Exhibit 10.29 






	

      SCIENTIFIC
        LEARNING CORPORATION

      MILESTONE
        EQUITY INCENTIVE PLAN

      Adopted
        February 25, 2003

        Approved
        By Stockholders May 21, 2003

        Amended
        January 28, 2004

        Approved
        By Stockholders _________, 2004

        Termination
        Date: February 24, 2013


	 
	1.             
        PURPOSES.

                      (a)           
        The purpose of the Plan is to provide a means by which selected Employees,
        Directors and Consultants may be given an opportunity to benefit from
        increases in value of the common stock of the Company (the “Common
        Stock”) through the granting of (i) Incentive Stock Options, (ii)
        Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase
        restricted stock and (v) Stock Appreciation Rights.

                      (b)           
        The Company, by means of the Plan, seeks to retain the services of persons
        who are now Employees, Directors or Consultants, to secure and retain
        the services of new Employees, Directors and Consultants and to provide
        incentives for such persons to exert maximum efforts for the success of
        the Company and its Affiliates.

                      (c)           
        The Company intends that the Stock Awards issued under the Plan shall,
        in the discretion of the Board or any Committee to which responsibility
        for administration of the Plan has been delegated pursuant to subsection
        3(c), be (i) Options granted pursuant to Section 6 hereof, including Incentive
        Stock Options and Nonstatutory Stock Options, (ii) rights to purchase
        restricted stock or to receive stock bonuses pursuant to Section 7 hereof
        or (iii) Stock Appreciation Rights granted pursuant to Section 8 hereof.
        All Options shall be separately designated Incentive Stock Options or
        Nonstatutory Stock Options at the time of grant, and in such form as issued
        pursuant to Section 6, and a separate certificate or certificates will
        be issued for shares purchased on exercise of each type of Option.


	 
	2.             
        DEFINITIONS.

                      (a)           
        “Affiliate”  means any parent corporation or subsidiary
        corporation, whether now or hereafter existing, as those terms are defined
        in Sections 424(e) and (f) respectively, of the Code.

                      (b)           
        “Board”  means the Board of Directors of the Company.

                      (c)           
        “Code”  means the Internal Revenue Code of 1986,
        as amended.






	
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	                (d)           
        “Committee”  means a Committee appointed by the
        Board in accordance with subsection 3(c) of the Plan.

                      (e)           
        “Company”  means Scientific Learning Corporation,
        a Delaware corporation.

                      (f)            
        “Consultant”  means any person, including an advisor,
        engaged by the Company or an Affiliate to render consulting services and
        who is compensated for such services, provided that the term “Consultant”
        shall not include 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.

                      (g)           
        “Continuous Service”  means that the Optionee’s
        employment or service with the Company or an Affiliate of the Company,
        whether in the capacity of an Employee, a Director or a Consultant, is
        not interrupted or terminated. The Optionee’s Continuous Service
        shall not be deemed to have terminated merely because of a change in the
        capacity in which the Optionee renders employment or service to the Company
        or an Affiliate or the Company or a change in the entity for which the
        Optionee renders such employment or service, provided that there is no
        interruption or termination of the Optionee’s Continuous Service.
        The Board or the Chief Executive Officer of the Company, in that party’s
        sole discretion, may determine whether Continuous Service shall be considered
        interrupted in the case of any leave of absence approved by the Board
        or the Chief Executive Officer of the Company, including sick leave, military
        leave, or any other personal leave.

                      (h)           
        “Covered Employee”  means the Chief Executive
        Officer and the four (4) other highest compensated officers of the Company
        for whom total compensation is required to be reported to stockholders
        under the Exchange Act, as determined for purposes of Section 162(m) of
        the Code.

                      (i)            
        “Director”  means a member of the Board.

                      (j)            
        “Disability”  means the inability of a person,
        in the opinion of a qualified physician acceptable to the Company, to
        perform the major duties of that person’s position with the Company
        or an Affiliate of the Company because of the sickness or injury of the
        person.

                      (k)           
        “Employee”  means any person, including Officers
        and Directors, employed by the Company or any Affiliate of the Company.
        Neither service as a Director nor payment of a director’s fee by
        the Company shall be sufficient to constitute “employment” by
        the Company.

                      (l)            
        “Exchange Act”  means the Securities Exchange
        Act of 1934, as amended.

                      (m)         
        “Fair Market Value”  means, as of any date, the
        value of the Common Stock of the Company determined as follows:  

	 
	                                 (1)           
      if the Common Stock is listed on any established stock exchange,  traded
      on the Nasdaq National Market or the Nasdaq SmallCap Market, or quoted on
      the OTC Bulletin Board, the Fair Market Value of a share of Common Stock
      shall be the closing sales price for such stock (or the closing bid, if
      no sales were reported) as quoted on such exchange, market or board (or
      the exchange or market with the greatest volume of trading in Common Stock)
      on the trading day prior to the day of determination, as reported in the
      Wall Street Journal or such other source as the Board deems reliable;




	
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	                                (2)           
      in the absence of such markets for the Common Stock, the Fair Market Value
      shall be determined in good faith by the Board and to the extent that the
      Company is subject to Section 260.140.50 of Title 10 of the California Code
      of Regulations at the time a Stock Award is granted, in a manner consistent
      with Section 260.140.50 of Title 10 of the California Code of Regulations.
	 
