Exhibit 4.1
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                       ADVANCED ENGINE TECHNOLOGIES, INC.
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                            2000 STOCK INCENTIVE PLAN
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1.  Purposes of the Plan.  The purposes of this Plan are:

         (a)   to attract and retain the best available  personnel for positions
               of substantial responsibility,

         (b)   to  provide  additional  incentive  to  selected  key  Employees,
               Consultants and Directors, and

         (c)   to promote the success of the Company's business.

2.  Definitions.  For the purposes of this Plan, the following terms will have
    the following meanings:

         (a)   "Administrator"  means  the Board or any of its  Committees  that
               administer the Plan, in accordance with Section 4.

         (b)   "Applicable  Laws" means the legal  requirements  relating to the
               administration   of  and  issuance  of  securities   under  stock
               incentive plans, including,  without limitation, the requirements
               of state  corporations  law,  federal and state  securities  law,
               federal  and state  tax law,  and the  requirements  of any stock
               exchange  or  quotation  system upon which the Shares may then be
               listed or quoted.  For all purposes of this Plan,  references  to
               statutes and regulations shall be deemed to include any successor
               statutes and regulations, to the extent reasonably appropriate as
               determined by the Administrator.

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

         (d)   "Cause"   shall  have  the  meaning  set  forth  in  a  Grantee's
               employment or consulting  agreement with the Company (if any), or
               if not defined  therein,  shall mean (i) acts or omissions by the
               Grantee which  constitute  intentional  material  misconduct or a
               knowing  violation of a material  policy of the Company or any of
               its subsidiaries, (ii) the Grantee personally receiving a benefit
               in money,  property  or  services  from the Company or any of its
               subsidiaries  or from another  person dealing with the Company or
               any of its subsidiaries,  in material violation of applicable law
               or   Company   policy,   (iii)  an  act  of  fraud,   conversion,
               misappropriation,   or   embezzlement   by  the  Grantee  or  his
               conviction  of, or  entering a guilty  plea or plea of no contest
               with respect to, a felony, or the equivalent  thereof (other than
               DUI),  or (iv) any  material  misuse or  improper  disclosure  of
               confidential or proprietary information of the Company.

         (e)   "Code" means the Internal  Revenue Code of 1986, as amended.  For
               all purposes of this Plan,  references to Code sections  shall be
               deemed to include  any  successor  Code  sections,  to the extent
               reasonably appropriate as determined by the Administrator.

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         (f)   "Committee"   means  a  Committee   appointed  by  the  Board  in
               accordance with Section 4.

         (g)   "Common  Stock"  means the  common  stock,  $0.001  par value per
               share, of the Company.

         (h)   "Company"  means Advanced Engine  Technologies,  Inc., a Colorado
               corporation.

         (i)   "Consultant"  means any  natural  person,  including  an advisor,
               engaged by the Company or a Parent or  Subsidiary  to render bona
               fide services and who is compensated for such services,  provided
               that the term "Consultant" does not include (i) Employees or (ii)
               Directors  who are paid only a  director's  fee by the Company or
               who are not  compensated  by the  Company  for their  services as
               Directors.

         (j)   "Continuous Status as an Employee,  Director or Consultant" means
               that the employment,  director or consulting  relationship is not
               interrupted   or  terminated  by  the  Company,   any  Parent  or
               Subsidiary,   or  by  the  Employee,   Director  or   Consultant.
               Continuous Status as an Employee, Director or Consultant will not
               be  considered  interrupted  in the  case  of:  (i) any  leave of
               absence  approved by the Board,  including  sick leave,  military
               leave,  or any other personal  leave;  or (ii) transfers  between
               locations of the Company or between the Company,  its Parent, its
               Subsidiaries or its successor.

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

         (l)   "Disability"  means total and permanent  disability as defined in
               Section 22(e)(3) of the Code.

         (m)   "Employee"  means any person,  including  Officers and  Directors
               employed as a common law employee by the Company or any Parent or
               Subsidiary  of the  Company.  Neither  service as a Director  nor
               payment of a director's fee by the Company will be sufficient, in
               and of itself, to constitute "employment" by the Company.

