EXHIBIT 10.21

                              VALUESTAR CORPORATION

                           2000 EQUITY INCENTIVE PLAN

Section 1.  General Purpose of Plan; Definitions.


                  The name of this plan is the ValueStar Corporation 2000 Equity
Incentive Plan (the "Plan").  The Plan was adopted by the Board (defined  below)
on July 21, 2000 and approved by the stockholders of the Company (defined below)
on  ___________,  2000.  The  purpose  of the Plan is to enable  the  Company to
attract  and  retain  highly  qualified  personnel  who will  contribute  to the
Company's success and to provide incentives to Participants (defined below) that
are linked  directly to increases in stockholder  value and will therefore inure
to the  benefit  of all  stockholders  of the  Company.  This  Plan is a new and
separate  plan and  therefore  does not  amend or  change  any of the  Company's
existing plans or grants thereunder.


                  For purposes of the Plan, the following terms shall be defined
as set forth below:

                  (a)  "Administrator"  means the Board, or if and to the extent
the Board does not administer the Plan, the Committee in accordance with Section
2 below.

                  (b)  "Affiliate"  means  any  corporation  that  directly,  or
indirectly through one or more intermediaries,  controls or is controlled by, or
is under common control with, another  corporation,  where "control"  (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect,  of the power to cause the direction of the  management  and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.

                  (c) "Award" means any award under the Plan.

                  (d) "Award  Agreement"  means, with respect to each Award, the
signed written agreement  between the Company and the Participant  setting forth
the terms and conditions of the Award.

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

                  (f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.

                  (g)  "Committee"  means any committee the Board may appoint to
administer the Plan. To the extent necessary and desirable,  the Committee shall
be composed entirely of individuals who meet the  qualifications  referred to in
Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. If at any time
or to any extent the Board shall not administer the Plan,  then the functions of
the Board specified in the Plan shall be exercised by the Committee.


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

                  (i)  "Company"   means  ValueStar   Corporation,   a  Colorado
corporation (or any successor corporation).

                  (j) "Deferred  Stock" means the right to receive Shares at the
end of a specified deferral period granted pursuant to Section 8 below.

                  (k)  "Disability"  means the  inability  of a  Participant  to
perform  substantially his or her duties and  responsibilities to the Company or
to any Parent or  Subsidiary  by reason of a physical  or mental  disability  or
infirmity  (i) for a  continuous  period of six months,  or (ii) at such earlier
time  as  the  Participant   submits  medical   evidence   satisfactory  to  the
Administrator  that the  Participant  has a  physical  or mental  disability  or
infirmity  that will  likely  prevent  the  Participant  from  returning  to the
performance of the Participant's  work duties for six months or longer. The date
of such Disability  shall be the last day of such six-month period or the day on
which the Participant  submits such satisfactory  medical evidence,  as the case
may be.

                  (l) "Eligible Recipient" means an officer, director, employee,
consultant or advisor of the Company or of any Parent or Subsidiary.

                  (m) "Employee  Director" means any director of the Company who
is also an employee of the Company or of any Parent or Subsidiary.

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

                  (o)  "Exercise  Price"  means the per  share  price at which a
holder of an Award may purchase the Shares issuable upon exercise of the Award.

                  (p) "Fair Market Value" as of a particular date shall mean the
fair market value of a share of Common Stock as determined by the  Administrator
in its sole  discretion;  provided,  however,  that (i) if the  Common  Stock is
admitted to trading on a national  securities  exchange,  fair market value of a
share of Common Stock on any date shall be the closing  sale price  reported for
such share on such  exchange  on such date or, if no sale was  reported  on such
date, on the last date preceding such date on which a sale was reported, (ii) if
the Common  Stock is  admitted  to  quotation  on the  National  Association  of
Securities  Dealers  Automated  Quotation  ("Nasdaq") System or other comparable
quotation  system and has been  designated as a National  Market System  ("NMS")
security,  fair market value of a share of Common Stock on any date shall be the
closing sale price reported for such share on such system on such date or, if no
sale was reported on such date, on the last date  preceding such date on which a
sale was  reported,  (iii) if the Common  Stock is admitted to  quotation on the
Nasdaq System but has not been designated as an NMS security,  fair market value
of a share of Common  Stock on any date shall be the  average of the highest bid
and lowest  asked prices of such share on such system on such date or, if no bid
and ask prices were reported on such date, on the last date  preceding such date
on which both bid


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and ask prices were reported;  (iv) in the case of a Limited Stock  Appreciation
Right,  the fair market value of a share of Common Stock shall be the "Change in
Control Price" (as defined in the Award Agreement  evidencing such Limited Stock
Appreciation Right) of a share of Common Stock as of the date of exercise.

                  (q) "Incentive  Stock Option" means any Option  intended to be
designated as an "incentive  stock option"  within the meaning of Section 422 of
the Code.

                  (r)  "Limited   Stock   Appreciation   Right"  means  a  Stock
Appreciation  Right  that can be  exercised  only in the event of a  "Change  in
Control"  (as  defined in the Award  Agreement  evidencing  such  Limited  Stock
Appreciation Right).

                  (s)  "Non-Employee  Director"  means a director of the Company
who is not an employee of the Company or of any Parent or Subsidiary.

                  (t) "Non-Qualified  Stock Option" means any Option that is not
an Incentive  Stock  Option,  including any Option that provides (as of the time
such  Option is  granted)  that it will not be  treated  as an  Incentive  Stock
Option.

                  (u)  "Option"  means an  option  to  purchase  Shares  granted
pursuant to Section 6 below.

                  (v) "Parent" means any corporation (other than the Company) in
an  unbroken  chain of  corporations  ending  with the  Company,  if each of the
corporations in the chain (other than the Company) owns stock  possessing 50% or
more of the  combined  voting  power of all classes of stock in one of the other
corporations in the chain.


