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                                                                    EXHIBIT 10.1

                             QUALSTAR CORPORATION

                           1998 STOCK INCENTIVE PLAN
                            As Amended and Restated

     The 1998 STOCK INCENTIVE PLAN (the "Plan") of Qualstar Corporation, a
California corporation (the "Company"), originally adopted by its Board of
Directors as of February 4, 1998 (the "Effective Date"), is hereby amended and
restated as of January 14, 2000.

                                  Article 1.


                             PURPOSES OF THE PLAN
                             --------------------

     1.1  Purposes.  The purposes of the Plan are (a) to enhance the Company's
          --------
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company's business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the Company.


                                  Article 2.

                                  DEFINITIONS
                                  -----------

     For purposes of this Plan, the following terms shall have the meanings
indicated:

     2.1  Administrator.  "Administrator" means the Board or, if the Board
          -------------
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.

     2.2  Affiliated Company.  "Affiliated Company" means any "parent
          ------------------
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.

     2.3  Board.  "Board" means the Board of Directors of the Company.
          -----

     2.4  Change in Control.  "Change in Control" shall mean (i) the
          -----------------
acquisition, directly or indirectly, by any person or group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of all outstanding securities
of the Company; (ii) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction in which the holders of the
outstanding voting securities of the Company immediately prior to such merger or
consolidation hold, in the aggregate, securities possessing more than fifty
percent (50%) of the total combined voting power of all outstanding voting
securities of the surviving entity immediately after such merger or
consolidation; (iii) a reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of all outstanding voting securities of the Company
are transferred to or acquired by a person or persons different from the persons
holding those securities immediately prior to such merger; (iv) the sale,
transfer or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company;
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or (v) the approval by the shareholders of a plan or proposal for the
liquidation or dissolution of the Company.

     2.5   Code.  "Code" means the Internal Revenue Code of 1986, as amended
           ----
from time to time.

     2.6   Committee.  "Committee" means a committee of two or more members of
           ---------
the Board appointed to administer the Plan, as set forth in Section 7.1 hereof.

     2.7   Common Stock.  "Common Stock" means the Common Stock of the Company,
           ------------
subject to adjustment pursuant to Section 4.2 hereof.

     2.8   Disability.  "Disability" means permanent and total disability as
           ----------
defined in Section 22(e)(3) of the Code.  The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.

     2.9   Effective Date.  "Effective Date" means the date on which the Plan
           --------------
was originally adopted by the Board, as set forth on the first page hereof.

     2.10  Exercise Price.  "Exercise Price" means the purchase price per share
           --------------
of Common Stock payable upon exercise of an Option.

     2.11  Fair Market Value.   "Fair Market Value" on any given date means the
           -----------------
value of one share of Common Stock, determined as follows:

           (a)  If the Common Stock is then listed or admitted to trading on a
NASDAQ market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the closing sale price on the date of valuation on
such NASDAQ market system or principal stock exchange on which the Common Stock
is then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on such NASDAQ market system or such exchange on the next preceding
day for which a closing sale price is reported.

           (b)  If the Common Stock is not then listed or admitted to trading on
a NASDAQ market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the average of the closing bid and asked prices
of the Common Stock in the over-the-counter market on the date of valuation.

           (c)  If neither (a) nor (b) is applicable as of the date of
valuation, then the Fair Market Value shall be determined by the Administrator
in good faith using any reasonable method of evaluation, which determination
shall be conclusive and binding on all interested parties.

     2.12  Incentive Option.  "Incentive Option" means any Option designated and
           ----------------
qualified as an "incentive stock option" as defined in Section 422 of the Code.

     2.13  Incentive Option Agreement.  "Incentive Option Agreement" means an
           --------------------------
Option Agreement with respect to an Incentive Option.

     2.14  NASD Dealer.  "NASD Dealer" means a broker-dealer that is a member of
           -----------
the National Association of Securities Dealers, Inc.

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     2.15  Nonqualified Option.  "Nonqualified Option" means any Option that is
           -------------------
not an Incentive Option.  To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Shareholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.

     2.16  Nonqualified Option Agreement.  "Nonqualified Option Agreement" means
           -----------------------------
an Option Agreement with respect to a Nonqualified Option.

     2.17  Offeree.  "Offeree" means a Participant to whom a Right to Purchase
           -------
has been offered or who has acquired Restricted Stock under the Plan.

