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                           ROSETTA INPHARMATICS, INC.

                                 1997 STOCK PLAN

         1.  PURPOSES OF THE PLAN.  The purposes of this 1997 Stock Plan are
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) 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, as
amended, and the regulations 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 any of its Committees
appointed pursuant to Section 4 of the Plan.

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

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

             (d)  "CAUSE" for termination of a Participant's Continuous
Service Status will exist if the Participant is terminated 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 successor thereto, if
appropriate.

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             (e)  "CHANGE OF CONTROL" means a sale of all or substantially
all of the Company's assets, or any merger or consolidation of the Company
with or into another corporation other than a merger or consolidation in
which the holders of more than 50% of the shares of capital stock of the
Company outstanding immediately prior to such transaction continue to hold
(either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) more than 50% of
the total voting power represented by the voting securities of the Company,
or such surviving entity, outstanding immediately after such transaction.

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

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

             (h)  "COMMON STOCK" means the Common Stock of the Company.

             (i)  "COMPANY" means Rosetta Inpharmatics, Inc., a Delaware
corporation.

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

             (k)  "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous 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 Subsidiaries or their respective
successors. For purposes of this Plan, a change in status from an Employee to
a Consultant or from a Consultant to an Employee will not constitute an
interruption of Continuous Status as an Employee or Consultant.

             (l)  "CORPORATE TRANSACTION" means a sale of all or
substantially all of the Company's assets, or a merger, consolidation or
other capital reorganization of the Company with or into another corporation
and includes a Change of Control.

             (m)  "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company, with the status of employment determined based upon such minimum
number of hours or periods worked as shall be determined by the Administrator
in its discretion, subject to any requirements of the Code. 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.

             (n)  "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

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             (o)  "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.

             (p)  "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 written option agreement.

             (q)  "INVOLUNTARY TERMINATION" means termination of a
Participant's Continuous Service Status under the following circumstances:
(i) termination without Cause by the Company or a Subsidiary, Parent or
successor thereto, as appropriate; or (ii) voluntary termination by the
Participant within 30 days following (A) a material reduction in the
Participant's job responsibilities, provided that neither a mere change in
title alone nor reassignment following a Change of Control to a position that
is substantially similar to the position held prior to the Change of Control
shall constitute a material reduction in job responsibilities; (B) relocation
by the Company or a Subsidiary, Parent or successor thereto, as appropriate,
of the Participant's work site to a facility or location more than 30 miles
from the Participant's principal work site for the Company at the time of the
Change of Control; or (C) a reduction in Participant's then-current base
salary by at least 25%, provided that an across-the-board reduction in the
salary level of all other employees or consultants in positions similar to
the Participant's by the same percentage amount as part of a general salary
level reduction shall not constitute such a salary reduction.

             (r)  "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..

             (s)  "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.

             (t)  "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

             (u)  "OPTION" means a stock option granted pursuant to the Plan.

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

             (w)  "OPTIONEE" means an Employee or Consultant who receives an
Option or a Stock Purchase Right.

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

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

             (z)  "PLAN" means this 1997 Stock Plan.

             (aa)  "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.

             (bb)  "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 10 below.

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

             (dd)  "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

             (ee)  "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.

             (ff)  "STOCK PURCHASE RIGHT" means the right to purchase Common
Stock pursuant to Section 10 below.

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

             (hh)  "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
12 of the Plan, the maximum aggregate number of Shares that may be optioned
and sold under the Plan is 3,107,825 shares of Common Stock. The Shares may
be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised
in full, 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 Option or Stock Purchase Right in order to
satisfy any withholding taxes due with respect to such exercise shall be
treated as not issued and shall continue to be available under the Plan.
Shares repurchased by the Company pursuant to any repurchase right which the
Company may have shall not be available for future grant under the Plan.

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         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.

             (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.

             (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(o) 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
Options may from time to time be granted;

                  (iii)   to determine whether and to what extent Options 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, and any restriction or limitation regarding any
Option, Optioned Stock or restricted stock issued upon exercise of an Option,
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;

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                  (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 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.

         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. An Employee or Consultant who has
been granted an Option or Stock Purchase Right may, if he or she is otherwise
eligible, be granted additional Options or Stock Purchase Rights.

             (b)  TYPE OF OPTION.  Each Option shall be designated in the
written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, 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(b),
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.

             (c)  The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with such Optionee's right or the
Company's right to terminate his or her employment or consulting relationship
at any time, with or without cause.