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

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

                  (i)    If the Common Stock is listed on any established  stock
                         exchange or a national market system, including without
                         limitation,  the National Market System of NASDAQ,  the
                         Fair  Market  Value of a Share of Common  Stock will be
                         the closing  sales price for such stock (or the closing
                         bid, if no sales are reported) as quoted on that system
                         or  exchange  (or  the  system  or  exchange  with  the
                         greatest volume of trading in Common Stock) on the last
                         market  trading day prior to the day of  determination,
                         as  reported  in the Wall  Street  Journal or any other
                         source the Administrator considers reliable.

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                  (ii)   If the Common Stock is quoted on the NASDAQ System (but
                         not  on  the  NASDAQ  National  Market  System)  or  is
                         regularly quoted by recognized  securities  dealers but
                         selling prices are not reported,  the Fair Market Value
                         of a Share of Common Stock will be the mean between the
                         high bid and low asked  prices for the Common  Stock on
                         the  last  market  trading  day  prior  to  the  day of
                         determination,  as reported in the Wall Street  Journal
                         or  any  other  source  the   Administrator   considers
                         reliable.

                  (iii)  If the Common  Stock is not traded as set forth  above,
                         the Fair Market Value will be  determined in good faith
                         by the  Administrator  with  reference  to the earnings
                         history,  book value and  prospects  of the  Company in
                         light of  market  conditions  generally,  and any other
                         factors the Administrator  considers appropriate,  such
                         determination   by  the   Administrator  to  be  final,
                         conclusive and binding.

         (p)   "Grant  Notice" shall mean a written  notice  evidencing  certain
               terms and  conditions  of an individual  Option grant.  The Grant
               Notice is part of the Option Agreement.

         (q)   "Grantee"  shall  mean (i) any  Optionee  or (ii)  any  Employee,
               Consultant  or Director  to whom a Stock  Award has been  granted
               pursuant to this Plan.

         (r)   "NASDAQ" means the National  Association  of Securities  Dealers,
               Inc. Automated Quotation System.

         (s)   "Officer"  means a person who is an officer of the Company within
               the meaning of Section 16 of the  Exchange  Act and the rules and
               regulations promulgated thereunder.

         (t)   "Option" means a stock option granted under this Plan.

         (u)   "Option  Agreement" means a written agreement between the Company
               and  an  Optionee  evidencing  the  terms  and  conditions  of an
               individual  Option grant. Each Option Agreement is subject to the
               terms and conditions of this Plan.

         (v)   "Option  Exchange  Program" means a program in which  outstanding
               Options  are  surrendered  in exchange  for Options  with a lower
               exercise price.

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

         (x)   "Optionee" means an Employee, Consultant or Director who holds an
               outstanding Option.

         (y)   "Parent"  means  a  "parent  corporation"  with  respect  to  the
               Company,  whether  now or later  existing,  as defined in Section
               424(e) of the Code.

         (z)   "Plan" means this 2000 Stock Incentive Plan.

         (aa)  "Section" means, except as otherwise specified, a section of this
               Plan.
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         (bb)  "Share"  means  a share  of the  Common  Stock,  as  adjusted  in
               accordance with Section 13.

         (cc)  "Stock  Award"  shall  mean a grant or sale by the  Company  of a
               specified  number of Shares upon terms and conditions  determined
               by the Administrator.

         (dd)  "Subsidiary" means a "subsidiary corporation" with respect to the
               Company,  whether  now or later  existing,  as defined in Section
               424(f) of the Code.

3.   Stock Subject to the Plan.    Subject to the provisions of Section 13 of
the Plan, the maximum  aggregate  number of Shares which may be issued under the
Plan will be Five Million  (5,000,000) Shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

         If an Option  expires  or becomes  unexercisable  without  having  been
exercised in full, or is surrendered  pursuant to an Option Exchange Program, or
if a Stock  Award shall be  cancelled  or  surrendered  or expire for any reason
without  having been  received in full,  the Shares that were not  purchased  or
received  which were subject  thereto will become  available for future grant or
sale under the Plan (unless the Plan has terminated).  If the Company reacquires
Shares  which were issued  pursuant  to the  exercise of an Option or grant of a
Stock Award,  however,  those reacquired Shares will not be available for future
grant under the Plan.

