Exhibit 10.7

WESTAFF, INC.  1996 STOCK OPTION/STOCK ISSUANCE PLAN(amended and restated as of March 26, 1998)  (amended and restated as of May 17, 2000)  (amended and restated as
of April 30, 2001)

ARTICLE ONE        GENERAL

I.    PURPOSE OF THE PLAN

A.    This
1996 Stock Option/Stock Issuance Plan (the "Plan") is intended to promote the interests of Westaff, Inc., a Delaware corporation (the "Corporation"), by
providing eligible individuals with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the
service of the Corporation (or its Parent or Subsidiary corporations).

B.    The
Plan became effective immediately upon the execution and final pricing of the Underwriting Agreement for the initial public offering of the Corporation's Common Stock
on April 30, 1996 (referred to herein as the Plan Effective Date).

II.    DEFINITIONS

A.    For
purposes of the Plan, the following definitions shall be in effect:

BOARD:    the
Corporation's Board of Directors.

CHANGE
IN CONTROL:    a change in ownership or control of the Corporation effected through either of the following transactions:



CODE:    the
Internal Revenue Code of 1986, as amended.

COMMON
STOCK:    shares of the Corporation's Common Stock, par value of $0.01 per share.

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CORPORATE
TRANSACTION:    either of the following stockholder-approved transactions to which the Corporation is a party:



COVERED
EMPLOYEE:    an Employee who is a "covered employee" under Section 162(m)(3) of the Code.

EMPLOYEE:    an
individual who performs services while in the employ of the Corporation or one or more Parent or Subsidiary corporations, subject to the control and direction
of the employer entity not only as to the work to be performed but also as to the manner and method of performance.

EXERCISE
DATE:    the date on which the Corporation shall have received written notice of the option exercise.

FAIR
MARKET VALUE:    the Fair Market Value per share of Common Stock determined in accordance with the following provisions: If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the Nasdaq National Market, the Fair Market Value shall be the closing selling price per share on the date in question, as such
price is reported by the National Association of Securities Dealers, Inc. through the Nasdaq National Market. If there is no reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date for which such quotation exists shall be determinative of Fair Market Value. If the Common Stock is at the time listed or admitted
to trading on any national securities exchange, then the Fair Market Value shall be the closing selling price per share on the date in question on the exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no reported sale of Common Stock on such exchange on
the date in question, then the Fair Market Value shall be the closing selling price on the exchange on the last preceding date for which such quotation exists. For purposes of any option grants which
are made at the time the Underwriting Agreement for the initial public offering of the Common Stock is executed and priced
but prior to the time the Common Stock is first traded on either a national securities exchange or the Nasdaq National Market, the Fair Market Value per share of Common Stock shall be deemed to be
equal to the price per share at which the Common Stock is to be sold in the initial public offering pursuant to the Underwriting Agreement.

HOSTILE
TAKE-OVER:    a change in ownership of the Corporation effected through the following transaction:



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INCENTIVE
OPTION:    a stock option which satisfies the requirements of Code Section 422.

INVOLUNTARY
TERMINATION:    the termination of the Service of any individual which occurs by reason of:



MISCONDUCT:    the
commission of any act of fraud, embezzlement or dishonesty by the Optionee, Participant or other person in the Service of the Corporation (or any Parent or
Subsidiary), any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by
such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the
acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the
Corporation (or any Parent or Subsidiary).

1934
ACT:    the Securities and Exchange Act of 1934, as amended from time to time.

NON-STATUTORY
OPTION:    a stock option not intended to meet the requirements of Code Section 422.

OPTIONEE:    a
person to whom an option is granted under the Discretionary Option Grant Program or Automatic Option Grant Program.

PARTICIPANT:    a
person who is issued Common Stock under the Stock Issuance Program.

PERFORMANCE-BASED
COMPENSATION:    compensation qualifying as "performance-based compensation" under Section 162(m) of the Code.

PERMANENT
DISABILITY OR PERMANENTLY DISABLED:    the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. However, solely for the purposes of the Automatic Option
Grant Program, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee Board member to perform his or her usual duties as a Board member by reason of any
medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

PLAN
ADMINISTRATOR:    the particular entity, whether the Primary Committee, the Board or the Secondary Committee, which is authorized to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.