                  (w) "Participant" means (i) any Eligible Recipient selected by
the Administrator, pursuant to the Administrator's authority in Section 2 below,
to  receive  grants  of  Options,   Stock  Appreciation  Rights,  Limited  Stock
Appreciation Rights,  awards of Restricted Stock, Deferred Stock, or Performance
Shares or any combination of the foregoing.


                  (x)  "Performance  Shares"  means  Shares  that are subject to
restrictions  based upon the  attainment  of  specified  performance  objectives
granted pursuant to Section 8 below.


                  (y)  "Restricted   Stock"  means  Shares  subject  to  certain
restrictions granted pursuant to Section 8 below.

                  (z)  "Shares"  means  shares  of  Common  Stock  reserved  for
issuance  under the Plan,  as  adjusted  pursuant  to  Sections 3 and 4, and any
successor security.

                  (aa) "Stock Appreciation Right" means the right pursuant to an
Award granted under Section 7 below to receive an amount equal to the excess, if
any, of (i) the Fair Market Value, as of the date such Stock  Appreciation Right
or portion thereof is  surrendered,  of the Shares covered by such right or such
portion  thereof,  over (ii) the aggregate  Exercise Price of such right or such
portion thereof.


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                  (bb)  "Subsidiary"  means  any  corporation  (other  than  the
Company) in an unbroken chain of  corporations  beginning  with the Company,  if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock  possessing  50% or more of the total  combined  voting  power of all
classes of stock in one of the other corporations in the chain.


Section 2.  Administration.

                  The  Plan  shall  be   administered  in  accordance  with  the
requirements of Section 162(m) of the Code (but only to the extent necessary and
desirable  to  maintain  qualification  of Awards  under the Plan under  Section
162(m) of the Code) and, to the extent applicable, Rule 16b-3 under the Exchange
Act ("Rule  16b-3"),  by the Board or, at the Board's  sole  discretion,  by the
Committee,  which shall be appointed by the Board,  and which shall serve at the
pleasure of the Board.

                  Pursuant  to the terms of the Plan,  the  Administrator  shall
have the power and  authority  to grant to Eligible  Recipients  Options,  Stock
Appreciation Rights or Limited Stock Appreciation  Rights,  Awards of Restricted
Stock, Deferred Stock or Performance Shares or any combination of the foregoing.
Except as otherwise provided in Section 6(i) below, the Administrator shall have
the authority:


                  (a)  to  select  those   Eligible   Recipients  who  shall  be
Participants;

                  (b) to  determine  whether and to what extent  Options,  Stock
Appreciation  Rights,  Limited Stock Appreciation  Rights,  Awards of Restricted
Stock,  Deferred  Stock or  Performance  Shares or a  combination  of any of the
foregoing, are to be granted hereunder to Participants;

                  (c) to  determine  the  number of Shares to be covered by each
Award granted hereunder;

                  (d) to determine the terms and  conditions,  not  inconsistent
with the terms of the Plan, of each Award granted hereunder (including,  but not
limited to, (x) the  restrictions  applicable to Awards of  Restricted  Stock or
Deferred Stock and the conditions  under which  restrictions  applicable to such
Awards  of  Restricted  Stock  or  Deferred  Stock  shall  lapse,  and  (ii) the
performance goals and periods applicable to Awards of Performance Shares);

                  (e) to determine the terms and  conditions,  not  inconsistent
with  the  terms  of the  Plan,  which  shall  govern  all  written  instruments
evidencing  Options,  Stock  Appreciation  Rights,  Limited  Stock  Appreciation
Rights,  Awards of Restricted Stock, Deferred Stock or Performance Shares or any
combination of the foregoing granted hereunder;

                  (f) to reduce  the  Exercise  Price of any  Option to the then
current Fair Market Value if the Fair Market Value of the Shares covered by such
Option has declined  since the date such Option was  granted,  but only with the
advance consent of the Board; and

                  (g) the  Committee  may,  at any  time or from  time to  time,
authorize the Company, with the consent of the affected  Participants,  to issue
new  Awards  in  exchange  for  the  surrender  and  cancellation  of any or all
outstanding  Awards.  The Committee  may at any time buy from a  Participant  an
Award  previously  granted with payment in cash,  Shares  (including  Restricted
Stock)  or  other  consideration,  based on such  terms  and  conditions  as the
Committee and the Participant shall agree.


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                  The  Administrator  shall  have  the  authority,  in its  sole
discretion, to adopt, alter and repeal such administrative rules, guidelines and
practices  governing the Plan as it shall from time to time deem  advisable;  to
interpret  the terms and  provisions  of the Plan and any Award issued under the
Plan (and any Award Agreement relating thereto);  and to otherwise supervise the
administration of the Plan.

                  All  decisions  made  by  the  Administrator  pursuant  to the
provisions  of the Plan shall be final,  conclusive  and binding on all persons,
including the Company and the Participants.

Section 3.  Shares Subject to Plan.

                  The  total  number of shares  of  Common  Stock  reserved  and
available for issuance under the Plan shall be two million five hundred thousand
(2,500,000)  shares. Such shares may consist, in whole or in part, of authorized
and unissued  shares or treasury  shares.  The aggregate  number of Shares as to
which  Options,  Stock  Appreciation  Rights,  and Awards of  Restricted  Stock,
Deferred Stock and Performance  Shares may be granted to any Participant  during
any calendar year may not,  subject to adjustment as provided in this Section 3,
exceed 50% of the Shares reserved for the purposes of the Plan.

                  Consistent  with the provisions of Section 162(m) of the Code,
as from time to time applicable,  to the extent that (i) an Option expires or is
otherwise terminated without being exercised,  or (ii) any Shares subject to any
Award  of  Restricted  Stock,  Deferred  Stock  or  Performance  Shares  granted
hereunder  are  forfeited,  such Shares shall again be available for issuance in
connection  with future  Awards  granted under the Plan. If any Shares have been
pledged as collateral for  indebtedness  incurred by a Participant in connection
with the  exercise of an Option and such  Shares are  returned to the Company in
satisfaction  of such  indebtedness,  such Shares shall again be  available  for
issuance in connection with future Awards granted under the Plan.