	                 (n)           
        “Incentive Stock Option”  means an Option intended
        to qualify as an incentive stock option within the meaning of Section
        422 of the Code and the regulations promulgated thereunder.

                      (o)           
        “Non-Employee Director”  means a Director
        who either (i) is not a current Employee or Officer of the Company or
        its parent or subsidiary, does not receive compensation (directly or indirectly)
        from the Company or its parent or subsidiary for services rendered as
        a consultant or in any capacity other than as a Director (except for an
        amount as to which disclosure would not be required under Item 404(a)
        of Regulation S-K promulgated pursuant to the Securities Act), does not
        possess an interest in any other transaction as to which disclosure would
        be required under Item 404(a) of Regulation S-K, and is not engaged in
        a business relationship as to which disclosure would be required under
        Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee
        director” for purposes of Rule 16b-3.

                      (p)           
        “Nonstatutory Stock Option”  means an Option not
        intended to qualify as an Incentive Stock Option.

                      (q)           
        “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.

                      (r)           
        “Option”  means a stock option granted pursuant
        to the Plan.

                      (s)           
        “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 shall be subject
        to the terms and conditions of the Plan.

                      (t)            
        “Optionee”  means a person to whom an Option is
        granted pursuant to the Plan, or if applicable, such other person who
        holds an outstanding Option.

                      (u)           
        “Outside Director”  means a Director who either
        (i) is not a current employee of the Company or an “affiliated corporation”
        (within the meaning of Treasury regulations promulgated under Section
        162(m) of the Code), is not a former employee of the Company or an “affiliated
        corporation” receiving compensation for prior services (other than
        benefits under a tax qualified pension plan), was not an officer of the
        Company or an “affiliated corporation” at any time, and is not
        currently receiving direct or indirect remuneration from the Company or
        an “affiliated corporation” for services in any capacity other
        than as a Director, or (ii) is otherwise considered an “outside director”
        for purposes of Section 162(m) of the Code.





	
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	                (v)           
        “Participant”  means a person to whom a Stock
        Award is granted pursuant to the Plan or, if applicable, such other person
        who holds an outstanding Stock Award.

                      (w)          
        “Plan”  means this Scientific Learning Corporation
        Milestone Equity Incentive Plan.

                      (x)           
        “Rule 16b-3”  means Rule 16b-3 of the Exchange
        Act or any successor to Rule 16b-3, as in effect when discretion is being
        exercised with respect to the Plan.

                      (y)           
        “Securities Act”  means the Securities Act of
        1933, as amended.

                      (z)           
        “Stock Appreciation Right”  means any of the various
        types of rights which may be granted under Section 8 of the Plan.

                      (aa)        
        “Stock Award”  means any right granted under the
        Plan, including an Option, a stock bonus, a right to purchase restricted
        stock and a Stock Appreciation Right. 

                      (bb)        
        “Stock Award Agreement”  means a written agreement
        between the Company and a holder of a Stock Award evidencing the terms
        and conditions of an individual Stock Award grant. Each Stock Award Agreement
        shall be subject to the terms and conditions of the Plan.

                      (cc)         
        “Ten Percent Stockholder”  means a person who
        owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
        possessing more than ten percent (10%) of the total combined voting power
        of all classes of stock of the Company or any of its Affiliates.

	 
	3.             
      ADMINISTRATION.
	 
	                (a)           
        The Board shall administer the Plan unless and until the Board delegates
        administration to a Committee, as provided in subsection 3(c).

                      (b)           
        The Board shall have the power, subject to, and within the limitations
        of, the express provisions of the Plan:

	 
	                                 (1)           
        to determine from time to time which of the persons eligible under the
        Plan shall be granted Stock Awards; when and how each Stock Award shall
        be granted; whether a Stock Award will be an Incentive Stock Option or
        a Nonstatutory Stock Option, a right to purchase restricted stock, a Stock
        Appreciation Right or a combination of the foregoing; the provisions of
        each Stock Award granted (which need not be identical), including the
        time or times when a person shall be permitted to receive stock pursuant
        to a Stock Award; whether a person shall be permitted to receive stock
        upon exercise of an Independent Stock Appreciation Right; and the number
        of shares with respect to which a Stock Award shall be granted to each
        such person;

                                      (2)           
        to construe and interpret the Plan and Stock Awards granted under it,
        and to establish, amend and revoke rules and regulations for its administration.
        The Board, in the exercise of this power, may correct any defect, omission
        or inconsistency in the Plan or in any Stock Award Agreement, in a manner
        and to the extent it shall deem necessary or expedient to make the Plan
        fully effective;

      




	
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	                                 (3)           
        to amend the Plan or a Stock Award as provided in Section 13; and

                                      (4)           
        generally, to exercise such powers and to perform such acts as the Board
        deems necessary or expedient to promote the best interests of the Company
        which are not in conflict with the provisions of the Plan.