     2.18  Option.  "Option" means any option to purchase Common Stock granted
           ------
pursuant to the Plan.

     2.19  Option Agreement.  "Option Agreement" means the written agreement
           ----------------
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.

     2.20  Optionee.  "Optionee" means a Participant who holds an Option.
           --------

     2.21  Participant.  "Participant" means an individual or entity who holds
           -----------
an Option, a Right to Purchase or Restricted Stock under the Plan.

     2.22  Purchase Price.  "Purchase Price" means the purchase price per share
           --------------
of Restricted Stock payable upon acceptance of a Right to Purchase.

     2.23  Restricted Stock.  "Restricted Stock" means shares of Common Stock
           ----------------
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.

     2.24  Right to Purchase.  "Right to Purchase" means a right to purchase
           -----------------
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.

     2.25  Service Provider.  "Service Provider" means a consultant or other
           ----------------
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a  Participant in the Plan.

     2.26  Stock Purchase Agreement.  "Stock Purchase Agreement" means the
           ------------------------
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.

     2.27  10% Shareholder.  "10% Shareholder" means a person who, as of a
           ---------------
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.

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                                   Article 3.

                                  ELIGIBILITY
                                  -----------

     3.1  Incentive Options.  Only employees of the Company or of an Affiliated
          -----------------
Company (including officers of the Company and members of the Board if they are
employees of the Company or of an Affiliated Company) are eligible to receive
Incentive Options under the Plan.

     3.2  Nonqualified Options and Rights to Purchase.  Employees of the Company
          -------------------------------------------
or of an Affiliated Company, officers of the Company and members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan.

     3.3  Limitation on Shares.  In no event shall any Participant be granted
          --------------------
Options or Rights to Purchase in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 50,000 shares.

                                   Article 4.

                                  PLAN SHARES
                                  -----------

     4.1  Shares Subject to the Plan.  A total of 450,000* shares of Common
          --------------------------
Stock may be issued under the Plan, subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation,
in the event that (a) all or any portion of any Option or Right to Purchase
granted or offered under the Plan can no longer under any circumstances be
exercised, or (b) any shares of Common Stock are reacquired by the Company
pursuant to an Incentive Option Agreement, Nonqualified Option Agreement or
Stock Purchase Agreement, the shares of Common Stock allocable to the
unexercised portion of such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.

     4.2  Changes in Capital Structure.   In the event that the outstanding
          ----------------------------
shares of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements,
Rights to Purchase and Stock Purchase Agreements, in order to preserve, as
nearly as practicable, but not to increase, the benefits to Participants.

                                   Article 5.

                                    OPTIONS
                                    -------

     5.1  Option Agreement.  Each Option granted pursuant to this Plan shall be
          ----------------
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option.  As soon as is practical

-------------------
     *  1,215,000 shares, as adjusted for a 2.7-for-1 stock split that will
become effective in March 2000.

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following the grant of an Option, an Option Agreement shall be duly executed and
delivered by or on behalf of the Company to the Optionee to whom such Option was
granted. Each Option Agreement shall be in such form and contain such additional
terms and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.

     5.2  Exercise Price.  The Exercise Price per share of Common Stock covered
          --------------
by each Option shall be determined by the Administrator, subject to the
following:  (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 100% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the
person to whom an Option is granted is a 10% Shareholder on the date of grant,
the Exercise Price shall not be less than 110% of Fair Market Value on the date
the Option is granted.

     5.3  Payment of Exercise Price.  Payment of the Exercise Price shall be
          -------------------------
made upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee 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 Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.

     5.4  Term and Termination of Options.  The term and provisions for
          -------------------------------
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Shareholder on the date of
grant shall not be exercisable more than five (5) years after the date it is
granted.

     5.5  Vesting and Exercise of Options.  Each Option shall vest and become
          -------------------------------
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.

     5.6  Annual Limit on Incentive Options.  To the extent required for
          ---------------------------------
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted

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under this Plan and any other plan of the Company or any Affiliated Company
become exercisable for the first time by an Optionee during any calendar year,
exceed $100,000.

     5.7  Nontransferability of Options.  No Option shall be assignable or
          -----------------------------
transferable except by will or the laws of descent and distribution, and during
the life of the Optionee shall be exercisable only by such Optionee; provided,
however, that, in the discretion of the Administrator, any Option may be
assigned or transferred in any manner which an "incentive stock option" is
permitted to be assigned or transferred under the Code.

     5.8  Rights as Shareholder.  An Optionee or permitted transferee of an
          ---------------------
Option shall have no rights or privileges as a shareholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.