4.   Administration of the Plan.
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     (a)    Procedure.

                (i)    Composition  of  the  Administrator.  The  Plan  will  be
                       administered  by  (A)  the  Board,  or  (B)  a  Committee
                       designated  by  the  Board,   which   Committee  will  be
                       constituted to satisfy Applicable Laws. Once appointed, a
                       Committee  will serve in its  designated  capacity  until
                       otherwise  directed by the Board.  The Board may increase
                       the size of the Committee and appoint additional members,
                       remove members (with or without cause) and substitute new
                       members,  fill vacancies (however caused), and remove all
                       members  of  the   Committee  and   thereafter   directly
                       administer  the  Plan.   Notwithstanding  the  foregoing,
                       unless the Board expressly resolves to the contrary, from
                       and after such time as the Company is registered pursuant
                       to  Section  12 of the  Exchange  Act,  the Plan  will be
                       administered only by a Committee, which will then consist
                       solely of persons who are both  "non-employee  directors"
                       within the  meaning of Rule 16b-3  promulgated  under the
                       Exchange Act and "outside  directors"  within the meaning
                       of Section  162(m) of the Code;  provided,  however,  the
                       failure  of  the  Committee  to  be  composed  solely  of
                       individuals  who are both  "non-employee  directors"  and
                       "outside  directors" shall not render ineffective or void
                       any awards or grants made by, or other  actions taken by,
                       such Committee.

                                      -4-
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                (ii)   Multiple   Administrative   Bodies.   The   Plan  may  be
                       administered   by   different   bodies  with  respect  to
                       Directors,  Officers who are not Directors, and Employees
                       and Consultants who are neither Directors nor Officers.

        (b) Powers of the Administrator.  Subject to the provisions of the Plan,
and in the case of a Committee,  subject to the specific duties delegated by the
Board to that  Committee,  the  Administrator  will have the  authority,  in its
discretion:

                (i)    to determine  the Fair Market Value of the Common  Stock,
                       in accordance with Section 2(o);

                (ii)   to select the Consultants, Employees or Directors to whom
                       Options or Stock Awards may be granted;

                (iii)  to determine  whether and to what extent Options or Stock
                       Awards are granted;

                (iv)   to  determine  the number of shares of Common Stock to be
                       covered by each Option or Stock Award granted;

                (v)    to approve forms of Grant Notices,  Option Agreements and
                       agreements governing Stock Awards;

                (vi)   to determine the terms and conditions,  not  inconsistent
                       with the terms of this  Plan,  of any grant of Options or
                       Stock  Awards,  including,  but not  limited  to, (A) the
                       Options'  exercise  price,  (B) the  time or  times  when
                       Options may be  exercised or Stock Awards will be vested,
                       which  may be  based  on  performance  criteria  or other
                       reasonable  conditions  such as  Continuous  Status as an
                       Employee,   Director  or  Consultant,   (C)  any  vesting
                       acceleration  or waiver of forfeiture  restrictions,  and
                       any  restriction  or  limitation  regarding  any  Option,
                       Optioned  Stock or  Stock  Award,  based in each  case on
                       factors  that the  Administrator  determines  in its sole
                       discretion,  including  but not limited to a  requirement
                       subjecting  the  Optioned  Stock or Shares to (i) certain
                       restrictions on transfer  (including without limitation a
                       prohibition  on transfer  for a specified  period of time
                       and/or a right of first refusal in favor of the Company),
                       and (ii) a right of  repurchase  in favor of the  Company
                       upon termination of the Grantee's Continuous Status as an
                       Employee, Director or Consultant;

                (vii)  to  determine  whether,  to what  extent  and under  what
                       circumstances Common Stock and other amounts payable with
                       respect  to a grant of  Options  under  this Plan will be
                       deferred either  automatically  or at the election of the
                       participant  (including providing for and determining the
                       amount,  if any, of any deemed  earnings on any  deferred
                       amount during any deferral period);

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                (viii) to reduce  the  exercise  price of any Option to the Fair
                       Market  Value at the time of the  reduction,  if the Fair
                       Market Value of the Common  Stock  covered by that Option
                       has declined since the date it was granted;

                (ix)   to construe and interpret the terms of this Plan;

                (x)    to prescribe,  amend,  and rescind rules and  regulations
                       relating to the administration of this Plan;

                (xi)   to modify or amend each Option or Stock Award, subject to
                       Section 15(b);

                (xii)  to  authorize  any  person  to  execute  on behalf of the
                       Company any instrument required to effect the grant of an
                       Option previously granted by the Administrator;

                (xiii) to institute an Option Exchange Program;

                (xiv)  to accelerate the vesting or  exercisability of an Option
                       or Stock Award;

                (xv)   to determine  the terms and  restrictions  applicable  to
                       Options or Stock Awards; and

                (xvi)  to make all other  determinations it considers  necessary
                       or advisable for administering this Plan.