                        (c)           
      The Board may delegate administration of the Plan to a Committee or Committees
      of one or more members of the Board. In the discretion of the Board, a Committee
      may consist solely of two or more Outside Directors, in accordance with
      Code Section 162(m), or solely of two or more Non-Employee Directors, in
      accordance with Rule 16b-3. If administration is delegated to a Committee,
      the Committee shall have, in connection with the administration of the Plan,
      the powers theretofore possessed by the Board (and references in this Plan
      to the Board shall thereafter be to the Committee), subject, however, to
      such resolutions, not inconsistent with the provisions of the Plan, as may
      be adopted from time to time by the Board. The Board may abolish the Committee
      at any time and revest in the Board the administration of the Plan. Notwithstanding
      anything in this Section 3 to the contrary, the Board or the Committee may
      delegate to a committee of one or more members of the Board the authority
      to grant Options to eligible persons who (1) are not then subject to Section
      16 of the Exchange Act and/or (2) are either (i) not then Covered Employees
      and are not expected to be Covered Employees at the time of recognition
      of income resulting from such Option, or (ii) not persons with respect to
      whom the Company wishes to comply with Section 162(m) of the Code.
	 
	4.             
      SHARES SUBJECT TO THE PLAN.
	 
	                 (a)           
        Subject to the provisions of subsection 12(a) relating to adjustments
        upon changes in stock, the stock that may be issued pursuant to Stock
        Awards shall not exceed in the aggregate Five Million Four Hundred Ninety-Two
        Thousand Six Hundred Sixty Six (5,492,666) shares of Common Stock, less
        any shares which are subject to Stock Awards granted under the Company’s
        1999 Equity Incentive Plan, as then in effect. If any Stock Award shall
        for any reason expire or otherwise terminate, in whole or in part, without
        having been exercised in full, the stock not acquired under such Stock
        Award shall revert to and again become available for issuance under the
        Plan. Shares subject to Stock Appreciation Rights exercised in accordance
        with Section 8 of the Plan shall not be available for subsequent issuance
        under the Plan.

                      (b)           
        The stock subject to the Plan may be unissued shares or reacquired shares,
        bought on the market or otherwise.

	 
	5.             
      ELIGIBILITY.
	 
	                (a)           
        Incentive Stock Options and Stock Appreciation Rights appurtenant thereto
        may be granted only to Employees. Stock Awards other than Incentive Stock
        Options and Stock Appreciation Rights appurtenant thereto may be granted
        to Employees, Directors and Consultants.

                      (b)           
        Ten Percent Stockholders.   A Ten Percent Stockholder
        shall not be granted an Incentive Stock Option unless the exercise price
        of such Option is at least one hundred ten percent (110%) of the Fair
        Market Value of the Common Stock on the date of grant and the Option is
        not exercisable after the expiration of five (5) years from the date of
        grant. 

      




	
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	                 (c)           
        Subject to the provisions of Section 12(a) relating to adjustments upon
        changes in stock, no employee shall be eligible to be granted Options
        and Stock Appreciation Rights covering more than One Million (1,000,000)
        shares of the Common Stock in any calendar year. 

      6.             
        OPTION PROVISIONS.

	 
	                Each
      Option shall be in such form and shall contain such terms and conditions
      as the Board shall deem appropriate. The provisions of separate Options
      need not be identical, but each Option shall include (through incorporation
      of provisions hereof by reference in the Option or otherwise) the substance
      of each of the following provisions:
	 
	                 (a)           
        Term.   No Incentive Stock Option shall be exercisable
        after the expiration of ten (10) years from the date it was granted.

                      (b)           
         Price.   Subject to the provisions of Section 5(b)
        regarding Ten Percent Stockholders, the exercise price of each Incentive
        Stock Option shall be not less than one hundred percent (100%) of the
        Fair Market Value of the stock subject to the Option on the date the Option
        is granted. The exercise price of each Nonstatutory Stock Option shall
        be any price determined by the Board in its sole discretion.

                      (c)           
        Consideration.   The purchase price of stock acquired
        pursuant to an Option shall be paid, to the extent permitted by applicable
        statutes and regulations, either (i) in cash or (ii) at the discretion
        of the Board (A) by delivery to the Company of other Common Stock of the
        Company, (B) according to a deferred payment as permitted by law (however,
        payment of the common stock’s “par value,” as defined in
        the Delaware General Corporation Law, shall not be made by deferred payment),
        or other arrangement (which may include, without limiting the generality
        of the foregoing, the use of other Common Stock of the Company) with the
        person to whom the Option is granted or to whom the Option is transferred
        pursuant to subsection 6(d), or (C) in any other form of legal consideration
        that may be acceptable to the Board.