                  In the event of any stock  dividend,  recapitalization,  stock
split,  reverse  stock  split,  subdivision,  combination,  reclassification  or
similar change in the capital structure of the Company without consideration, an
equitable  substitution  or  proportionate  adjustment  shall be made in (i) the
aggregate  number of Shares reserved for issuance under the Plan, (ii) the kind,
number and Exercise Prices of Shares subject to outstanding  Options,  and (iii)
the kind, number and Exercise Prices of Shares subject to outstanding  Awards of
Restricted Stock,  Deferred Stock and Performance Shares, in each case as may be
determined by the Administrator, in its sole discretion, subject to any required
action by the Board or the  stockholders  of the Company and in compliance  with
applicable  securities laws; provided,  however, that fractions of a Share shall
not be issued but shall  either be paid in cash at Fair Market Value or shall be
rounded up to the nearest  whole  share,  as  determined  by the  Committee.  An
adjusted  Exercise  Price shall also be used to determine the amount  payable by
the Company upon the exercise of any Stock  Appreciation  Right or Limited Stock
Appreciation Right related to any Option.

Section 4.  Corporate Transactions.

                  (a) Assumption or  Replacement of Awards by Successor.  In the
event of (i) a merger or consolidation in which the Company is not the surviving
corporation   (other  than  a  merger  or  consolidation   with  a  wholly-owned
subsidiary,  a reincorporation  of the Company in a different


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jurisdiction,  or other  transaction in which there is no substantial  change in
the  stockholders  of the  Company  and the  Awards  granted  under the Plan are
assumed or replaced by the  successor  corporation,  which  assumption  shall be
binding on all Participants);  (ii) a dissolution or liquidation of the Company;
(iii) the sale of  substantially  all of the assets of the Company;  or (iv) any
other  transaction  which qualifies as a "corporate  transaction"  under Section
424(a) of the Code wherein the  stockholders of the Company give up all of their
equity interest in the Company (except for the acquisition,  sale or transfer of
all or substantially all of the outstanding  shares of the Company),  any or all
outstanding  Awards may be assumed or replaced by the successor  corporation (if
any) or Parent thereof,  which assumption or replacement shall be binding on all
Participants.  In the alternative,  the successor  corporation or Parent thereof
may substitute  equivalent awards or provide substantially similar consideration
to  Participants  as was provided to  stockholders  of the Company (after taking
into account the existing provisions of the Awards).  The successor  corporation
or Parent thereof may also issue, in place of outstanding  shares of the Company
held by the Participant,  substantially similar shares or other property subject
to repurchase  restrictions no less favorable to the  Participant.  In the event
such  successor  corporation  (if any) or  Parent  thereof  does not  assume  or
substitute  awards,  as provided above,  pursuant to a transaction  described in
this  Section  4(a),  such Awards  shall  automatically  become fully vested and
exercisable and be released from any  restrictions on transfer and repurchase or
forfeiture  rights,  immediately  prior to the specified  effective date of such
transaction,  for all the Shares at the time represented by such Awards. In such
event, effective upon the consummation of the transaction, or at such other time
and on such  conditions as the Board shall  determine,  all  outstanding  Awards
under the Plan shall  terminate and cease to remain  outstanding,  except to the
extent assumed by the successor corporation or its Parent.

                  (b) Other  Treatment of Awards.  Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 4, in the
event of the  occurrence  of any  transaction  described  in Section  4(a),  any
outstanding  Awards  shall  be  treated  as  provided  in the  applicable  Award
Agreement or plan of merger,  consolidation,  dissolution,  liquidation, sale of
assets or other "corporate transaction."

                  (c)  Assumption  of Awards by the Company.  The Company,  from
time to time,  also may  substitute  or assume  outstanding  awards  granted  by
another company, whether in connection with an acquisition of such other company
or otherwise,  by either (i) granting an Award under the Plan in substitution of
such  other  company's  award;  or (ii)  assuming  such  award as if it had been
granted under the Plan if the terms of such assumed award could be applied to an
award  granted  under  the  Plan.  Such  substitution  or  assumption  shall  be
permissible  if the holder of the  substituted  or assumed award would have been
eligible to be granted an Award under the Plan if the other  company had applied
the rules of the Plan to such grant.  In the event the Company  assumes an award
granted by another company,  the terms and conditions of such award shall remain
unchanged  (except that the  exercise  price and the number and nature of Shares
issuable  upon  exercise  of any  such  option  will be  adjusted  approximately
pursuant  to Section  424(a) of the Code).  In the event the  Company  elects to
grant a new Option rather than assuming an existing option,  such new Option may
be granted with a similarly adjusted Exercise Price.


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Section 5.  Eligibility.

                  Eligible  Recipients  shall be eligible to be granted Options,
Stock  Appreciation  Rights,   Limited  Stock  Appreciation  Rights,  Awards  of
Restricted Stock, Deferred Stock or Performance Shares or any combination of the
foregoing hereunder. The Participants under the Plan shall be selected from time
to time by the  Administrator,  in its sole discretion,  from among the Eligible
Recipients,  and the Administrator shall determine, in its sole discretion,  the
number of Shares covered by each such Award.

Section 6.  Options.

                  Options may be granted  alone or in  addition to other  Awards
granted under the Plan.  Any Option granted under the Plan shall be in such form
as the Administrator  may from time to time approve,  and the provisions of each
Option need not be the same with respect to each  Participant.  Participants who
are granted  Options shall enter into an Award  Agreement  with the Company,  in
such form as the Administrator shall determine,  which Award Agreement shall set
forth,  among other things,  the Exercise  Price of the Option,  the term of the
Option and provisions regarding exercisability of the Option granted thereunder.

                  The Options  granted  under the Plan may be of two types:  (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.