        (c) Effect of Administrator's  Decision. The Administrator's  decisions,
determinations and  interpretations  will be final and binding on all holders of
Options or Stock Awards.

5.  Eligibility.   Options  and  Stock  Awards  may  be  granted  to  Employees,
Consultants and Directors.  If otherwise  eligible,  an Employee,  Consultant or
Director  who has  been  granted  an  Option  or a Stock  Award  may be  granted
additional Options or Stock Awards. Options granted under this Plan shall not be
Options  which are intended to qualify as an incentive  stock option  within the
meaning of Section 422 of the Code.

6. Term of the Plan.  This Plan will become  effective  upon its adoption by the
Board.  It will  continue  in effect for a term of ten years  unless  terminated
earlier  under  Section  15.  Unless  otherwise   provided  in  this  Plan,  its
termination  will  not  affect  the  validity  of  any  Option  or  Stock  Award
outstanding at the date of termination.

7.  Term of  Option.  The  term of each  Option  will be  stated  in the  Option
Agreement;  provided,  however,  that in no event  may the term be more than ten
years from the date of grant.

                                      -6-
<PAGE>

8. Option Exercise Price and Consideration.

        (a)  Exercise  Price of  Options.  The  exercise  price for Shares to be
issued  pursuant  to the  exercise  of any  Option  will  be  determined  by the
Administrator.

        (b) Waiting Period and Exercise Dates. At the time an Option is granted,
the  Administrator  will fix the period within which the Option may be exercised
and will determine any conditions  which must be satisfied before the Option may
be exercised. Exercise of an Option may be conditioned upon performance criteria
or  other  reasonable  conditions  such as  Continuous  Status  as an  Employee,
Director or Consultant.

        (c)  Form  of  Consideration.   The  Administrator  will  determine  the
acceptable form of consideration for exercising an Option,  including the method
of payment. Such consideration may consist partially or entirely of:

               (i)    cash;

               (ii)   a  promissory  note made by the  Optionee  in favor of the
                      Company;

               (iii)  other Shares which have a Fair Market Value on the date of
                      surrender  equal to the  aggregate  exercise  price of the
                      Shares as to which an Option will be exercised;

               (iv)   delivery of a properly  executed  exercise notice together
                      with any other  documentation as the Administrator and the
                      Optionee's  broker,  if applicable,  requires to effect an
                      exercise of the Option and  delivery to the Company of the
                      sale or loan proceeds  required to pay the exercise price;
                      or

               (v)    any other  consideration  and  method of  payment  for the
                      issuance of Shares to the extent  permitted by  Applicable
                      Laws.

9. Exercise of Option.

        (a) Procedure for Exercise; Rights as a Shareholder.  Any Option granted
hereunder  will be  exercisable  according to the terms of the Plan and at times
and under conditions determined by the Administrator and set forth in the Option
Agreement; provided, however, that an Option may not be exercised for a fraction
of a Share.

         An Option  will be deemed  exercised  when the  Company  receives:  (i)
written notice of exercise (in accordance  with the Option  Agreement)  from the
person  entitled to exercise  the Option,  (ii) full payment for the Shares with
respect  to which the  Option  is  exercised,  and  (iii)  all  representations,
indemnifications and documents  reasonably requested by the Administrator.  Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and this Plan. Shares issued
upon  exercise  of an Option will be issued in the name of the  Optionee  or, if
requested  by the  Optionee,  in the name of the Optionee and his or her spouse.
Until the stock  certificate  evidencing  such Shares is issued (as evidenced by

                                      -7-
<PAGE>

the  appropriate  entry on the  books  of the  Company  or of a duly  authorized
transfer  agent of the  Company),  no right to vote or receive  dividends or any
other rights as a  shareholder  will exist with  respect to the Optioned  Stock,
notwithstanding  the  exercise  of the  Option.  Subject  to the  provisions  of
Sections  12, 16, and 17, the  Company  will issue (or cause to be issued)  such
stock certificate promptly after the Option is exercised.  No adjustment will be
made for a dividend  or other  right for which the  record  date is prior to the
date the stock  certificate  is issued,  except as provided in Section 13 of the
Plan.  Notwithstanding  the foregoing,  the  Administrator in its discretion may
require the Company to retain possession of any certificate evidencing Shares of
Common Stock acquired upon exercise of an Option, if those Shares remain subject
to  repurchase  under  the  provisions  of the  Option  Agreement  or any  other
agreement  between  the  Company  and  the  Optionee,  or if  those  Shares  are
collateral for a loan or obligation due to the Company.