PRIMARY
COMMITTEE:    the committee of two (2) or more non-employee Board members appointed by the Board to administer the Discretionary Option Grant, the
Automatic Option Grant and Stock Issuance Programs with respect to Section 16 Insiders.

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SECONDARY
COMMITTEE:    a committee of two (2) or more Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs
with respect to eligible persons other than Section 16 Insiders.

SECTION
16 INSIDER:    an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.

SECTION
12(g) REGISTRATION DATE:    the date on which the initial registration of the Common Stock under Section 12(g) of the 1934 Act becomes effective.

SERVICE:    the
performance of services on a periodic basis for the Corporation (or any parent or subsidiary corporation) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant or advisor, except to the extent otherwise specifically provided in the applicable stock option or stock issuance
agreement.

TAKE-OVER
PRICE:    the greater of (i) the Fair Market Value per share of Common Stock on the date the particular option to purchase such stock is
surrendered to the Corporation in connection with a Hostile Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option, the Take-Over Price shall not exceed the clause (i) price per share.

B.    The
following provisions shall be applicable in determining the parent and subsidiary corporations of the Corporation:



III.  STRUCTURE OF THE PLAN

A.    STOCK
PROGRAMS.    The Plan shall be divided into three separate components: the Discretionary Option Grant Program specified in Article Two, the Automatic
Option Grant Program specified in Article Three and the Stock Issuance Program specified in Article Four. Under the Discretionary Option Grant Program, eligible individuals may, at the discretion of
the Plan Administrator, be granted options to purchase shares of Common Stock in accordance with the provisions of Article Two. Under the Automatic Option Grant Program, each individual serving as a
non-employee Board member on the Plan Effective Date and each individual who first joins the Board as a non-employee director at any time after such Plan Effective Date shall
at periodic intervals receive option grants to purchase shares of Common Stock in accordance with the provisions of Article Three, with the first such grants to be made on the Plan Effective Date.
Under the Stock Issuance Program, eligible individuals may be issued shares of Common Stock directly, either through the immediate purchase of such shares at a price per share not less than
eighty-five percent (85%) of the fair market value per share of Common Stock at the time of issuance or as a bonus for past services rendered the Corporation or the Corporation's
attainment of financial objectives.

B.    GENERAL
PROVISIONS.    Unless the context clearly indicates otherwise, the provisions of Articles One and Five shall apply to the Discretionary Option Grant
Program, Automatic Option Grant

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Program and the Stock Issuance Program and shall accordingly govern the interests of all individuals under the Plan.

IV.  ADMINISTRATION OF THE PLAN

A.    The
Primary Committee shall have sole and exclusive authority to administer the Discretionary Option Grant, the Automatic Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. The Primary Committee shall be constituted in such a manner as to satisfy all applicable laws
and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3.

B.    Administration
of the Discretionary Option Grant, the Automatic Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in
those programs, if any, may, at the Board's discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all
such persons.

C.    Notwithstanding
the foregoing, grants of stock options, separately exercisable stock appreciation rights or direct stock issuances to any Covered Employee intended to
qualify as Performance-Based Compensation shall be made only by a committee (or subcommittee of a committee) which is comprised solely of two or more Board members eligible to serve on a committee
making grants qualifying as Performance-Based Compensation. In the case of such grants to Covered Employees, references to the "Plan Administrator", the "Primary Committee", or to a "Secondary
Committee" shall be deemed to be references to such committee or subcommittee.

D.    Members
of the Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time.
The Board may also at any time terminate the functions of the Primary Committee and any Secondary Committee and reassume all powers and authority previously delegated to such committee.

E.    Each
Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority to establish such rules and regulations as
it may deem appropriate for proper administration of the Discretionary Option Grant, the Automatic Option Grant and Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant Program, the Automatic Option Grant Program or
Stock Issuance Program under its jurisdiction or any stock option or stock issuance thereunder.

F.    Service
on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and members of each such committee shall accordingly be entitled
to full indemnification and reimbursement as Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option grants or stock issuances under the Plan.