         6.  TERM OF PLAN.  The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated
under Section 15 of the Plan.

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         7.  TERM OF OPTION.  The term of each Option shall be the term
stated in the Option Agreement; provided, however, 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 an Optionee who, at the time the
Option is granted, is a Ten Percent 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 written option agreement.

         8.  OPTION EXERCISE PRICE AND CONSIDERATION.

             (a)  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
Board and set forth in the applicable agreement, but shall be subject to the
following:

                  (i)     In the case of an Incentive Stock Option that is:

                          (A)  granted to an Employee who, at the time
of the grant of such Incentive Stock Option, 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.

                          (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 prior to the date, if any, on which
the Common Stock becomes 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 prior to the date, if any, on which
the Common Stock becomes 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.

                          (C)  granted on or after the date, if any, on which
the Common Stock becomes 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.

             (b)  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

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entirely of (1) cash, (2) check, (3) promissory note (subject to the
provisions of Section 153 of the Delaware General Corporation Law), (4) other
Shares that (x) in the case of Shares acquired upon exercise of an Option,
have been owned by the Optionee for more than six months on the date of
surrender or such other period as may be required to avoid a charge to the
Company's earnings, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option
shall be exercised, (5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price and any applicable income or employment taxes, or (6) 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.

         9.  EXERCISE OF OPTION.

             (a)  PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  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; provided however that, if required by the Applicable Laws, any
Option granted prior to the date, if any, upon which the Common Stock becomes
a Listed Security shall become exercisable at the rate of at least 20% per
year over five years from the date the Option is granted if required by the
Applicable Laws. In the event that any of the Shares issued upon exercise of
an Option (which exercise occurs prior to the date, if any, upon which the
Common Stock becomes a Listed Security) should be subject to a right of
repurchase in the Company's favor, such repurchase right shall, if required
by the Applicable Laws, lapse at the rate of at least 20% per year over five
years from the date the Option is granted. Notwithstanding the above, in the
case of an Option granted to an officer, Director or Consultant of the
Company or any Parent or Subsidiary of the Company, the Option may become
fully exercisable, or a repurchase right, if any, in favor of the Company
shall lapse, at any time or during any period established by the
Administrator.

                  An Option may not be exercised for a fraction of a Share.

                  An Option shall be deemed to be 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 Board, consist of
any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to
the Optioned Stock, not withstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment

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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 12
of the Plan.

                  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.

             (b)  TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.
Subject to Section 9(c), in the event of termination of an Optionee's
Continuous Status as an Employee or Consultant with the Company, such
Optionee may, but only within three (3) months (or such other period of time
not less than thirty (30) days as is determined by the Administrator, with
such determination in the case of an Incentive Stock Option being made at the
time of grant of the Option) after the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
such termination, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) 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.

             (c)  DISABILITY OF OPTIONEE.

                  (i)     Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant
as a result of his or her total and permanent disability (within the meaning
of Section 22(e)(3) of the Code), Optionee may, but only within twelve (12)
months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

                  (ii)    In the event of termination of an Optionee's
Continuous Status as an Employee or Consultant as a result of a disability
which does not fall within the meaning of total and permanent disability (as
set forth in Section 22(e)(3) of the Code), Optionee may, but only within six
(6) months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination. However, to the extent that such Optionee
fails to exercise an Option which is an Incentive Stock Option ("ISO")
(within the meaning of Section 422 of the Code) within three (3) months of
the date of such termination, the Option will not qualify for ISO treatment
under the Code. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such
Option to the extent so entitled within six months (6) from the date of
termination, the Option shall terminate.

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             (d)  DEATH OF OPTIONEE.  In the event of the death of an
Optionee during the period of Continuous Status as an Employee or Consultant
since the date of grant of the Option, or within thirty (30) days following
termination of Optionee's Continuous Status as an Employee or Consultant, the
Option may be exercised, at any time within six (6) months following the date
of death (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued
at the date of death or, if earlier, the date of termination of Optionee's
Continuous Status as an Employee or Consultant. To the extent that Optionee
was not entitled to exercise the Option at the date of death or termination,
as the case may be, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall
terminate.

             (e)  RULE 16b-3. Options granted to Reporting Persons shall
comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption for Plan transactions.