         Exercising  an Option in any manner will  decrease the number of Shares
thereafter  available,  both for  purposes  of this 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   or
Directorship.  If an Optionee holds  exercisable  Options on the date his or her
Continuous Status as an Employee,  Director or Consultant terminates (other than
because of  termination  due to Cause,  death or  Disability),  the Optionee may
exercise those Options until the earlier of (i) their expiration as set forth in
the Option Agreement,  and (ii) 30 days after the date of such termination (or a
longer period determined by the Administrator).  If the Optionee is not entitled
to exercise his or her entire Option at the date of such termination, the Shares
covered by the  unexercisable  portion of the Option will revert to the Plan. If
the Optionee does not exercise an Option within the time  specified  above after
termination,  that Option will expire,  and the Shares covered by it will revert
to the Plan.

        (c) Disability of Optionee.  If an Optionee holds exercisable Options on
the date his or her  Continuous  Status as an Employee,  Director or  Consultant
terminates because of Disability,  the Optionee may exercise those Options until
the earlier of (i) their  expiration as set forth in the Option  Agreement,  and
(ii)  six  months  after  the  date  of such  termination  (or a  longer  period
determined  by the  Administrator).  If the Optionee is not entitled to exercise
his or her entire Option at the date of such termination,  the Shares covered by
the unexercisable portion of the Option will revert to the Plan. If the Optionee
does not exercise an Option within the time specified  above after  termination,
that Option will expire, and the Shares covered by it will revert to the Plan.

        (d) Death of Optionee.  If an Optionee holds exercisable  Options on the
date his or her death, the Optionee's  estate or a person who acquired the right
to exercise  the Option by bequest or  inheritance  may exercise  those  Options
until the earlier of (i) their expiration as set forth in the Option  Agreement,
and (ii) six months after the date of death (or a longer  period  determined  by
the  Administrator).  If the  Optionee is not  entitled  to exercise  his or her
entire  Option at the date of death,  the Shares  covered  by the  unexercisable
portion of the Option will  revert to the Plan.  If the  Optionee's  estate or a
person who acquired  the right to exercise the Option by bequest or  inheritance
does not exercise an Option within the time specified  above after  termination,
that Option will expire, and the Shares covered by it will revert to the Plan.

                                      -8-
<PAGE>

        (e)  Termination  for Cause.  If an Optionee's  Continuous  Status as an
Employee,  Director or  Consultant  is  terminated  for Cause,  then all Options
(including any vested Options) held by Optionee shall  immediately be terminated
and cancelled.

10. Non-Transferability of Options.

        (a)  No  Transfer.  An  Option  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 and may be exercised, during the lifetime of
the Optionee, only by the Optionee.

        (b)  Designation  of  Beneficiary.   An  Optionee  may  file  a  written
designation  of a  beneficiary  who  is  to  receive  any  Options  that  remain
unexercised  in the event of the Optionee's  death.  If a participant is married
and the  designated  beneficiary  is not the  spouse,  spousal  consent  will be
required  for the  designation  to be  effective.  The  Optionee may change such
designation of  beneficiary at any time by written notice to the  Administrator,
subject to the above spousal consent requirement.

        (c)  Effect  of No  Designation.  If an  Optionee  dies and  there is no
beneficiary  validly  designated and living at the time of the Optionee's death,
the  Company  will  deliver   such   Optionee's   Options  to  the  executor  or
administrator of his or her estate,  or if no such executor or administrator has
been  appointed  (to  the  knowledge  of  the  Company),  the  Company,  in  its
discretion,  may  deliver  such  Options  to the  spouse  or to any  one or more
dependents or relatives of the Optionee, or if no spouse,  dependent or relative
is known to the Company, then to such other person as the Company may designate.