                      In
        the case of any deferred payment arrangement, interest shall be compounded
        at least annually and shall be charged at the minimum rate of interest
        necessary to avoid the treatment as interest, under any applicable provisions
        of the Code, of any amounts other than amounts stated to be interest under
        the deferred payment arrangement.

                      (d)           
        Transferability.   Neither an Incentive Stock Option
        nor a Nonstatutory Stock Option shall be transferable except by will or
        by the laws of descent and distribution, and either shall be exercisable
        during the lifetime of the person to whom the Option is granted only by
        such person. Notwithstanding the foregoing, the Optionee may, by delivering
        written notice to the Company, in a form satisfactory to the Company,
        designate a third party who, in the event of the death of the Optionee,
        shall thereafter be entitled to exercise the Option.

                      (e)           
        Vesting.   The total number of shares of stock subject
        to an Option may, but need not, be allotted in periodic installments (which
        may, but need not, be equal). The Option Agreement may provide that from
        time to time during each of such installment periods, the Option may become
        exercisable (“vest”) with respect to some or all of the shares
        allotted to that period, and may be exercised with respect to some or
        all of the shares allotted to such period and/or any prior period as to
        which the Option became vested but was not fully exercised. The Option
        may be subject to such other terms and conditions on the time or times
        when it may be exercised (which may be based on performance or other criteria)
        as the Board may deem appropriate. The vesting provisions of individual
        Options may vary. The provisions of this subsection 6(e) are subject to
        any Option provisions governing the minimum number of shares as to which
        an Option may be exercised.






	
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	                (f)            
        Termination of the Optionee’s Continuous Service.   In
        the event an Optionee’s Continuous Service terminates (other than
        upon the Optionee’s death or Disability), the Optionee may exercise
        his or her Option (to the extent that the Optionee was entitled to exercise
        it at the date of termination) but only within such period of time ending
        on the earlier of (i) the date three (3) months after the termination
        of the Optionee’s Continuous Service (or such longer or shorter period
        specified in the Option Agreement, or (ii) the expiration of the term
        of the Option as set forth in the Option Agreement. If, after termination,
        the Optionee does not exercise his or her Option within the time specified
        in the Option Agreement, the Option shall terminate, and the shares covered
        by such Option shall revert to and again become available for issuance
        under the Plan.

                      An
        Optionee’s Option Agreement may also provide that, if the exercise
        of the Option following the termination of the Optionee’s Continuous
        Service (other than upon the Optionee’s death or Disability) would
        be prohibited at any time solely because the issuance of shares would
        violate the registration requirements under the Securities Act, then the
        Option shall terminate on the earlier of (i) the expiration of the term
        of the Option as described in subsection 6(a) or (ii) the expiration of
        a period of three (3) months after the termination of the Optionee’s
        Continuous Service during which the exercise of the Option would not be
        in violation of such registration requirements (if such provisions would
        result in an extension of the time during which the Option may be exercised
        beyond the period described in the first paragraph of this subsection 6(f)).

                      (g)           
        Disability of Optionee.   In the event an Optionee’s
        Continuous Service terminates as a result of the Optionee’s Disability,
        the Optionee may exercise his or her Option (to the extent that the Optionee
        was entitled to exercise it at the date of termination), but only within
        such period of time ending on the earlier of (i) the date twelve (12)
        months following such termination (or such longer or shorter period specified
        in the Option Agreement, or (ii) the expiration of the term of the Option
        as set forth in the Option Agreement. If, at the date of termination,
        the Optionee is not entitled to exercise his or her entire Option, the
        shares covered by the unexercisable portion of the Option shall revert
        to and again become available for issuance under the Plan. If, after termination,
        the Optionee does not exercise his or her Option within the time specified
        herein, the Option shall terminate, and the shares covered by such Option
        shall revert to and again become available for issuance under the Plan.

                      (h)           
        Death of Optionee.   In the event of the death of an
        Optionee during, or within a period specified in the Option after the
        termination of, the Optionee’s Continuous Service, the Option may
        be exercised (to the extent the Optionee was entitled to exercise the
        Option at the date of death) by the Optionee’s estate, by a person
        who acquired the right to exercise the Option by bequest or inheritance
        or by a person designated to exercise the option upon the Optionee’s
        death pursuant to subsection 6(d), but only within the period ending on
        the earlier of (i) the date eighteen (18) months following the date of
        death (or such longer or shorter period specified in the Option Agreement),
        or (ii) the expiration of the term of such Option as set forth in the
        Option Agreement. If, at the time of death, the Optionee was not entitled
        to exercise his or her entire Option, the shares covered by the unexercisable
        portion of the Option shall revert to and again become available for issuance
        under the Plan. If, after death, the Option is not exercised within the
        time specified herein, the Option shall terminate, and the shares covered
        by such Option shall revert to and again become available for issuance
        under the Plan.