V.    ELIGIBILITY

A.    The
persons eligible to participate in the Discretionary Option Grant Program under Article Two and the Stock Issuance Program under Article Four shall be limited to the
following:



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B.    Each
Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority (subject to the provisions of the Plan) to
determine, (i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive option grants, the time or times when such option grants are
to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times at which each
option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such issuances are to be made, the number of shares to be issued to each
Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid for such shares.

VI.  STOCK SUBJECT TO THE PLAN

A.    Shares
of Common Stock shall be available for issuance under the Plan and shall be drawn from either the Corporation's authorized but unissued shares of Common Stock or
from reacquired shares of Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan
shall not exceed 2,550,718 shares, subject to adjustment from time to time in accordance with the provisions of this Section VI.

B.    No
one person participating in the Plan may receive stock options, separately exercisable stock appreciation rights and direct stock issuances for more than 1,000,000
shares of Common Stock in the aggregate per calendar year. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitation with respect
to a person participating in the Plan, if any stock option, separately exercisable stock appreciation right or direct stock issuance is canceled, the canceled stock option, stock appreciation right or
direct stock issuance shall continue to count against the maximum number of shares with respect to which stock options, stock appreciation rights and direct stock issuances may be granted to such
person. For this purpose, the repricing of an option (or in the case of a stock appreciation right, the base amount on which the stock appreciation is calculated is reduced to reflect a reduction in
the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing option or stock appreciation right and the grant of a new option or stock appreciation right.

C.    Except
to the extent required by Section 162(m) of the Code or the regulations thereunder, as discussed immediately above, should one or more outstanding options
under this Plan expire or terminate for any reason prior to exercise in full (including any option cancelled in accordance with the cancellation-regrant provisions of Section IV of Article Two
of the Plan), then the shares subject to the portion of each option not so exercised shall be available for subsequent issuance under the Plan. Shares subject to any stock appreciation rights
exercised under the Plan and all share issuances under the Plan, whether or not the shares are subsequently repurchased by the Corporation pursuant to its repurchase rights under the Plan, shall
reduce on a share-for-share basis the number of shares of Common Stock available for subsequent issuance under the Plan. In addition, should the exercise price of an
outstanding option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an outstanding option under the Plan or the vesting of a direct share issuance made under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number of shares for which

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the option is exercised or which vest under the share issuance, and not by the net number of shares of Common Stock actually issued to the holder of such option or share issuance.

D.    Should
any change be made to the Common Stock issuable under the Plan by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, then appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one individual participating in the Plan may be granted stock options,
separately exercisable stock appreciation rights and direct stock issuances in the aggregate per calendar year, (iii) the number and/or class of securities for which automatic-option grants are
to be subsequently made per eligible non-employee Board member under the Automatic Option Grant Program, (iv) the number and/or class of securities and price per share in effect
under each option outstanding under either the Discretionary Option Grant Program or Automatic Option Grant Program, and (v) such other provisions of the Plan as the Plan Administrator
determines is appropriate. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and conclusive.

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ARTICLE TWO    DISCRETIONARY OPTION GRANT PROGRAM

I.    TERMS AND CONDITIONS OF OPTIONS

Options
granted pursuant to the Discretionary Option Grant Program shall be authorized by action of the Plan Administrator and may, at the Plan Administrator's discretion, be either
Incentive Options or Non-Statutory Options. Individuals who are not Employees of the Corporation or its Parent or Subsidiary corporations may only be granted non-statutory
options. Each granted option shall be evidenced by one or more instruments in the form approved by the Plan Administrator; PROVIDED, however, that each such instrument shall comply with the terms and
conditions specified below. Each instrument evidencing an Incentive Option shall, in addition, be subject to the applicable provisions of Section II of this Article Two.

A.    OPTION
PRICE.



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Except
to the extent the sale and remittance procedure is used in connection with the exercise of the option, payment of the option price for the purchased shares must accompany such
notice.

B.    TERM
AND EXERCISE OF OPTIONS.

Each
option granted under this Discretionary Option Grant Program shall be exercisable at such time or times and during such period as is determined by the Plan Administrator and set
forth in the instrument evidencing the grant. No such option, however, shall have a maximum term in excess of ten (10) years from the grant date.

C.    TERMINATION
OF SERVICE.



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D.    STOCKHOLDER
RIGHTS.