        (d)  Death  of  Spouse  or  Dissolution  of  Marriage.  If  an  Optionee
designates his or her spouse as  beneficiary,  that  designation  will be deemed
automatically revoked if the Optionee's marriage is later dissolved.  Similarly,
any designation of a beneficiary will be deemed  automatically  revoked upon the
death of the  beneficiary if the beneficiary  predeceases the Optionee.  Without
limiting the generality of the preceding sentence,  the interest in Options of a
spouse of an Optionee who has  predeceased  the  Optionee or whose  marriage has
been  dissolved  will  automatically  pass  to the  Optionee,  and  will  not be
transferable  by such  spouse in any manner,  including  but not limited to such
spouse's  will,  nor will any such  interest  pass  under the laws of  intestate
succession.

11. Stock Awards.

        (a) Grant.  Subject to the express  provisions  and  limitations  of the
Plan, the Administrator,  in its sole and absolute  discretion,  may grant Stock
Awards to Employees,  Consultants  or Directors for a number of shares of Common
Stock  on such  terms  and  conditions  and to such  Employees,  Consultants  or
Directors as it deems advisable and specifies in the respective grants.  Subject
to the  limitations  and  restrictions  set  forth  in the  Plan,  an  Employee,
Consultant  or  Director  who has been  granted an Option or Stock Award may, if
otherwise  eligible,  be  granted  additional  Options  or Stock  Awards  if the
Administrator shall so determine.

        (b)  Restrictions.   The   Administrator,   in  its  sole  and  absolute
discretion,  may  impose  restrictions  in  connection  with  any  Stock  Award,
including without limitation,  (i) imposing a restricted period during which all
or a portion of the  Common  Stock  subject to the Stock  Award may not be sold,
assigned,   transferred,   pledged  or  otherwise  encumbered  (the  "Restricted

                                      -9-
<PAGE>

Period"),  (ii)  providing  for a vesting  schedule  with respect to such Common
Stock such that if a Grantee  ceases to be an Employee,  Consultant  or Director
during the Restricted Period,  some or all of the shares of Common Stock subject
to the Stock Award shall be  immediately  forfeited and returned to the Company.
The Administrator  may, at any time, reduce or terminate the Restricted  Period.
Each certificate issued in respect of shares of Common Stock pursuant to a Stock
Award which is subject to  restrictions  shall be  registered in the name of the
Grantee,  shall be  deposited by the Grantee  with the Company  together  with a
stock power endorsed in blank and shall bear an appropriate  legend  summarizing
the restrictions imposed with respect to such shares of Common Stock.

        (c)  Rights  As  Shareholder.  Subject  to the  terms  of any  agreement
governing a Stock Award,  the Grantee of a Stock Award shall have all the rights
of a  shareholder  with respect to the Common  Stock issued  pursuant to a Stock
Award,  including  the  right  to vote  such  Shares;  provided,  however,  that
dividends or  distributions  paid with respect to any such Shares which have not
vested  shall be deposited  with the Company and shall be subject to  forfeiture
until the  underlying  Shares  have  vested  unless  otherwise  released  by the
Administrator  in its sole  discretion.  A  Grantee  shall  not be  entitled  to
interest with respect to the dividends or distributions so deposited.

12.  Withholding  Taxes.  The Company will have the right to take whatever steps
the  Administrator  deems necessary or appropriate to comply with all applicable
federal,  state,  local,  and employment tax withholding  requirements,  and the
Company's  obligations  to deliver  Shares upon the  exercise of an Option or in
connection with a Stock Award will be conditioned  upon compliance with all such
withholding tax requirements.  Without limiting the generality of the foregoing,
upon the  exercise  of an Option,  the  Company  will have the right to withhold
taxes  from any  other  compensation  or other  amounts  which it may owe to the
Optionee,  or to require  the  Optionee  to pay to the Company the amount of any
taxes which the Company may be required to withhold  with  respect to the Shares
issued on such exercise.  Without limiting the generality of the foregoing,  the
Administrator in its discretion may authorize the Grantee to satisfy all or part
of any  withholding  tax  liability by (a) having the Company  withhold from the
Shares which would  otherwise be issued in  connection  with a Stock Award or on
the exercise of an Option that number of Shares having a Fair Market  Value,  as
of the date the  withholding  tax  liability  arises,  equal to or less than the
amount of the Company's  withholding tax liability,  or (b) by delivering to the
Company  previously-owned  and unencumbered  Shares of the Common Stock having a
Fair Market Value, as of the date the withholding tax liability arises, equal to
or less than the amount of the Company's withholding tax liability.