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

             (g)  EXTENSION OF EXERCISE PERIOD.  The Administrator shall have
full power and authority to extend the period of time for which an option is
to remain exercisable following termination of an Optionee's Continuous
Status as an Employee or Consultant from the periods set forth in Sections
9(b), 9(c) and 9(d) above or in the Option Agreement to such greater time as
the Board shall deem appropriate, PROVIDED, that in no event shall such
option be exercisable later than the date of expiration of the term of such
Option as set forth in the Option Agreement.

         10.  STOCK PURCHASE RIGHTS.

             (a)  RIGHTS TO PURCHASE.  Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under
the Plan and/or cash awards made outside of the Plan. 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, which shall in no event exceed thirty (30)
days from the date upon which the Administrator made the determination to
grant the Stock Purchase Right. 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

                                      -10-
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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. Shares
purchased pursuant to the grant of a Stock Purchase Right shall be referred
to herein as "Restricted Stock."

             (b)  REPURCHASE OPTION.  Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination
of the purchaser's employment with the Company for any reason (including
death or disability). The purchase price for Shares repurchased pursuant to
the Restricted Stock purchase agreement shall be the original purchase price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to the Company. The repurchase option shall lapse at such rate
as the Administrator may determine, provided that with respect to a Stock
Purchase Right granted prior to the date, if any, on which the Common Stock
becomes a Listed Security to a purchaser who is not an officer, Director or
Consultant of the Company or of any Parent or Subsidiary of the Company, it
shall lapse at a minimum rate of 20% per year if required by the Applicable
Laws.

             (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 12 of the Plan.

         11.  STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS.  At
the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax
liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee is obligated to pay the Company an amount required to be withheld
under applicable tax laws, the Optionee may satisfy the withholding tax
obligation by one or some combination of the following methods: (a) by cash
payment, or (b) out of Optionee's current compensation, (c) if permitted by
the Administrator, in its discretion, by surrendering to the Company Shares
that (i) in the case of Shares previously acquired from the Company, have
been owned by the Optionee for more than six months on the date of surrender,
and (ii) have a fair market value on the date of surrender equal to or less
than Optionee's marginal tax rate times the ordinary income recognized, or
(d) by electing to have the Company withhold from the Shares to be issued
upon exercise of the Option, or the Shares to be issued in connection with
the Stock Purchase Right, if any, that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall

                                      -11-
<PAGE>

be determined on the date that the amount of tax to be withheld is to be
determined (the "TAX DATE"). If the Administrator allows the withholding or
surrender of Shares to satisfy a Participant's tax withholding obligations
under this Section 11, the Administrator shall not allow Shares to be
withheld or surrendered in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.

             Any surrender by a Reporting Person of previously owned Shares
to satisfy tax withholding obligations arising upon exercise of this Option
must comply with the applicable provisions of Rule 16b-3.

             All elections by an Optionee to have Shares withheld to satisfy
tax with-holding obligations shall be made in writing in a form acceptable to
the Administrator and shall be subject to the following restrictions:

             (a)  the election must be made on or prior to the applicable Tax
Date;

             (b)  once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the
election is made; and

             (c)  all elections shall be subject to the consent or
disapproval of the Administrator.

             In the event the election to have Shares withheld is made by an
Optionee 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 Optionee shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.

         12.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN
OTHER TRANSACTIONS.

             (a)  CHANGES IN CAPITALIZATION.  Subject to any required action
by the stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the number of
shares of Common Stock that have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
that have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination, 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 Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided

                                      -12-
<PAGE>

herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock Purchase Right.

             (b)  DISSOLUTION OR LIQUIDATION.  In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, the Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.

             (c)  CORPORATE TRANSACTION; CHANGE OF CONTROL.  In the event of
a Corporate Transaction, 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.

             Notwithstanding the above, in the event of a Change of Control
and irrespective of whether outstanding awards are being assumed, substituted
or terminated in connection with the transaction, the vesting and
exercisability of each outstanding Option and Stock Purchase Right shall
accelerate such that the Options and Stock Purchase Rights shall become
vested and exercisable to the extent of 50% of the Shares then unvested, and
any repurchase right of the Company with respect to shares issued upon
exercise of an Option or Stock Purchase Right shall lapse as to 50% of the
Shares subject to such repurchase right prior to consummation of the Change
of Control, in each case effective as of immediately prior to consummation of
the transaction; provided, however, that in the event that the Successor
Corporation does not agree to assume the award or to substitute an equivalent
option or right, the vesting and exercisability of each outstanding Option
and Stock Purchase Right shall accelerate such that the Options and Stock
Purchase Rights shall become vested and exercisable to the extent of all of
the Shares then unvested, and any repurchase right of the Company with
respect to shares issued upon exercise of an Option or Stock Purchase Right
shall lapse as to all of the Shares subject to such repurchase right prior to
consummation of the Change of Control, in each case effective as of
immediately prior to consummation of the transaction. To the extent that an
Option or Stock Purchase Right is not exercised prior to consummation of a
Corporate Transaction in which the Option or Stock Purchase Right is not
being assumed or substituted, such Option or Stock Purchase Right shall
terminate upon such consummation.