                  The  Administrator  shall have the  authority  to grant to any
officer or  employee of the  Company or of any Parent or  Subsidiary  (including
directors  who are  also  officers  of the  Company)  Incentive  Stock  Options,
Non-Qualified  Stock  Options,  or both types of  Options  (in each case with or
without  Stock  Appreciation  Rights  or  Limited  Stock  Appreciation  Rights).
Directors  who  are  not  also  officers  of the  Company  or of any  Parent  or
Subsidiary,  consultants  or  advisors  to  the  Company  or to  any  Parent  or
Subsidiary  may only be granted  Non-Qualified  Stock  Options  (with or without
Stock Appreciation  Rights or Limited Stock Appreciation  Rights). To the extent
that  any  Option  does not  qualify  as an  Incentive  Stock  Option,  it shall
constitute a separate  Non-Qualified  Stock Option.  More than one Option may be
granted to the same Participant and be outstanding concurrently hereunder.

                  Options  granted  under  the  Plan  shall  be  subject  to the
following  terms and  conditions  and shall  contain such  additional  terms and
conditions,  not inconsistent  with the terms of the Plan, as the  Administrator
shall deem desirable:

                  (a) Option  Exercise  Price.  The per share  Exercise Price of
Shares  purchasable  under an Option shall be determined by the Administrator in
its sole  discretion  at the time of grant  but  shall  not,  (i) in the case of
Incentive  Stock  Options,  be less  than 100% of the Fair  Market  Value of the
Common  Stock on such  date,  (ii) in the case of  Non-Qualified  Stock  Options
intended to qualify as  "performance-based  compensation"  within the meaning of
Section  162(m) of the Code,  be less than 100% of the Fair Market  Value of the
Common Stock on such date and (iii) in any event, be less than the par value (if
any) of the Common Stock.  If a Participant  owns or is deemed to own (by reason
of the attribution  rules applicable under Section 424(d) of the Code) more than
10% of the  combined  voting  power of all classes of stock of the Company or of
any  Parent or  Subsidiary  and an  Incentive  Stock  Option is  granted to such
Participant, the per share Exercise Price of such Incentive Stock Option (to the


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extent  required  at the time of grant by the Code shall be no less than 110% of
the Fair  Market  Value of the  Common  Stock on the date such  Incentive  Stock
Option is granted.

                  (b) Option Term. The term of each Option shall be fixed by the
Administrator,  but no Option shall be exercisable more than ten years after the
date such Option is granted;  provided,  however, that if an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more  than  10% of the  combined  voting  power of all  classes  of stock of the
Company or of any Parent or Subsidiary and an Incentive  Stock Option is granted
to such  employee,  the  term of such  Incentive  Stock  Option  (to the  extent
required by the Code at the time of grant) shall be no more than five years from
the date of grant.

                  (c) Exercisability.  Options shall be exercisable at such time
or times and subject to such terms and  conditions as shall be determined by the
Administrator  at or after the time of grant. The  Administrator  may provide at
the time of grant, in its sole discretion,  that any Option shall be exercisable
only in installments,  and the Administrator may waive such installment exercise
provisions  at any  time,  in  whole or in part,  based on such  factors  as the
Administrator may determine,  in its sole discretion,  including but not limited
to in connection  with any "change in control" of the Company (as defined in the
Award Agreement evidencing such Option).

                  (d) Method of Exercise.  Subject to Section 6(c),  Options may
be exercised in whole or in part at any time during the Option period, by giving
written notice of exercise to the Company  specifying the number of Shares to be
purchased, accompanied by payment in full of the aggregate Exercise Price of the
Shares  so  purchased  in  cash  or  its   equivalent,   as  determined  by  the
Administrator.  In addition,  payment for Shares purchased  pursuant to the Plan
may be made,  where expressly  approved for the Participant by the Committee and
where permitted by law:

                       (i) by cancellation of indebtedness of the Company to the
      Participant;

                       (ii) by  surrender  of shares of Common Stock that either
      (1) have been owned by  Participant  for more than six (6) months and have
      been paid for within the meaning of SEC Rule 144 (and, if such shares were
      purchased from the Company by use of a promissory note, such note has been
      fully  paid  with  respect  to  such  Shares);  or (2)  were  obtained  by
      Participant in the public market;

                       (iii)  by  waiver  of  compensation  due  or  accrued  to
      Participant for services rendered;

                       (iv)  by tender of property;

                       (v) with respect only to  purchases  upon  exercise of an
      Option, and provided that a public market for the Common Stock exists: (i)
      through a "same day sale"  commitment from Participant and a broker-dealer
      that is a member of the National  Association  of  Securities  Dealers (an
      "NASD Dealer") whereby the Participant  irrevocably elects to exercise the
      Option  and to sell a portion of the  Shares so  purchased  to pay for the
      aggregate Exercise Price of the Shares so purchased,  and whereby the


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      NASD Dealer  irrevocably  commits  upon  receipt of such Shares to forward
      such Exercise  Price  directly to the Company;  or (ii) through a "margin"
      commitment  from  Participant  and  an  NASD  Dealer  whereby  Participant
      irrevocably  elects to  exercise  the  Option  and to pledge the Shares so
      purchased  to the NASD Dealer in a margin  account as security  for a loan
      from the NASD Dealer in the amount of the aggregate  Exercise Price of the
      Shares so purchased,  and whereby the NASD Dealer irrevocably commits upon
      receipt of such  Shares to forward  such  Exercise  Price  directly to the
      Company;

                       (vi) in the case of the exercise of a Non-Qualified Stock
      Option,  in the form of Restricted Stock or Performance  Shares subject to
      an Award hereunder  (based,  in each case, on the Fair Market Value of the
      Common Stock on the date the Option is exercised); provided, however, that
      in the case of an Incentive Stock Option, the right to make payment in the
      form of already owned shares of Common Stock may be authorized only at the
      time of grant. If payment of the Exercise Price of a  Non-Qualified  Stock
      Option  is made in  whole or in part in the  form of  Restricted  Stock or
      Performance  Shares,  the Shares received upon the exercise of such Option
      shall  be  restricted  in  accordance  with  the  original  terms  of  the
      Restricted  Stock Award or  Performance  Shares Award in question,  except
      that the Administrator may direct that such restrictions  shall apply only
      to that number of Shares  equal to the number of shares  surrendered  upon
      the exercise of such Option.