                                  Article 6.

                              RIGHTS TO PURCHASE
                              ------------------

     6.1  Nature of Right to Purchase.  A Right to Purchase granted to an
          ---------------------------
Offeree entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.

     6.2  Acceptance of Right to Purchase.  An Offeree shall have no rights with
          -------------------------------
respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within thirty (30) days (or
such longer or shorter period as the Administrator may specify) following the
grant of the Right to Purchase by making payment of the full Purchase Price to
the Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.

     6.3  Payment of Purchase Price.    Subject to any legal restrictions,
          -------------------------
payment of the Purchase Price upon acceptance of a Right to Purchase Restricted
Stock may be made, in the discretion of the Administrator, by: (a) cash; (b)
check; (c) the surrender of shares of Common Stock owned by the Offeree that
have been held by the Offeree for at least six (6) months, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise; (d)
the Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.

     6.4  Rights as a Shareholder.  Upon complying with the provisions of
          -----------------------
Section 6.2 hereof, an Offeree shall have the rights of a shareholder with
respect to the Restricted Stock purchased pursuant to the Right to Purchase,
including voting and dividend rights, subject to the terms, restrictions and
conditions as are set forth in the Stock Purchase Agreement. Unless the

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<PAGE>

Administrator shall determine otherwise, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company until such shares
have vested in accordance with the terms of the Stock Purchase Agreement.

     6.5  Restrictions.  Shares of Restricted Stock may not be sold, assigned,
          ------------
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement. In the event of
termination of a Participant's employment, service as a director of the Company
or Service Provider status for any reason whatsoever (including death or
disability), the Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator, to repurchase (i) at the original Purchase
Price, any shares of Restricted Stock which have not vested as of the date of
termination, and (ii) at Fair Market Value, any shares of Restricted Stock which
have vested as of such date, on such terms as may be provided in the Stock
Purchase Agreement.

     6.6  Vesting of Restricted Stock.  The Stock Purchase Agreement shall
          ---------------------------
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.

     6.7  Dividends.  If payment for shares of Restricted Stock is made by
          ---------
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.

     6.8  Nonassignability of Rights.  No Right to Purchase shall be assignable
          --------------------------
or transferable except by will or the laws of descent and distribution or as
otherwise provided by the  Administrator.

                                  Article 7.

                          ADMINISTRATION OF THE PLAN
                          --------------------------

     7.1  Administrator.  Authority to control and manage the operation and
          -------------
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.

     7.2  Powers of the Administrator.  In addition to any other powers or
          ---------------------------
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's rights under any Option or Right to Purchase under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to Restricted Stock; (h) to extend
the exercise date of any Option or

                                       7
<PAGE>

acceptance date of any Right to Purchase; (i) to provide for rights of first
refusal and/or repurchase rights; (j) to amend outstanding Option Agreements and
Stock Purchase Agreements to provide for, among other things, any change or
modification which the Administrator could have provided for upon the grant of
an Option or Right to Purchase or in furtherance of the powers provided for
herein; and (k) to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. Any action, decision, interpretation or determination
made in good faith by the Administrator in the exercise of its authority
conferred upon it under the Plan shall be final and binding on the Company and
all Participants.

     7.3  Limitation on Liability.  No employee of the Company or member of the
          -----------------------
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.

                                  Article 8.

                               CHANGE IN CONTROL
                               -----------------

     8.1  Change in Control.  In order to preserve a Participant's rights in the
          -----------------
event of a Change in Control of the Company:

     (a)  Vesting of all outstanding Options shall accelerate automatically
effective as of immediately prior to the consummation of the Change in Control
unless the Options are to be assumed by the acquiring or successor entity (or
parent thereof) or new options or New Incentives are to be issued in exchange
therefor, as provided in subsection (b) below.

     (b)  Vesting of outstanding Options shall not accelerate if and to the
                                               ---
extent that: (i) the Options (including the unvested portion thereof) are to be
assumed by the acquiring or successor entity (or parent thereof) or new options
of comparable value are to be issued in exchange therefor pursuant to the terms
of the Change in Control transaction, or (ii) the Options (including the
unvested portion thereof) are to be replaced by the acquiring or successor
entity (or parent thereof) with other incentives under a new incentive program
("New Incentives") containing such terms and provisions as the Administrator in
its discretion may consider equitable. If outstanding Options are assumed, or if
new options of comparable value are issued in exchange therefor, then each such
Option or new option shall be appropriately adjusted, concurrently with the
Change in Control, to apply to the number and class of securities or other
property that the Participant would have received pursuant to the Change in
Control transaction in exchange for the shares issuable upon exercise of the
Option had the Option been exercised immediately prior to the Change in Control,
and appropriate adjustment also shall be made to the Exercise Price such that
the aggregate Exercise Price of each such Option or new option shall remain the
same as nearly as practicable.