      





	
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	                (i)            
        Early Exercise.   The Option may, but need not, include
        a provision whereby the Optionee may elect at any time before the Optionee’s
        Continuous Service terminates to exercise the Option as to any part or
        all of the shares subject to the Option prior to the full vesting of the
        Option. Any unvested shares so purchased may be subject to a repurchase
        right in favor of the Company or to any other restriction the Board determines
        to be appropriate. 

      7.             
        PROVISIONS OF STOCK BONUS AND RESTRICTED STOCK AWARDS.

	 
	                (a)           
      Stock Bonus Awards.   Each stock bonus agreement shall
      be in such form and shall contain such terms and conditions as the Board
      shall deem appropriate. The terms and conditions of stock bonus agreements
      may change from time to time, and the terms and conditions of separate stock
      bonus agreements need not be identical, but each stock bonus agreement shall
      include (through incorporation of provisions hereof by reference in the
      agreement or otherwise) the substance of each of the following provisions:  
	 
	                                 (i)            
        Consideration.   A stock bonus may be awarded in consideration
        for past services actually rendered to the Company or an Affiliate for
        its benefit.

                                      (ii)           
        Vesting.   Shares of Common Stock awarded under the stock
        bonus agreement may, but need not, be subject to a share repurchase option
        in favor of the Company in accordance with a vesting schedule to be determined
        by the Board.

                                      (iii)         
        Termination of Participant’s Continuous Service.  In
        the event that a Participant’s Continuous Service terminates, the
        Company may reacquire any or all of the shares of Common Stock held by
        the Participant that have not vested as of the date of termination under
        the terms of the stock bonus agreement. The Company will not exercise
        its repurchase option until at least six (6) months (or such longer or
        shorter period of time required to avoid a change to earnings for financial
        accounting purposes) have elapsed following receipt of the stock bonus
        unless otherwise specifically provided in the stock bonus agreement.

                                      (iv)         
        Transferability.   Rights to acquire shares of Common
        Stock under the stock bonus agreement shall be transferable by the Participant
        only upon such terms and conditions as are set forth in the stock bonus
        agreement, as the Board shall determine in its discretion, so long as
        Common Stock awarded under the stock bonus agreement remains subject to
        the terms of the stock bonus agreement.

	 
	                 (b)           
      Restricted Stock Awards.   Each restricted stock purchase
      agreement shall be in such form and shall contain such terms and conditions
      as the Board shall deem appropriate. The terms and conditions of the restricted
      stock purchase agreements may change from time to time, and the terms and
      conditions of separate restricted stock purchase agreements need not be
      identical, but each restricted stock purchase agreement shall include (through
      incorporation of provisions hereof by reference in the agreement or otherwise)
      the substance of each of the following provisions:




	
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	                                (i)            
        Purchase Price.   The purchase price of restricted stock
        awards shall not be less than eighty-five percent (85%) of the Common
        Stock’s Fair Market Value on the date such award is made or at the
        time the purchase is consummated. 

                                      (ii)           
        Consideration.   The purchase price of Common Stock acquired
        pursuant to the restricted stock purchase agreement shall be paid either:
        (i) in cash at the time of purchase; (ii) at the discretion of the Board,
        according to a deferred payment or other similar arrangement with the
        Participant; or (iii) in any other form of legal consideration that may
        be acceptable to the Board in its discretion; provided, however,
        that at any time that the Company is incorporated in Delaware, then payment
        of the Common Stock’s “par value,” as defined in the Delaware
        General Corporation Law, shall not be made by deferred payment.

                                      (iii)         
        Vesting.  Shares of Common Stock acquired under the restricted
        stock purchase agreement may, but need not, be subject to a share repurchase
        option in favor of the Company in accordance with a vesting schedule to
        be determined by the Board.

                                      (iv)         
        Termination of Participant’s Continuous Service.  In
        the event that a Participant’s Continuous Service terminates, the
        Company may repurchase or otherwise reacquire any or all of the shares
        of Common Stock held by the Participant that have not vested as of the
        date of termination under the terms of the restricted stock purchase agreement.
        The Company will not exercise its repurchase option until at least six
        (6) months (or such longer or shorter period of time required to avoid
        a charge to earnings for financial accounting purposes) have elapsed following
        the purchase of the restricted stock unless otherwise provided in the
        restricted stock purchase agreement.

                                      (v)           
        Transferability.  Rights to acquire shares of Common Stock
        under the restricted stock purchase agreement shall be transferable by
        the Participant only upon such terms and conditions as are set forth in
        the restricted stock purchase agreement, as the Board shall determine
        in its discretion, so long as Common Stock awarded under the restricted
        stock purchase agreement remains subject to the terms of the restricted
        stock purchase agreement.


	 
	8.             
      STOCK APPRECIATION RIGHTS.
	 
	                (a)           
        To exercise any outstanding Stock Appreciation Right, the holder must
        provide written notice of exercise to the Company in compliance with the
        provisions of the Stock Award Agreement evidencing such right. Except
        as provided in subsection 5(c), no limitation shall exist on the aggregate
        amount of cash payments the Company may make under the Plan in connection
        with the exercise of a Stock Appreciation Right.