                       (vii) by any combination of the foregoing or

                       (viii) by any other form of  consideration  permitted  by
      applicable law.

               A Participant  shall  generally  have the rights to dividends and
any other  rights of a  stockholder  with  respect to the Shares  subject to the
Option only after the Participant has given written notice of exercise, has paid
in full for such  Shares,  and,  if  requested,  has  given  the  representation
described in Section 11(b).

                  The  Administrator  may  require  the  surrender  of  all or a
portion of any Option  granted  under the Plan as a condition  precedent  to the
grant of a new Option.  Subject to the  provisions of the Plan,  such new Option
shall be exercisable at the Exercise Price, during such period and on such other
terms and conditions as are specified by the  Administrator  at the time the new
Option is granted.  Consistent  with the  provisions of Section  162(m),  to the
extent  applicable,  upon their  surrender,  Options  shall be canceled  and the
Shares previously  subject to such canceled Options shall again be available for
future grants of Options and other Awards hereunder.

                  (e) Loans.  The Company or any Parent or  Subsidiary  may make
loans available to Option holders in connection with the exercise of outstanding
Options, as the Administrator, in its sole discretion, may determine. Such loans
shall (i) be evidenced by promissory notes entered into by the Option holders in
favor of the Company or any Parent or  Subsidiary,  (ii) be subject to the terms
and  conditions  set  forth  in this  Section  6(e)  and such  other  terms  and
conditions,   not  inconsistent  with  the  Plan,  as  the  Administrator  shall
determine,  (iii) bear interest at the applicable  Federal interest rate or such
other rate as the  Administrator  shall determine,  and (iv) be subject to Board
approval  (or to


                                       9
<PAGE>


approval  by the  Administrator  to the  extent  the  Board  may  delegate  such
authority). In no event may the principal amount of any such loan exceed the sum
of (x) the  aggregate  Exercise  Price less the par value (if any) of the Shares
covered by the Option, or portion thereof,  exercised by the holder, and (y) any
Federal,  state, and local income tax attributable to such exercise. The initial
term of the loan,  the schedule of payments of principal and interest  under the
loan, the extent to which the loan is to be with or without recourse against the
holder with respect to principal  and/or  interest and the conditions upon which
the loan will become payable in the event of the holder's termination of service
to the  Company  or to any  Parent  or  Subsidiary  shall be  determined  by the
Administrator.  Unless the Administrator  determines  otherwise,  when a loan is
made,  Shares  having  an  aggregate  Fair  Market  Value at least  equal to the
principal  amount of the loan shall be  pledged by the holder to the  Company as
security for payment of the unpaid balance of the loan, and such pledge shall be
evidenced by a pledge  agreement,  the terms of which shall be determined by the
Administrator,  in its sole discretion;  provided, however, that each loan shall
comply with all applicable laws, regulations and rules of the Board of Governors
of  the  Federal  Reserve  System  and  any  other  governmental  agency  having
jurisdiction.

                  (f)  Non-Transferability of Options.  Except under the laws of
descent  and  distribution,  the  Participant  shall not be  permitted  to sell,
transfer,  pledge or assign any Option,  and all Options  shall be  exercisable,
during the Participant's lifetime, only by the Participant;  provided,  however,
that the  Participant  shall be permitted to transfer one or more  Non-Qualified
Stock Options to a trust controlled by the Participant  during the Participant's
lifetime for estate planning purposes.

                  (g)  Termination of Employment or Service.  If a Participant's
employment  with or service as a director,  consultant or advisor to the Company
or to any  Parent  or  Subsidiary  terminates  by  reason  of his or her  death,
Disability  or for any other reason,  the Option may  thereafter be exercised to
the  extent  provided  in the Award  Agreement  evidencing  such  Option,  or as
otherwise determined by the Administrator.

                  (h) Annual Limit on  Incentive  Stock  Options.  To the extent
that the aggregate  Fair Market Value  (determined  as of the date the Incentive
Stock Option is granted) of Shares with respect to which Incentive Stock Options
granted  to a  Participant  under  this Plan and all other  option  plans of the
Company or of any Parent or Subsidiary become  exercisable for the first time by
the  Participant  during any calendar  year exceeds  $100,000 (as  determined in
accordance with Section 422(d) of the Code), the portion of such Incentive Stock
Options in excess of $100,000 shall be treated as Non-Qualified Stock Options.

Section 7.  Stock Appreciation Rights and Limited Stock Appreciation Rights.

                  Stock  Appreciation  Rights  and  Limited  Stock  Appreciation
Rights may be granted  either alone ("Free  Standing  Rights") or in conjunction
with all or part of any Option granted under the Plan ("Related Rights"). In the
case of a Non-Qualified Stock Option, Related Rights may be granted either at or
after the time of the grant of such Option.  In the case of an  Incentive  Stock
Option,  Related  Rights  may be  granted  only at the time of the  grant of the
Incentive  Stock  Option.   The  Administrator   shall  determine  the  Eligible
Recipients to whom, and the time or times at which, grants of Stock Appreciation
Rights or Limited Stock Appreciation  Rights shall be made; the number of Shares
to be  awarded,  the  Exercise  Price  (or,  in  the  case  of a  Limited  Stock
Appreciation  Right, the "Change in Control" price),


                                       10
<PAGE>


and all  other  conditions  of  Stock  Appreciation  Rights  and  Limited  Stock
Appreciation  Rights.  The provisions of Stock  Appreciation  Rights and Limited
Stock Appreciation Rights need not be the same with respect to each Participant.