An
Optionee shall have no stockholder rights with respect to any shares covered by the option until such individual shall have exercised the option, paid the option price for the
purchased shares and become the holder of record of those shares.

E.    TRANSFERABILITY.

During
the lifetime of the Optionee, any Incentive Option shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death. However, a Non-Statutory Option may be assigned in whole or in part during the Optionee's lifetime in accordance with the terms of
the instrument evidencing the grant. The terms applicable to the assigned portion of any Non-Statutory Option shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

F.    REPURCHASE
RIGHTS.

The
shares of Common Stock acquired upon the exercise of any Article Two option grant may be subject to repurchase by the Corporation in accordance with the following provisions:



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II.    INCENTIVE OPTIONS

The terms and conditions specified below shall be applicable to all Incentive Options granted under this Article Two. Incentive Options may only be granted to
individuals who are Employees. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall NOT be subject to such terms and conditions.

A.    DOLLAR
LIMITATION.    The aggregate Fair Market Value (determined as of the respective date or dates of grant) of the Common Stock for which one or more options
granted to any Employee under this Plan (or any other option plan of the Corporation or its parent or subsidiary corporations) may for the first time become exercisable as Incentive Options during any
one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time
in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. Should the
number of shares of Common Stock for which any
Incentive Option first becomes exercisable in any calendar year exceed the applicable One Hundred Thousand Dollar ($100,000) limitation, then that option may nevertheless be exercised in that calendar
year for the excess number of shares as a Non-Statutory Option.

B.    10%
STOCKHOLDER.    If any individual to whom an Incentive Option is granted is the owner of stock (as determined under Section 424(d) of the Code)
possessing ten percent (10%) or more of the total combined voting power of all classes of stock of the Corporation or any one of its Parent or Subsidiary corporations, then the option price per share
shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the grant date, and the option term shall not exceed five (5) years, measured from
the grant date.

Except
as modified by the preceding provisions of this Section II, the provisions of Articles One, Two and Five of the Plan shall apply to all Incentive Options granted hereunder.

III.  CORPORATE TRANSACTIONS/CHANGES IN CONTROL

A.    In
the event of any Corporate Transaction, each option which is at the time outstanding under this Article Two shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Corporate Transaction, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares. However, an outstanding option under this Article Two shall NOT so accelerate if and to the extent: (i) such option is, in
connection with the Corporate Transaction, either to be assumed by the successor corporation or parent thereof or to be replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the option spread existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such option, or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant. The determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive.

B.    Immediately
following the consummation of the Corporate Transaction, all outstanding options under this Article Two shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation or its parent company.

C.    Each
outstanding option under this Article Two which is assumed in connection with the Corporate Transaction or is otherwise to continue in effect shall be appropriately
adjusted, immediately after such
Corporate Transaction, to apply and pertain to the number and class of securities which would have been issued to the option holder, in consummation of such Corporate Transaction, had

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such person exercised the option immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the option price payable per share, provided the aggregate option price
payable for such securities shall remain the same. In addition, the class and number of securities available for issuance under the Plan on both an aggregate and per participant basis following the
consummation of the Corporate Transaction shall be appropriately adjusted.

D.    The
Plan Administrator shall have full power and authority to grant options under the Discretionary Option Grant Program which provide for the accelerated vesting of one
or more outstanding options under the Discretionary Option Grant Program upon the occurrence of a Corporate Transaction, Change in Control or Hostile Take-Over whether or not those options
are to be assumed or otherwise continued in full force and effect pursuant to the terms of the Corporate Transaction, Change in Control or Hostile Take-Over. In addition, the Plan
Administrator may structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall immediately terminate, in whole or in part, at
the time of a Corporate Transaction, Change in Control or Hostile Take-Over and shall not be assignable to the successor corporation (or parent thereof), and the shares subject to those
terminated repurchase rights shall accordingly vest in full at the time of such Corporate Transaction, Change in Control or Hostile Take-Over.