                      (b)           
        Three types of Stock Appreciation Rights shall be authorized for issuance
        under the Plan:

      




	
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	                                (1)           
        Tandem Stock Appreciation Rights.   Tandem Stock Appreciation
        Rights will be granted appurtenant to an Option, and shall, except as
        specifically set forth in this Section 8, be subject to the same terms
        and conditions applicable to the particular Option grant to which it pertains.
        Tandem Stock Appreciation Rights will require the holder to elect between
        the exercise of the underlying Option for shares of stock and the surrender,
        in whole or in part, of such Option for an appreciation distribution.
        The appreciation distribution payable on the exercised Tandem Right shall
        be in cash (or, if so provided, in an equivalent number of shares of stock
        based on Fair Market Value on the date of the Option surrender) in an
        amount up to the excess of (A) the Fair Market Value (on the date of the
        Option surrender) of the number of shares of stock covered by that portion
        of the surrendered Option in which the Optionee is vested over (B) the
        aggregate exercise price payable for such vested shares.

                                      (2)           
        Concurrent Stock Appreciation Rights.   Concurrent Rights
        will be granted appurtenant to an Option and may apply to all or any portion
        of the shares of stock subject to the underlying Option and shall, except
        as specifically set forth in this Section 8, be subject to the same terms
        and conditions applicable to the particular Option grant to which it pertains.
        A Concurrent Right shall be exercised automatically at the same time the
        underlying Option is exercised with respect to the particular shares of
        stock to which the Concurrent Right pertains. The appreciation distribution
        payable on an exercised Concurrent Right shall be in cash (or, if so provided,
        in an equivalent number of shares of stock based on Fair Market Value
        on the date of the exercise of the Concurrent Right) in an amount equal
        to such portion as shall be determined by the Board or the Committee at
        the time of the grant of the excess of (A) the aggregate Fair Market Value
        (on the date of the exercise of the Concurrent Right) of the vested shares
        of stock purchased under the underlying Option which have Concurrent Rights
        appurtenant to them over (B) the aggregate exercise price paid for such
        shares.

                                      (3)           
        Independent Stock Appreciation Rights.   Independent
        Rights will be granted independently of any Option and shall, except as
        specifically set forth in this Section 8, be subject to the same terms
        and conditions applicable to Nonstatutory Stock Options as set forth in
        Section 6. They shall be denominated in share equivalents. The appreciation
        distribution payable on the exercised Independent Right shall be not greater
        than an amount equal to the excess of (A) the aggregate Fair Market Value
        (on the date of the exercise of the Independent Right) of a number of
        shares of Company stock equal to the number of share equivalents in which
        the holder is vested under such Independent Right, and with respect to
        which the holder is exercising the Independent Right on such date, over
        (B) the aggregate Fair Market Value (on the date of the grant of the Independent
        Right) of such number of shares of Company stock. The appreciation distribution
        payable on the exercised Independent Right shall be in cash or, if so
        provided, in an equivalent number of shares of stock based on Fair Market
        Value on the date of the exercise of the Independent Right.


	 
	9.             
      COVENANTS OF THE COMPANY.
	 
	                (a)           
        During the terms of the Stock Awards, the Company shall keep available
        at all times the number of shares of stock required to satisfy such Stock
        Awards.

                      (b)           
        The Company shall seek to obtain from each regulatory commission or agency
        having jurisdiction over the Plan such authority as may be required to
        issue and sell shares under Stock Awards; provided, however, that
        this undertaking shall not require the Company to register under the Securities
        Act the Plan, any Stock Award or any stock issued or issuable pursuant
        to any such Stock Award. If, after reasonable efforts, the Company is
        unable to obtain from any such regulatory commission or agency the authority
        which counsel for the Company deems necessary for the lawful issuance
        and sale of stock under the Plan, the Company shall be relieved from any
        liability for failure to issue and sell stock upon exercise of such Stock
        Awards unless and until such authority is obtained.

      




	
        10.

      








	10.          
      USE OF PROCEEDS FROM STOCK.
	 
	                Proceeds
      from the sale of stock pursuant to Stock Awards shall constitute general
      funds of the Company.
	 
	11.          
      MISCELLANEOUS.
	 
	                (a)           
        The Board shall have the power to accelerate the time at which a Stock
        Award may first be exercised or the time during which a Stock Award or
        any part thereof will vest, notwithstanding the provisions in the Stock
        Award stating the time at which it may first be exercised or the time
        during which it will vest.

                      (b)           
        Neither the recipient of a Stock Award nor any person to whom a Stock
        Award is transferred in accordance with the Plan shall be deemed to be
        the holder of, or to have any of the rights of a holder with respect to,
        any shares subject to such Stock Award unless and until such person has
        satisfied all requirements for exercise of the Stock Award pursuant to
        its terms.