                  Stock  Appreciation  Rights  and  Limited  Stock  Appreciation
Rights  granted  under the Plan  shall be  subject  to the  following  terms and
conditions  and  shall  contain  such  additional  terms  and  conditions,   not
inconsistent  with the  terms  of the  Plan,  as the  Administrator  shall  deem
desirable:

                  (a) Awards. The prospective  recipient of a Stock Appreciation
Right or Limited Stock Appreciation Right shall not have any rights with respect
to such Award,  unless and until such recipient has executed an Award  Agreement
evidencing the Award (a "Stock  Appreciation  Right Agreement" or "Limited Stock
Appreciation  Right  Agreement," as appropriate)  and delivered a fully executed
copy thereof to the Company, within a period of sixty days (or such other period
as the  Administrator  may specify) after the award date.  Participants  who are
granted Stock  Appreciation  Rights or Limited Stock  Appreciation  Rights shall
have no rights as  stockholders  of the  Company  with  respect  to the grant or
exercise of such rights.

                  (b)  Exercisability.

                       (i)  Stock  Appreciation  Rights  that are Free  Standing
      Rights ("Free Standing Stock Appreciation Rights") shall be exercisable at
      such time or times and  subject to such terms and  conditions  as shall be
      determined by the Administrator at or after grant; provided, however, that
      no Free Standing Stock  Appreciation Right shall be exercisable during the
      first six months of its term, except that this additional limitation shall
      not apply in the event of a Participant's death or Disability prior to the
      expiration of such six-month period.

                       (ii) Stock  Appreciation  Rights that are Related  Rights
      ("Related Stock  Appreciation  Rights") shall be exercisable  only at such
      time or times and to the extent  that the  Options  to which  they  relate
      shall be exercisable in accordance  with the provisions of Section 6 above
      and this Section 7 of the Plan;  provided,  however,  that a Related Stock
      Appreciation  Right granted in connection  with an Incentive  Stock Option
      shall be exercisable  only if and when the Fair Market Value of the Common
      Stock subject to the Incentive  Stock Option exceeds the Exercise Price of
      such Option;  provided,  further, that no Related Stock Appreciation Right
      shall be exercisable  during the first six months of its term, except that
      this additional limitation shall not apply in the event of a Participant's
      death or Disability prior to the expiration of such six-month period.


                                       11
<PAGE>


                       (iii)  Limited  Stock  Appreciation  Rights shall only be
      exercised  within the 30-day  period  following a "Change in Control"  (as
      defined by the  Administrator  in the  Limited  Stock  Appreciation  Right
      Agreement  evidencing  such  right)  and,  with  respect to Limited  Stock
      Appreciation  Rights  that are  Related  Rights  ("Related  Limited  Stock
      Appreciation  Rights"),  only to the extent that the Options to which they
      relate shall be exercisable in accordance with the provisions of Section 6
      above and this Section 7 of the Plan.

                  (c) Payment Upon Exercise.

                       (i)  Upon  the   exercise  of  a  Free   Standing   Stock
      Appreciation  Right,  the Participant  shall be entitled to receive up to,
      but not more  than,  an  amount in cash or that  number of Shares  (or any
      combination  of cash and Shares)  equal in value to the excess of the Fair
      Market Value as of the date of exercise over the per share  Exercise Price
      specified in the Free Standing Stock  Appreciation  Right (which  Exercise
      Price  shall be no less than 100% of the Fair  Market  Value of the Common
      Stock on the date of grant)  multiplied by the number of Shares in respect
      of which the Free Standing Stock  Appreciation  Right is being  exercised,
      with the Administrator having the right to determine the form of payment.

                       (ii) A Related Right may be exercised by a Participant by
      surrendering  the  applicable  portion of the  related  Option.  Upon such
      exercise and surrender,  the  Participant  shall be entitled to receive up
      to, but not more than,  an amount in cash or that number of Shares (or any
      combination  of cash and Shares)  equal in value to the excess of the Fair
      Market Value as of the date of exercise over the per share  Exercise Price
      specified  in the  related  Option  multiplied  by the number of Shares in
      respect of which the Related Stock  Appreciation Right is being exercised,
      with the Administrator  having the right to determine the form of payment.
      Options  which  have been so  surrendered,  in whole or in part,  shall no
      longer be  exercisable  to the  extent  the  Related  Rights  have been so
      exercised.

                       (iii) Upon the exercise of a Limited  Stock  Appreciation
      Right,  the  Participant  shall be  entitled  to receive an amount in cash
      equal in value to the excess of the "Change in Control  Price" (as defined
      in the Award Agreement  evidencing such Limited Stock Appreciation  Right)
      of a share of Common  Stock Share as of the date of exercise  over (A) the
      per share Exercise Price  specified in the related  Option,  or (B) in the
      case of a Limited Stock  Appreciation Right which is a Free Standing Stock
      Appreciation  Right,  the per share Exercise  Price  specified in the Free
      Standing  Stock  Appreciation  Right,  such excess to be multiplied by the
      number of Shares in respect of which the Limited Stock  Appreciation Right
      shall have been exercised.


                                       12
<PAGE>


                  (a) Non-Transferability.

                       (i) Free  Standing  Stock  Appreciation  Rights  shall be
      transferable  only  when  and  to the  extent  that  an  Option  would  be
      transferable under Section 6(f) of the Plan.

                       (ii)   Related   Stock   Appreciation   Rights  shall  be
      transferable  only when and to the extent that the underlying Option would
      be transferable under Section 6(f) of the Plan.

                       (iii)   Limited  Stock   Appreciation   Rights  shall  be
      transferable  only  when  and  to the  extent  that  an  Option  would  be
      transferable under Section 6(f) of the Plan.

                  (b) Termination of Employment or Service

                       (i) In the  event of the  termination  of  employment  or
      service of a  Participant  who has been granted one or more Free  Standing
      Stock Appreciation  Rights,  such rights shall be exercisable at such time
      or times and subject to such terms and  conditions  as shall be determined
      by the Administrator at or after grant.

                       (ii) In the event of the  termination  of  employment  or
      service of a  Participant  who has been granted one or more Related  Stock
      Appreciation  Rights,  such rights  shall be  exercisable  at such time or
      times and subject to such terms and conditions as set forth in the related
      Options.