E.    The
Plan Administrator shall have full power and authority to grant options under the Discretionary Option Grant Program which will automatically accelerate in whole or
in part in the event the Optionee's Service subsequently terminates by reason of an Involuntary Termination within a designated period (not to exceed twelve (12) months) following the effective
date of any Corporate Transaction in which those options are assumed or replaced and do not otherwise accelerate. Any options so accelerated shall remain exercisable for fully-vested shares until the
earlier of (i) the expiration of the option term or (ii) the expiration of the twelve (12) month period measured from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may provide that one or more of the Corporation's outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination
shall immediately terminate in whole or in part, and the shares subject to those terminated rights shall accordingly vest.

F.    The
Plan Administrator shall have full power and authority to grant options under the Discretionary Option Grant Program which will automatically accelerate in whole or
in part in the event the Optionee's Service subsequently terminates by reason of an Involuntary Termination within a designated period (not to exceed twelve (12) months) following the effective
date of any Change in Control. Each option so accelerated shall remain exercisable for fully-vested shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the twelve (12)-month period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may provide that one or more of the Corporation's
outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate in whole or in part, and the shares subject to those
terminated rights shall accordingly vest.

G.    The
portion of any Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non-Qualified Option.

H.    The
outstanding options shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

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IV.  CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected optionees, the cancellation of any
or all outstanding options under this Article Two and to grant in substitution new options under the Plan covering the same or different numbers of shares of Common Stock but with an option price per
share not less than (i) one hundred percent (100%) of the Fair Market Value per share of Common Stock on the new grant date in the case of a grant of an Incentive Option, (ii) one
hundred ten percent (110%) of such Fair Market Value in the case of a grant of an Incentive Option to a 10% Stockholder or (iii) eighty-five percent (85%) of such Fair Market Value
in the case of all other grants.

V.    STOCK APPRECIATION RIGHTS

A.    Provided
and only if the Plan Administrator determines in its discretion to implement the stock appreciation right provisions of this Section V, one or more
Optionees may be granted the right, exercisable upon such terms and conditions as the Plan Administrator may establish, to surrender all or part of an unexercised option under this Article Two in
exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at
the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares.

B.    No
surrender of an option shall be effective hereunder unless it is approved by the Plan Administrator. If the surrender is so approved, then the distribution to which
the Optionee shall
accordingly become entitled under this Section V may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.

C.    If
the surrender of an option is rejected by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee had under the surrendered option (or
surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (i) five (5) business days after the receipt of the rejection
notice or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no event may such rights be exercised more
than ten (10) years after the date of the option grant.

D.    One
or more officers of the Corporation subject to the short-swing profit restrictions of the 1934 Act may, in the Plan Administrator's sole discretion, be granted
limited stock appreciation rights in tandem with their outstanding options under this Article Two. Upon the occurrence of a Hostile Take-Over, the officer shall have a thirty
(30)-day period in which he or she may surrender any outstanding options with such a limited stock appreciation right in effect for at least six (6) months to the Corporation, to
the extent such option is at the time exercisable for fully vested shares of Common Stock. The officer shall in return be entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the vested shares of Common Stock at the time subject to each surrendered option (or surrendered portion of such option) over (ii) the
aggregate exercise price payable for such shares. The cash distribution shall be made within five (5) days following the date the option is surrendered to the Corporation, and neither the
approval of the Plan Administrator nor the consent of the Board shall be required in connection with the option surrender and cash distribution. Any unsurrendered portion of the option shall continue
to remain outstanding and become exercisable in accordance with the terms of the instrument evidencing such grant.

E.    The
shares of Common Stock subject to any option surrendered for an appreciation distribution pursuant to this Section V shall not be available for subsequent
issuance under the Plan.

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ARTICLE THREE    AUTOMATIC OPTION GRANT PROGRAM

I.    ELIGIBILITY

The individuals eligible to receive automatic option grants pursuant to the provisions of this Article Three program shall be limited to those individuals who are
serving as non-employee Board members on the Plan Effective Date or who are first elected or appointed as non-employee Board members on or after the Plan Effective Date,
whether through appointment by the Board or election by the Corporation's stockholders. Each non-employee Board member eligible to participate in the Automatic Option Grant Program
pursuant to the foregoing criteria shall be designated an Eligible Director for purposes of the Plan.

II.    TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

A.    GRANT
DATES.    Option grants shall be made under this Article Three on the dates specified below:



B.    EXERCISE
PRICE.    The exercise price per share of Common Stock subject to each automatic option grant made under this Article Three shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the automatic grant date.