                      (c)           
        Nothing in the Plan or any instrument executed or Stock Award granted
        pursuant thereto shall confer upon any recipient or other holder of Stock
        Awards any right to continue in the employ of the Company or any Affiliate
        or to continue serving as a Consultant or a Director, or shall affect
        the right of the Company or any Affiliate to terminate the employment
        of any Employee with or without notice and with or without cause, or the
        right to terminate the relationship of any Consultant pursuant to the
        terms of such Consultant’s agreement with the Company or Affiliate
        or service as a Director pursuant to the Company’s Bylaws and the
        provisions of the corporate law of the state in which the Company is incorporated.

                      (d)           
        To the extent that the aggregate Fair Market Value (determined at the
        time of grant) of stock with respect to which Incentive Stock Options
        are exercisable for the first time by any Optionee during any calendar
        year under all plans of the Company and its Affiliates exceeds one hundred
        thousand dollars ($100,000), the Options or portions thereof which exceed
        such limit (according to the order in which they were granted) shall be
        treated as Nonstatutory Stock Options.

                      (e)           
        The Company may require any person to whom a Stock Award is granted, or
        any person to whom a Stock Award is transferred in accordance with the
        Plan, as a condition of exercising or acquiring stock under any Stock
        Award, (1) to give written assurances satisfactory to the Company as to
        such person’s knowledge and experience in financial and business
        matters and/or to employ a purchaser representative reasonably satisfactory
        to the Company who is knowledgeable and experienced in financial and business
        matters, and that he or she is capable of evaluating, alone or together
        with the purchaser representative, the merits and risks of exercising
        the Stock Award; and (2) to give written assurances satisfactory to the
        Company stating that such person is acquiring the stock subject to the
        Stock Award for such person’s own account and not with any present
        intention of selling or otherwise distributing the stock. The foregoing
        requirements, and any assurances given pursuant to such requirements,
        shall be inoperative if (i) the issuance of the shares upon the exercise
        or acquisition of stock under the Stock Award has been registered under
        a then currently effective registration statement under the Securities
        Act, or (ii) as to any particular requirement, a determination is made
        by counsel for the Company that such requirement need not be met in the
        circumstances under the then applicable securities laws. The Company may,
        upon advice of counsel to the Company, place legends on stock certificates
        issued under the Plan as such counsel deems necessary or appropriate in
        order to comply with applicable securities laws, including, but not limited
        to, legends restricting the transfer of the stock.






	
        11.

      








	                (f)            
        To the extent provided by the terms of a Stock Award Agreement, the person
        to whom a Stock Award is granted may satisfy any federal, state or local
        tax withholding obligation relating to the exercise or acquisition of
        stock under a Stock Award by any of the following means (in addition to
        the Company’s right to withhold from any compensation paid to such
        person by the Company) or by a combination of such means:  (1)
        tendering a cash payment; (2) authorizing the Company to withhold shares
        from the shares of the Common Stock otherwise issuable to the participant
        as a result of the exercise or acquisition of stock under the Stock Award;
        provided, however, that no shares of Common Stock are withheld with a
        value exceeding the minimum amount of tax required to be withheld by law
        (or such lesser amount as may be necessary to avoid variable award accounting);
        or (3) delivering to the Company owned and unencumbered shares of the
        Common Stock of the Company.

                      (g)           
        Repurchase Limitation.   The terms of any repurchase
        option shall be specified in the Stock Award Agreement, and the repurchase
        price may be either the Fair Market Value of the shares of Common Stock
        or the lower of (i) the Fair Market Value of the shares of Common Stock
        on the date of repurchase or (ii) their original purchase price. 

      
	 
	12.          
      ADJUSTMENTS UPON CHANGES IN STOCK.
	 
	                (a)           
        If any change is made in the stock subject to the Plan, or subject to
        any Stock Award, without the receipt of consideration by the Company (through
        merger, consolidation, reorganization, recapitalization, reincorporation,
        stock dividend, dividend in property other than cash, stock split, liquidating
        dividend, combination of shares, exchange of shares, change in corporate
        structure or other transaction not involving the receipt of consideration
        by the Company), the Plan will be appropriately adjusted in the class(es)
        and maximum number of shares subject to the Plan pursuant to subsection
        4(a) and the maximum number of shares subject to award to any person during
        any calendar year pursuant to subsection 5(c), and the outstanding Stock
        Awards will be appropriately adjusted in the class(es) and number of shares
        and price per share of stock subject to such outstanding Stock Awards.
        Such adjustments shall be made by the Board, the determination of which
        shall be final, binding and conclusive. (The conversion of any convertible
        securities of the Company shall not be treated as a “transaction
        not involving the receipt of consideration by the Company”.)

                      (b)           
        In the event of a proposed dissolution or liquidation of the Company,
        the Board shall notify the Stock Award holder at least fifteen (15) days
        prior to such proposed action. To the extent it has not been previously
        exercised, the Stock Award shall terminate immediately prior to the consummation
        of such proposed action.

      




	
        12.

