or Stock
Purchase Right is so granted within a reasonable time after the date of such
grant.

         16. Amendment and Termination of the Plan.

                  (a) Authority to Amend or Terminate. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation (other than an adjustment pursuant to Section 14
above) shall be made that would materially and adversely affect the rights of
any Optionee or holder of Stock Purchase Rights under any outstanding grant,
without his or her consent. In addition, to the extent necessary and desirable
to comply with the Applicable Laws, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.

                  (b) Effect of Amendment or Termination. Except as to
amendments which the Administrator has the authority under the Plan to make
unilaterally, no amendment or termination of the Plan shall materially and
adversely affect Options or Stock Purchase Rights already granted, unless
mutually agreed otherwise between the Optionee or holder of the Stock Purchase
Rights and the Administrator, which agreement must be in writing and signed by
the Optionee or holder and the Company.


                                       12
<PAGE>


         17. Conditions Upon Issuance of Shares. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the Applicable Laws, with such compliance determined
by the Company in consultation with its legal counsel. As a condition to the
exercise of an Option or Stock Purchase Right, the Company may require the
person exercising the award to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by law. Shares issued
upon exercise of awards granted prior to the date on which the Common Stock
becomes a Listed Security shall be subject to a right of first refusal in favor
of the Company pursuant to which the Participant will be required to offer
Shares to the Company before selling or transferring them to any third party on
such terms and subject to such conditions as is reflected in the applicable
Option Agreement or Restricted Stock Purchase Agreement.

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

         19. Agreements. Options and Stock Purchase Rights shall be evidenced by
Option Agreements and Restricted Stock Purchase Agreements, respectively, in
such form(s) as the Administrator shall from time to time approve.

         20. Stockholder Approval. If required by the Applicable Laws,
continuance of the Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months before or after the date the Plan is adopted.
Such stockholder approval shall be obtained in the manner and to the degree
required under the Applicable Laws.

         21. Information and Documents to Optionees and Purchasers. Prior to the
date, if any, upon which the Common Stock becomes a Listed Security and if
required by the Applicable Laws, the Company shall provide financial statements
at least annually to each Optionee and to each individual who acquired Shares
pursuant to the Plan, during the period such Optionee or purchaser has one or
more Options or Stock Purchase Rights outstanding, and in the case of an
individual who acquired Shares pursuant to the Plan, during the period such
individual owns such Shares. The Company shall not be required to provide such
information if the issuance of Options or Stock Purchase Rights under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.



                                       13
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