C.    PAYMENT.    The
exercise price shall be payable in one of the alternative forms specified below:



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Except
to the extent the sale and remittance procedure specified above is used for the exercise of the option for vested shares, payment of the exercise price for the purchased shares
must accompany the exercise notice.

D.    OPTION
TERM.    Each automatic grant under this Article Three shall have a maximum term of ten (10) years measured from the automatic grant date.

E.    EXERCISABILITY.
Each automatic grant shall become fully exercisable for the option shares upon the Optionee's completion of one year of Board service measured from the
automatic grant date. The exercisability of each automatic grant outstanding under this Article Three shall be accelerated as provided in Section II.G and Section III of this Article
Three.

F.    TRANSFERABILITY.    Any
automatic option grant may be assigned in whole or in part during the Optionee's lifetime in accordance with the terms of the instrument
evidencing the grant. The terms applicable to the assigned portion of the automatic option grant shall be the same as those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

G.    EFFECT
OF TERMINATION OF BOARD MEMBERSHIP.



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H.    STOCKHOLDER
RIGHTS.    The holder of an automatic option grant under this Article Three shall have none of the rights of a stockholder with respect to any
shares subject to such option until such individual shall have exercised the option, paid the exercise price for the purchased shares and become the holder of record of those shares.

III.  CORPORATE TRANSACTION/CHANGES IN CONTROL

A.    In
the event of any Corporate Transaction, each automatic option grant at the time outstanding under this Article Three shall automatically accelerate so that each such
option shall, immediately prior to the specified effective date for the Corporate Transaction, become fully exercisable with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for all or any portion of such shares. Immediately after the consummation of the Corporate Transaction, all automatic option grants under this Article Three shall
terminate and cease to be outstanding, except to the extent assumed by the successor entity or its parent company.

B.    In
connection with any Change in Control, each automatic option grant at the time outstanding under this Article Three shall automatically accelerate so that each such
option shall, immediately prior to the specified effective date for the Change in Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares. Any option accelerated in connection with the Change in Control shall remain fully exercisable until the expiration or sooner
termination of the option term.

C.    Upon
the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each option
held by him or her under this Article Three for a period
of at least six (6) months. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the surrendered option (whether or not the option is otherwise at the time exercisable for those shares) over (ii) the aggregate exercise
price payable for such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. Neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with such option surrender and cash distribution. The shares of Common Stock subject to each option surrendered in connection with the
Hostile Take-Over shall not be available for subsequent issuance under the Plan.

D.    The
automatic option grants outstanding under this Article Three shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

IV.  REMAINING TERMS

The remaining terms of each option granted under the Automatic Option Grant Program shall be the same as the terms in effect for option grants made under the
Discretionary Option Grant Program or as the Plan Administrator otherwise determines.

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ARTICLE FOUR    STOCK ISSUANCE PROGRAM

I.    TERMS AND CONDITIONS OF STOCK ISSUANCES

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate purchases without any intervening stock option grants. The
issued shares shall be evidenced by a Stock Issuance Agreement ("Issuance Agreement") that complies with the terms and conditions of this Article Four.

A.    CONSIDERATION.



B.    VESTING
PROVISIONS.



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II.    CORPORATE TRANSACTION/CHANGE IN CONTROL

A.    Upon
the occurrence of any Corporate Transaction, all unvested shares of Common Stock at the time outstanding under this Stock Issuance Program shall immediately vest in
full and the Corporation's repurchase/cancellation rights shall terminate, except to the extent: (i) any such right is expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is precluded by other limitations imposed in the Issuance Agreement.

B.    The
Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's
repurchase/cancellation rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically terminate in whole or in part, and the shares of Common Stock
subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within twelve (12) months
following the effective date of any Corporate

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Transaction in which those repurchase/cancellation rights are assigned to the successor corporation (or parent thereof).

C.    The
Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's
repurchase/cancellation rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically terminate in whole or in part, and the shares of Common Stock
subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within twelve (12) months
following the effective date of any Change in Control.