13.  Adjustments Upon Changes in  Capitalization,  Dissolution,  Merger or Asset
Sale.

        (a) Changes in  Capitalization.  Subject to any  required  action by the
shareholders  of the  Company,  if the  outstanding  shares of Common  Stock are
increased,  decreased,  changed into or exchanged for a different number or kind
of shares or  securities  of the  Company or a  successor  entity,  or for other
property  (including  without   limitation,   cash),   through   reorganization,
recapitalization,  reclassification,  stock combination,  stock dividend,  stock

                                      -10-
<PAGE>

split,  reverse  stock  split,  spin  off  or  other  similar  transaction,   an
appropriate and proportionate  adjustment will be made in the maximum number and
kind of shares as to which  Options and Stock  Awards may be granted  under this
Plan. A corresponding adjustment changing the number or kind of shares allocated
to Stock Awards or unexercised Options which have been granted prior to any such
change will likewise be made.  Any such  adjustment in the  outstanding  Options
will be made without change in the aggregate  purchase  price  applicable to the
unexercised  portion of the Options but with a  corresponding  adjustment in the
price for each share or other unit of any security  covered by the Option.  Such
adjustment  will be  made  by the  Administrator,  whose  determination  in that
respect will be final, binding, and conclusive.

        (b) Dissolution or Liquidation. In the event of the proposed dissolution
or  liquidation  of the  Company,  to the  extent  that an  Option  had not been
previously  exercised  or a Stock  Award  had  not  previously  vested,  it will
terminate  immediately prior to the consummation of such proposed dissolution or
liquidation.  In such instance,  the  Administrator  may, in the exercise of its
sole discretion,  declare that any Stock Award shall become vested or any Option
will  terminate as of a date fixed by the  Administrator  and give each Optionee
the right to  exercise  his or her Option as to all or any part of the  Optioned
Stock,  including  Shares  as  to  which  the  Option  would  not  otherwise  be
exercisable.

        (c)   Corporate   Transaction.   Upon  the   happening   of  a   merger,
reorganization  or sale of substantially  all of the assets of the Company,  the
Administrator, may, in its sole discretion, do one or more of the following: (i)
shorten the period during which Options are  exercisable  (provided  they remain
exercisable  for at least 30 days after the date  notice of such  shortening  is
given to the Optionees); (ii) accelerate any vesting schedule to which an Option
or Stock Award is subject;  (iii)  arrange to have the  surviving  or  successor
entity or any parent entity  thereof  assume the Stock Awards and the Options or
grant replacement options with appropriate  adjustments in the option prices and
adjustments  in the number and kind of  securities  issuable  upon  exercise  or
adjustments  so that the Options or their  replacements  represent  the right to
purchase the shares of stock,  securities or other property  (including cash) as
may be issuable or payable as a result of such transaction with respect to or in
exchange for the number of Shares of Common  Stock  purchasable  and  receivable
upon  exercise of the Options had such  exercise  occurred in full prior to such
transaction; or (iv) cancel Options or unvested Stock Awards upon payment to the
Optionees or Grantees in cash, with respect to each Option or Stock Award to the
extent then  exercisable or vested  (including,  if  applicable,  any Options or
Stock  Awards  as  to  which  the  vesting  schedule  has  been  accelerated  as
contemplated  in clause (ii) above),  of an amount that is the equivalent of the
excess of the Fair Market  Value of the Common Stock (at the  effective  time of
the merger,  reorganization,  sale or other event) over (in the case of Options)
the exercise price of the Option.  The Administrator may also provide for one or
more  of the  foregoing  alternatives  in any  particular  Option  Agreement  or
agreement governing a Stock Award.

14.  Date of Grant.  The date of grant of an Option or Stock  Award will be, for
all purposes,  the date as of which the  Administrator  makes the  determination
granting such Option or Stock Award, or any other,  later date determined by the
Administrator and specified in the Option Agreement. Notice of the determination
will be  provided to each  Grantee  within a  reasonable  time after the date of
grant.