             In addition, in the event a Participant holding an Option or
Stock Purchase Right assumed or substituted by the Successor Corporation in a
Change of Control, or holding Restricted Stock issued upon exercise of an
Option or Stock Purchase Right with respect to which the Successor
Corporation has succeeded to a repurchase right as a result of the Change of
Control, is Involuntarily Terminated by the Successor Corporation without
Cause in connection with, or within twelve (12) months following consummation
of, the transaction, then any assumed or substituted Option or Stock Purchase
Right held by the terminated Participant at the time of termination shall
accelerate and become exercisable as to all of Shares, and any

                                      -13-
<PAGE>

repurchase right applicable to any Shares shall lapse as to all of Shares.
The acceleration of vesting and lapse of repurchase rights provided for in
the previous sentence shall occur immediately prior to the effective date of
the Participant's termination.

             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)  LIMITATION ON PAYMENTS.  In the event that the vesting
acceleration or lapse of a repurchase right provided for in Section 14(c)
above (x) constitutes "parachute payments" within the meaning of Section 280G
of the Code, and (y) but for this Section 14(d) would be subject to the
excise tax imposed by Section 4999 of the Code (or any corresponding
provisions of state income tax law), then such vesting acceleration or lapse
of a repurchase right shall be either

                  (A)  delivered in full, or

                  (B)  delivered as to such lesser extent which would result
in no portion of such severance benefits being subject to excise tax under
Code Section 4999,

             whichever amount, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Code Section 4999,
results in the receipt by the Participant on an after-tax basis of the
greater amount of acceleration or lapse of repurchase rights benefits,
notwithstanding that all or some portion of such benefits may be taxable
under Code Section 4999. Any determination required under this Section 14(d)
shall be made in writing by the Company's independent accountants, whose
determination shall be conclusive and binding for all purposes on the Company
and any affected Participant. In the event that (A) above applies, then the
Participant shall be responsible for any excise taxes imposed with respect to
such benefits. In the event that (B) above applies, then each benefit
provided hereunder shall be proportionately reduced to the extent necessary
to avoid imposition of such excise taxes.

             (e)  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

                                      -14-
<PAGE>

may, in its discretion, appropriately adjust the price per Share of Common
Stock covered by each outstanding Option to reflect the effect of such
distribution.

         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, prior to the date, if any, on which the Common Stock
becomes a Listed Security, 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 to
"Immediate Family" (as defined below), on such terms and conditions as the
Administrator deems appropriate. Following the date, if any, on which the
Common Stock becomes a Listed Security, the Administrator may in its
discretion grant transferable Nonstatutory Stock Options pursuant to Option
Agreements specifying the manner in which such Nonstatutory Stock Options are
transferable. "IMMEDIATE FAMILY" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and shall include adoptive relationships.

         14.  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 Board;
provided however 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.

         15.  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 shall be made that would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 or
with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any Stock Exchange), the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

                                      -15-
<PAGE>

             (b)  EFFECT OF AMENDMENT OR TERMINATION.  No amendment or
termination of the Plan shall adversely affect Options already granted,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.

         16.  CONDITIONS UPON ISSUANCE OF SHARES.  Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange. As a condition to the exercise of an
Option, the Company may require the person exercising such Option 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.

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

         18.  AGREEMENTS.  Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall
approve from time to time.

         19.  STOCKHOLDER APPROVAL.  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 degree and manner required under applicable state and
federal law and the rules of any Stock Exchange upon which the Common Stock
is listed. All Options and Stock Purchase Rights issued under the Plan shall
become void in the event such approval is not obtained.

         20.  INFORMATION AND DOCUMENTS TO OPTIONEES AND PURCHASERS.  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. In addition, at the time of issuance of any securities under the
Plan, the Company shall provide to the Optionee or the Purchaser a copy of
the Plan and any agreement(s) pursuant to which securities under the Plan are
issued.

                                      -16-