III.  TRANSFER RESTRICTIONS/SHARE ESCROW

A.    Unvested
shares may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such shares vests or may be issued
directly to the Participant with restrictive legends on the certificates evidencing such unvested shares. To the extent an escrow arrangement is utilized, the unvested shares and any securities or
other assets distributed with respect to such shares (other than regular cash dividends) shall be delivered in escrow to the Corporation to be held until the Participant's interest in such shares (or
the distributed securities or assets) vests. If the unvested shares are issued directly to the Participant, the restrictive legend on the certificates for such shares shall read substantially as
follows:

"THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED
HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A
STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST)
DATED                        ,            , A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL
OFFICE OF THE CORPORATION."

B.    The
Participant shall have no right to transfer any unvested shares of Common Stock issued to him or her under the Stock Issuance Program. For purposes of this
restriction, the term "transfer" shall include (without limitation) any sale, pledge, assignment, encumbrance, gift or other disposition of such shares, whether voluntary or involuntary. Upon any such
attempted transfer, the unvested shares shall immediately be cancelled in accordance with substantially the same procedure in effect under Section I.B.3 of this Article Four, and neither the
Participant nor the proposed transferee shall have any rights with respect to such cancelled shares. However, the Participant shall have the right to make a gift of unvested shares acquired under the
Stock Issuance Program to his or her spouse or issue, including adopted children, or to a trust established for the benefit of such spouse or issue, provided the donee of such shares delivers to the
Corporation a written agreement to be bound by all the provisions of the Stock Issuance Program and the Issuance Agreement applicable to the gifted shares.

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ARTICLE FIVE    MISCELLANEOUS

I.    LOANS OR INSTALLMENT PAYMENTS

A.    The
Plan Administrator may, in its discretion, assist any Optionee or Participant (including an Optionee or Participant who is an officer of the Corporation) in the
exercise of one or more options granted to such Optionee under the Discretionary Option Grant Program or the purchase of one or more shares issued to such Participant under the Stock Issuance Program,
including the satisfaction of any Federal and state income and employment tax obligations arising therefrom, by (i) authorizing the extension of a loan from the Corporation to such Optionee or
Participant or (ii) permitting the Optionee or Participant to pay the option price or purchase price for the purchased Common Stock in installments over a period of years. The terms of any loan
or installment method of payment (including the interest rate and terms of repayment) shall be upon such terms as the Plan Administrator specifies in the applicable option or issuance agreement or
otherwise deems appropriate at the time such option price or purchase price becomes due and payable. Loans or installment payments may be authorized with or without security or collateral. In all
events, the maximum credit available to the Optionee or Participant may not exceed the option or purchase price of the acquired shares (less the par value of such shares) plus any Federal, state and
local income and employment tax liability incurred by the Optionee or Participant in connection with the acquisition of such shares.

B.    The
Plan Administrator may, in its absolute discretion, determine that one or more loans extended under this financial assistance program shall be subject to forgiveness
by the Corporation in whole or in part upon such terms and conditions as the Plan Administrator may deem appropriate.

II.    AMENDMENT OF THE PLAN AND AWARDS

The Board has complete and exclusive power and authority to amend or modify the Plan (or any component thereof) in any or all respects whatsoever, However, no
such amendment or modification shall adversely affect rights and obligations with respect to options at the time outstanding under the Plan, nor adversely affect the rights of any Participant with
respect to Common Stock issued under the Stock Issuance Program prior to such action, unless the Optionee or Participant consents to such amendment. In addition, the Board may not, without the
approval of the Corporation's stockholders, amend the Plan to (i) increase the maximum number of shares issuable under the Plan or (ii) the maximum number of shares for which any one
individual participating in the Plan may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances in the aggregate per calendar year, except for
permissible adjustments under Section VI subsection C of Article One.

III.  TAX WITHHOLDING

A.    The
Corporation's obligation to deliver shares of Common Stock upon the exercise of stock options for such shares or the vesting of such shares under the Plan shall be
subject to the satisfaction of all applicable Federal, foreign state and local income tax and employment tax withholding requirements.