      








	                (c)           
        In the event of:  (1) a dissolution, liquidation or sale of
        all or substantially all of the assets of the Company; (2) a merger or
        consolidation in which the Company is not the surviving corporation; or
        (3) a reverse merger in which the Company is the surviving corporation
        but the shares of Common Stock outstanding immediately preceding the merger
        are converted by virtue of the merger into other property, whether in
        the form of securities, cash or otherwise, then (i) any surviving corporation
        or acquiring corporation shall assume any Stock Awards outstanding under
        the Plan or shall substitute similar stock awards (including an award
        to acquire the same consideration paid to the stockholders in the transaction
        described in this subsection 12(b)) for those outstanding under the Plan,
        or (ii) in the event any surviving corporation or acquiring corporation
        refuses to assume such Stock Awards or to substitute similar stock awards
        for those outstanding under the Plan, (A) with respect to Stock Awards
        held by persons whose Continuous Service has not terminated, the vesting
        of such Stock Awards (and, if applicable, the time during which such Stock
        Awards may be exercised) shall be accelerated prior to such event and
        the Stock Awards terminated if not exercised (if applicable) after such
        acceleration and at or prior to such event, and (B) with respect to any
        other Stock Awards outstanding under the Plan, such Stock Awards shall
        be terminated if not exercised (if applicable) prior to such event.

                      (d)           
        In the event of the acquisition by any person, entity or group within
        the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
        successor provisions (excluding any employee benefit plan, or related
        trust, sponsored or maintained by the Company or any Affiliate of the
        Company) of the beneficial ownership (within the meaning of Rule 13d-3
        promulgated under the Exchange Act, or comparable successor rule) of securities
        of the Company representing at least fifty percent (50%) of the combined
        voting power entitled to vote in the election of directors, then, with
        respect to Stock Awards held by persons whose Continuous Service has not
        terminated, the vesting of such Stock Awards (and, if applicable, the
        time during which such Stock Awards may be exercised) shall be accelerated
        immediately upon the happening of such event.

      
	 
	13.          
      AMENDMENT OF THE PLAN AND STOCK AWARDS.
	 
	                (a)           
        The Board at any time, and from time to time, may amend the Plan. However,
        except as provided in Section 12 relating to adjustments upon changes
        in stock, no amendment shall be effective unless approved by the stockholders
        of the Company to the extent stockholder approval is necessary for the
        Plan to satisfy the requirements of Section 422 of the Code, Rule 16b-3
        or any Nasdaq or securities exchange listing requirements.

                      (b)           
        The Board may in its sole discretion submit any other amendment to the
        Plan for stockholder approval, including, but not limited to, amendments
        to the Plan intended to satisfy the requirements of Section 162(m) of
        the Code and the regulations thereunder regarding the exclusion of performance-based
        compensation from the limit on corporate deductibility of compensation
        paid to certain executive officers.

                      (c)           
        It is expressly contemplated that the Board may amend the Plan in any
        respect the Board deems necessary or advisable to provide eligible Optionees
        with the maximum benefits provided or to be provided under the provisions
        of the Code and the regulations promulgated thereunder relating to Incentive
        Stock Options and/or to bring the Plan and/or Incentive Stock Options
        granted under it into compliance therewith.

      




	
        13.

      








	                (d)           
        Rights under any Stock Award granted before amendment of the Plan shall
        not be impaired by any amendment of the Plan unless (i) the Company requests
        the consent of the person to whom the Stock Award was granted and (ii)
        such person consents in writing.

                      (e)           
        The Board at any time, and from time to time, may amend the terms of any
        one or more Stock Awards; provided, however, that the rights under
        any Stock Award shall not be impaired by any such amendment unless (i)
        the Company requests the consent of the person to whom the Stock Award
        was granted and (ii) such person consents in writing.

	 
	14.          
      TERMINATION OR SUSPENSION OF THE PLAN.
	 
	                (a)           
        The Board may suspend or terminate the Plan at any time. Unless sooner
        terminated, the Plan shall terminate ten (10) years from the date the
        Plan is adopted by the Board or approved by the stockholders of the Company,
        whichever is earlier. No Stock Awards may be granted under the Plan while
        the Plan is suspended or after it is terminated. Notwithstanding the foregoing,
        all Incentive Stock Options shall be granted, if at all, no later than
        the last day preceding the tenth (10th) anniversary of the earlier of
        (i) the date on which the latest increase in the maximum number of shares
        issuable under the Plan was approved by the stockholders of the Company
        or (ii) the date such amendment was adopted by the Board.

                      (b)           
        Rights and obligations under any Stock Award granted while the Plan is
        in effect shall not be impaired by suspension or termination of the Plan,
        except with the consent of the person to whom the Stock Award was granted.

	 
	15.          
      EFFECTIVE DATE OF PLAN.
	 
	                The
        Plan shall become effective as of the date the Board adopts the Plan,
        but no Options or rights to purchase restricted stock granted under the
        Plan shall be exercised unless and until the Plan has been approved by
        the stockholders of the Company, which approval shall be within twelve
        (12) months before or after the date the Plan was adopted by the Board.






	
        14.