                                      -11-
<PAGE>

15. Amendment and Termination of the Plan.

        (a) Amendment and Termination. The Board may at any time amend, alter or
suspend or terminate the Plan.

        (b)  Effect of  Amendment  or  Termination.  No  amendment,  alteration,
suspension  or  termination  of the Plan will  impair  the  rights of a Grantee,
unless mutually agreed otherwise between the Grantee and the Administrator.  Any
such agreement must be in writing and signed by the Grantee and the Company.

16. Conditions Upon Issuance of Shares.

        (a) Legal  Compliance.  Shares will not be issued in  connection  with a
Stock Award or pursuant to the exercise of an Option unless the exercise of such
Option and the  issuance  and  delivery  of such  Shares  will  comply  with all
Applicable  Laws, and will be further subject to the approval of counsel for the
Company with respect to such compliance. Any securities delivered under the Plan
will be subject to such  restrictions,  and the person acquiring such securities
will, if requested by the Company,  provide such assurances and  representations
to the  Company  as the  Company  may deem  necessary  or  desirable  to  assure
compliance with all Applicable Laws. To the extent permitted by Applicable Laws,
the Plan and Options and Stock Awards  granted  hereunder will be deemed amended
to the extent necessary to conform to such laws, rules and regulations.

        (b)  Investment  Representation.  As a condition  to the  exercise of an
Option or grant of a Stock Award, the Company may require the person  exercising
such Option or receiving  such Stock Award to represent  and warrant at the time
of any such exercise that the Shares are being  acquired only for investment and
without any present intention to sell, transfer, or distribute such Shares.

17. Liability of Company.

        (a)  Inability  to  Obtain  Authority.  If the  Company  cannot,  by the
exercise  of  commercially   reasonable  efforts,   obtain  authority  from  any
regulatory body having  jurisdiction for the sale of any Shares under this Plan,
and such  authority  is deemed by the  Company's  counsel to be necessary to the
lawful  issuance of those Shares,  the Company will be relieved of any liability
for failing to issue or sell those Shares.

        (b) Grants Exceeding  Allotted Shares.  If the Optioned Stock covered by
an Option or Shares  subject to a Stock Award  exceed,  as of the date of grant,
the number of Shares  which may be issued  under the Plan,  that Option or Stock
Award will be contingent with respect to such excess Shares, unless and until an
amendment  sufficiently  increasing the number of Shares subject to this Plan is
timely obtained in accordance with Section 15.

        (c) Rights of Participants and  Beneficiaries.  The Company will pay all
amounts payable under this Plan only to the Grantee,  or beneficiaries  entitled
thereto  pursuant to this Plan.  The  Company  will not be liable for the debts,
contracts, or engagements of any Grantee or his or her beneficiaries, and rights
to cash payments  under this Plan may not be taken in execution by attachment or
garnishment, or by any other legal or equitable proceeding while in the hands of
the Company.

                                      -12-
<PAGE>

18.  Reservation  of Shares.  The  Company  will at all times  reserve  and keep
available  for  issuance a number of Shares  sufficient  to satisfy  this Plan's
requirements during its term.

19. Legending Share Certificates.  In order to enforce any restrictions  imposed
upon Common Stock issued in connection with a Stock Award or upon exercise of an
Option granted under this Plan or to which such Common Stock may be subject, the
Administrator  may  cause  a  legend  or  legends  to be  placed  on  any  share
certificates  representing such Common Stock,  which legend or legends will make
appropriate  reference to such  restrictions,  including,  but not limited to, a
restriction  against  sale of such Common Stock for any period of time as may be
required by Applicable  Laws.  Additionally,  and not by way of limitation,  the
Administrator  may impose such  restrictions on any Common Stock issued pursuant
to the Plan as it may deem advisable.

20. No Employment  Rights.  Neither this Plan nor any Option or Stock Award will
confer  upon a Grantee  any right  with  respect  to  continuing  the  Grantee's
employment or consulting relationship with the Company, or continuing service as
a Director,  nor will they interfere in any way with the Grantee's  right or the
Company's  right to terminate  such  employment  or consulting  relationship  or
directorship at any time, with or without cause.

21.  Governing  Law. The Plan will be governed by, and  construed in  accordance
with the laws of the State of California  (without giving effect to conflicts of
law principles).


                                      -13-