                       (iii) In the event of the  termination  of  employment or
      service of a  Participant  who has been granted one or more Limited  Stock
      Appreciation  Rights,  such rights  shall be  exercisable  at such time or
      times and subject to such terms and  conditions  as shall be determined by
      the Administrator at or after grant.

                  (c) Term.

                       (i) The term of each  Free  Standing  Stock  Appreciation
      Right  shall be fixed by the  Administrator,  but no Free  Standing  Stock
      Appreciation Right shall be exercisable more than ten years after the date
      such right is granted.

                       (ii) The term of each Related  Stock  Appreciation  Right
      shall be the term of the Option to which it relates,  but no Related Stock
      Appreciation Right shall be exercisable more than ten years after the date
      such right is granted.


                                       13
<PAGE>


                       (iii) The term of each Limited Stock  Appreciation  Right
      shall be fixed by the  Administrator,  but no Limited  Stock  Appreciation
      Right shall be  exercisable  more than ten years after the date such right
      is granted.

Section 8   Restricted Stock, Deferred Stock and Performance Shares.


                  Awards of  Restricted  Stock,  Deferred  Stock or  Performance
Shares may be issued  either alone or in addition to other Awards  granted under
the Plan. The Administrator shall determine the Eligible Recipients to whom, and
the time or times at  which,  Awards  of  Restricted  Stock,  Deferred  Stock or
Performance  Shares  shall be made;  the  number of Shares  to be  awarded;  the
Exercise  Price,  if any, to be paid by the  Participant  for the acquisition of
Restricted Stock,  Deferred Stock or Performance  Shares;  the Restricted Period
(as  defined  in  Section  8(b))  applicable  to Awards of  Restricted  Stock or
Deferred  Stock;  the  performance  objectives  applicable to Awards of Deferred
Stock  or  Performance  Shares;  and  all  other  conditions  of the  Awards  of
Restricted  Stock,  Deferred  Stock  and  Performance  Shares.  Subject  to  the
requirements of Section 162(m) of the Code, as applicable, the Administrator may
also  condition the grant of the Award of Restricted  Stock,  Deferred  Stock or
Performance Shares upon the exercise of Options,  or upon such other criteria as
the Administrator may determine,  in its sole discretion.  The provisions of the
Awards of Restricted Stock, Deferred Stock or Performance Shares need not be the
same  with  respect  to  each  Participant.   In  the  sole  discretion  of  the
Administrator, loans may be made to Participants in connection with the purchase
of  Restricted  Stock  under  substantially  the same  terms and  conditions  as
provided in Section 6(e) of the Plan with respect to the exercise of Options.


                  (a) Awards and  Certificates.  The  prospective  recipient  of
Awards of Restricted Stock,  Deferred Stock or Performance Shares shall not have
any rights with respect to any such Award,  unless and until such  recipient has
executed an Award  Agreement  evidencing  the Award (a  "Restricted  Stock Award
Agreement,"  "Deferred  Stock Award  Agreement"  or  "Performance  Shares  Award
Agreement," as  appropriate)  and delivered a fully executed copy thereof to the
Company,   within  a  period  of  sixty  days  (or  such  other  period  as  the
Administrator  may specify) after the award date.  Except as otherwise  provided
below  in  Section  8(b),  (i)  each  Participant  who is  granted  an  Award of
Restricted  Stock or Performance  Shares shall be issued a stock  certificate in
respect of such shares of Restricted Stock or Performance  Shares; and (ii) such
certificate  shall be registered in the name of the Participant,  and shall bear
an  appropriate  legend  referring to the terms,  conditions,  and  restrictions
applicable to any such Award.

                  The Company may require that the stock certificates evidencing
Restricted Stock or Performance  Shares granted hereunder be held in the custody
of the Company until the restrictions  thereon shall have lapsed, and that, as a
condition  of  any  Award  of  Restricted  Stock  or  Performance   Shares,  the
Participant shall have delivered a stock power,  endorsed in blank,  relating to
the Shares covered by such Award.

                  With respect to Awards of Deferred Stock, at the expiration of
the Restricted Period,  stock certificates in respect of such Shares of Deferred
Stock shall be delivered to the Participant,  or his legal representative,  in a
number equal to the number of Shares covered by the Deferred Stock Award.


                                       14
<PAGE>


                  (b)  Restrictions  and  Conditions.  The Awards of  Restricted
Stock,  Deferred Stock and Performance Shares granted pursuant to this Section 8
shall be subject to the following restrictions and conditions:

                       (i)  Subject  to the  provisions  of  the  Plan  and  the
      Restricted  Stock  Award  Agreement,  Deferred  Stock Award  Agreement  or
      Performance  Shares Award  Agreement,  as appropriate,  governing any such
      Award, during such period as may be set by the Administrator commencing on
      the date of grant (the "Restricted Period"),  the Participant shall not be
      permitted to sell, transfer,  pledge or assign shares of Restricted Stock,
      Deferred  Stock or Performance  Shares  awarded under the Plan;  provided,
      however,  that the Administrator may, in its sole discretion,  provide for
      the lapse of such restrictions in installments and may accelerate or waive
      such  restrictions  in whole or in part  based  on such  factors  and such
      circumstances as the Administrator may determine,  in its sole discretion,
      including,  but not  limited  to, the  attainment  of certain  performance
      related goals, the Participant's termination of employment or service as a
      director,   consultant  or  advisor  to  the  Company  or  any  Parent  or
      Subsidiary,  the Participant's  death or Disability or the occurrence of a
      "change in control" as defined in the  Restricted  Stock Award  Agreement,
      Deferred Stock Award Agreement or Performance  Shares Award Agreement,  as
      appropriate, evidencing such Award.