B.    The
Plan Administrator may, in its discretion and in accordance with the provisions of this Section III of Article Five and such supplemental rules as the Plan
Administrator may from time to time adopt, provide any or all holders of Non-Statutory Options or unvested shares under the Plan with the right to use shares of Common Stock in
satisfaction of no more than the minimum amount of the Federal, foreign state and local income and employment tax liabilities that the Corporation is required to withhold from such holders in
connection with the exercise of their options or the vesting of their

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shares (the "Taxes"). Such right may be provided to any such holder in either or both of the following formats:



IV.  EFFECTIVE DATE AND TERM OF PLAN

A.    This
Plan became effective on April 30, 1996 and was approved by stockholders on April 26, 1996. In February 1998, the Board adopted and approved
amendments to the Plan to provide for an increase in the number of shares subject to grants under the Automatic Option Grant Program from 1,000 to 2,000 shares and to reflect the amendments
promulgated by the Securities and Exchange Commission to Rule 16b-3 which allow for greater transferability of Non-Statutory Options (collectively, the
"February 1998 Amendments"). The February 1998 Amendments became effective when approved by the Corporation's stockholders on March 26, 1998. In March 2000, the Board
adopted and approved amendments to the Plan pertaining to: (i) the name of the Corporation; (ii) the administration of the Plan; and (iii) the limit imposed by
Section 162(m) of the Code, on certain highly-compensated employees (collectively, the "March 2000 Amendments"). The March 2000 Amendments became effective when approved by the
Corporation's stockholders on June 20, 2000. In April 2001, the Board adopted and approved amendments to the Plan to: (i) increase the number of shares reserved for issuance under
the Plan by 1,000,000 shares; (ii) increase the maximum number of shares with respect to which stock options, stock appreciation rights and direct stock issuances may be granted to any grantee
in any calendar year from 500,000 to 1,000,000 shares; and (iii) permit the Plan Administrator to grant options under the Discretionary Option Grant Program which provide for accelerated
vesting upon the occurrence of a Corporate Transaction, Change in Control or Hostile Take-Over whether or not those options are to be assumed or otherwise continued in full force and
effect pursuant to the terms of the Corporate Transaction, Change in Control or Hostile Take-Over (collectively, the "April 2001 Amendments"). The April 2001 Amendments shall
be effective upon Board approval but any option grants made in reliance on the April 2001 Amendments will be rescinded if the stockholders vote against the April 2001 Amendments.

B.    The
Plan shall terminate upon the earlier of (i) ten (10) years following the Plan Effective Date or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the exercise of the options granted under the Plan or the issuance of shares (whether vested or unvested) under the Stock Issuance Program.
If the date of termination is determined under clause (i) above, then all option grants and unvested share issuances outstanding on such date shall thereafter continue to have force and effect
in accordance with the provisions of the instruments evidencing such grants or issuance.

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V.    USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares pursuant to option grants or share issuances under the Plan shall be used for general
corporate purposes.

VI.  REGULATORY APPROVALS

A.    The
implementation of the Plan, the granting of any option under the Plan, the issuance of any shares under the Stock Issuance Program, and the issuance of Common Stock
upon the exercise or surrender of the option grants made hereunder shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued pursuant to it.

B.    No
shares of Common Stock or other assets shall be issued or delivered under this Plan unless and until there shall have been compliance with all applicable requirements
of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any securities exchange on which stock of the same class is then listed.

VII.  NO EMPLOYMENT/SERVICE RIGHTS

Neither the action of the Corporation in establishing the Plan, nor any action taken by the Plan Administrator hereunder, nor any provision of the Plan shall be
construed so as to grant any individual the right to remain in the employ or service of the Corporation (or any Parent or Subsidiary corporation) for any period of specific duration, and the
Corporation (or any Parent or Subsidiary corporation retaining the services of such individual) may terminate such individual's employment or service at any time and for any reason, with or without
cause.

VIII.  MISCELLANEOUS PROVISIONS

A.    Except
as provided in the Plan, the right to acquire Common Stock or other assets under the Plan may not be assigned, encumbered or otherwise transferred by any Optionee
or Participant.

B.    The
provisions of the Plan relating to the exercise of options and the vesting of shares shall be governed by the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State.

C.    The
provisions of the Plan shall inure to the benefit of, and be binding upon, the Corporation and its successors or assigns, whether by Corporate Transaction or
otherwise, and the Participants and Optionees, the legal representatives of their respective estates, their respective heirs or legatees and their permitted assignees.

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