                       (ii)  Except  as  provided   in  Section   8(c)(i),   the
      Participant  shall  generally  have the  rights  of a  stockholder  of the
      Company with respect to Restricted Stock or Performance  Shares during the
      Restricted  Period. The Participant shall generally not have the rights of
      a stockholder  with respect to Shares  subject to Awards of Deferred Stock
      during the Restricted Period;  provided,  however, that dividends declared
      during the Restricted  Period with respect to the number of Shares covered
      by Awards of Deferred Stock shall be paid to the Participant. Certificates
      for  unrestricted  Shares shall be delivered to the  Participant  promptly
      after,  and  only  after,  the  Restricted  Period  shall  expire  without
      forfeiture in respect of such Awards of Restricted  Stock,  Deferred Stock
      or Performance Shares except as the Administrator, in its sole discretion,
      shall otherwise determine.

                       (iii)  The  rights  of  Participants  granted  Awards  of
      Restricted Stock, Deferred Stock or Performance Shares upon termination of
      employment or service as a director,  consultant or advisor to the Company
      or to any  Parent or  Subsidiary  terminates  for any  reason  during  the
      Restricted  Period  shall  be set  forth  in the  Restricted  Stock  Award
      Agreement,  Deferred  Stock Award  Agreement or  Performance  Shares Award
      Agreement, as appropriate, governing such Awards.

Section 9   Amendment and Termination.

                  The Board may amend,  alter or  discontinue  the Plan,  but no
amendment,  alteration,  or discontinuation  shall be made that would impair the
rights of a  Participant  under  any  Award  theretofore  granted  without  such
Participant's  consent,  or that,  without the approval of the  stockholders (as
described below), would:


                                       15
<PAGE>


                  (a) except as provided in Section 3 of the Plan,  increase the
total number of Shares reserved for issuance under the Plan;

                  (b)  change  the  class  of  officers,  directors,  employees,
consultants and advisors eligible to participate in the Plan; or

                  (c) extend the maximum Option period under Section 6(b) of the
Plan.

                  Notwithstanding the foregoing, stockholder approval under this
Section 9 shall only be  required at such time and under such  circumstances  as
stockholder approval would be required under Section 162(m) of the Code or other
applicable law, rule or regulation with respect to any material  amendment to an
employee benefit plan of the Company.

                  The Administrator may amend the terms of any Award theretofore
granted,  prospectively or retroactively,  but, subject to Section 3 of Plan, no
such  amendment  shall impair the rights of any  Participant  without his or her
consent.

Section 10   Unfunded Status of Plan.

                  The Plan is  intended to  constitute  an  "unfunded"  plan for
incentive  compensation.  With  respect  to  any  payments  not  yet  made  to a
Participant  by the  Company,  nothing  contained  herein  shall  give  any such
Participant any rights that are greater than those of a general  creditor of the
Company.

Section 11   General Provisions.

                  (a) Shares shall not be issued pursuant to the exercise of any
Award granted  hereunder  unless the exercise of such Award 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 and the requirements of any stock exchange upon which
the  Common  Stock may then be  listed,  and  shall be  further  subject  to the
approval of counsel for the Company with respect to such compliance.

                  (b) The Administrator may require each person acquiring Shares
to  represent  to and agree  with the  Company in  writing  that such  person is
acquiring the Shares without a view to distribution  thereof.  The  certificates
for such Shares may include any legend which the Administrator deems appropriate
to reflect any restrictions on transfer.

                  All  certificates for Shares delivered under the Plan shall be
subject  to  such   stock-transfer   orders  and  other   restrictions   as  the
Administrator  may deem  advisable  under  the  rules,  regulations,  and  other
requirements of the Securities and Exchange Commission,  any stock exchange upon
which the  Common  Stock is then  listed,  and any  applicable  Federal or state
securities law, and the Administrator may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such restrictions.


                                       16
<PAGE>


                  (c) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation  arrangements,  subject to stockholder
approval,  if such  approval is required;  and such  arrangements  may be either
generally  applicable or applicable only in specific cases.  The adoption of the
Plan  shall not  confer  upon any  Eligible  Recipient  any  right to  continued
employment or service with the Company or any Parent or Subsidiary,  as the case
may be, nor shall it  interfere  in any way with the right of the Company or any
Parent or  Subsidiary  to  terminate  the  employment  or  service of any of its
Eligible Recipients at any time.

                  (d) Each Participant shall, no later than the date as of which
the  value of an Award  first  becomes  includable  in the  gross  income of the
Participant  for  Federal  income  tax  purposes,  pay to the  Company,  or make
arrangements  satisfactory  to  the  Administrator  regarding  payment  of,  any
Federal,  state,  or local taxes of any kind required by law to be withheld with
respect to such Award.  The  obligations  of the Company under the Plan shall be
conditional  on the making of such  payments  or  arrangements,  and the Company
shall,  to the extent  permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.

                  (e) No  member  of the  Board  or the  Administrator,  nor any
officer  or  employee  of the  Company  acting  on  behalf  of the  Board or the
Administrator,  shall be  personally  liable for any action,  determination,  or
interpretation  taken or made in good  faith with  respect to the Plan,  and all
members of the Board or the  Administrator  and each and any officer or employee
of the Company acting on their behalf shall, to the extent  permitted by law, be
fully  indemnified  and  protected by the Company in respect of any such action,
determination or interpretation.

Section 12  Stockholder  Approval;  Effective  Date of Plan;  Effective  Date of
Amendments.

                  (a) The grant of any Award  hereunder shall be contingent upon
stockholder approval of the Plan being obtained within 12 months before or after
the date the Board adopts the Plan.


                  (b) Subject to the approval of the Plan by the stockholders of
the  Company  within  twelve  (12)  months  before or after the date the Plan is
adopted by the Board, the Plan shall be effective as of July 21, 2000.


Section 13   Term of Plan.


               No Option,  Stock Appreciation Right,  Limited Stock Appreciation
Right, or Awards of Restricted Stock, Deferred Stock or Performance Shares shall
be  granted  pursuant  to the  Plan  on or  after  July  21,  2010,  but  Awards
theretofore granted may extend beyond that date.


                                       17