     (c)  The Administrator in its discretion may provide in any Option
Agreement that if such Option is assumed by an acquiring or successor entity (or
parent thereof) or a new option of comparable value or New Incentive is issued
in exchange therefor pursuant to the terms of a Change in Control transaction,
then vesting of the Option, the new option or the New Incentive shall

                                       8
<PAGE>

accelerate if and at such time as the Participant's service as an employee,
director, officer, consultant or other service provider to the acquiring or
successor entity (or a parent or subsidiary thereof) is terminated involuntarily
within a specified period following consummation of the Change in Control,
pursuant to such terms and conditions as shall be set forth in the Option
Agreement.

     (d)  If outstanding Options will accelerate pursuant to subsection (a)
above, the Administrator in its discretion may provide, in connection with the
Change in Control transaction, for the purchase or exchange of each Option for
an amount of cash or other property having a value equal to the difference (or
"spread") between: (x) the value of the cash or other property that the
Participant would have received pursuant to the Change in Control transaction in
exchange for the shares issuable upon exercise of the Option had the Option been
exercised immediately prior to the Change in Control, and (y) the Exercise Price
of the Option.

     (e)  If a Participant holds shares of Restricted Stock that are not fully
vested at the time a Change in Control occurs, the provisions set forth above in
this Article 8 with respect to the vesting of Options also shall apply to the
vesting of shares of Restricted Stock. Thus, if the vesting of outstanding
Options does not accelerate because they are assumed or new options of
comparable value or New Incentives are issued in exchange therefor, as
contemplated by Section 8.1(b), then the vesting provisions of the Restricted
Stock shall also continue on a comparable basis following consummation of the
Change in Control. Likewise, if outstanding Options are not assumed and the
vesting of outstanding Options accelerates, as provided in Section 8.1(a), then
the vesting of shares of Restricted Stock also shall accelerate upon
consummation of the Change in Control.

     (f)  Outstanding Options shall terminate and cease to be exercisable upon
consummation of a Change in Control except to the extent that the Options are
assumed by the successor entity (or parent thereof) or new options of comparable
value or New Incentives are issued in exchange therefor pursuant to the terms of
the Change in Control transaction.

                                  Article 9.

                     AMENDMENT AND TERMINATION OF THE PLAN
                     -------------------------------------

     9.1  Amendments.  The Board may from time to time alter, amend, suspend or
          ----------
terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any Participant under an
outstanding Option Agreement or Stock Purchase Agreement without such
Participant's consent. The Board may alter or amend the Plan to comply with
requirements under the Code relating to Incentive Options or other types of
options which give Optionees more favorable tax treatment than that applicable
to Options granted under this Plan as of the date of its adoption. Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.

     9.2  Plan Termination.  Unless the Plan shall theretofore have been
          ----------------
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their
respective terms.

                                       9
<PAGE>

                                  Article 10.

                                TAX WITHHOLDING
                                ---------------

     10.1  Withholding.  The Company shall have the power to withhold, or
           -----------
require a Participant to remit to the Company, an amount sufficient to satisfy
any applicable Federal, state, and local tax withholding requirements with
respect to any Options exercised or Restricted Stock issued under the Plan. To
the extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the
purchase of or lapse of restrictions on Restricted Stock or (b) delivering to
the Company shares of Common Stock owned by the Participant. The shares of
Common Stock so applied or delivered in satisfaction of the Participant's tax
withholding obligation shall be valued at their Fair Market Value as of the date
of measurement of the amount of income subject to withholding.

                                  Article 11.

                                 MISCELLANEOUS
                                 -------------

     11.1  Benefits Not Alienable.  Other than as provided above, benefits under
           ----------------------
the Plan may not be assigned or alienated, whether voluntarily or involuntarily.
Any unauthorized attempt at assignment, transfer, pledge or other disposition
shall be without effect.

     11.2  No Enlargement of Employee Rights.  This Plan is strictly a voluntary
           ---------------------------------
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to limit the
right of the Company or any Affiliated Company to discharge any Participant at
any time.

     11.3  Application of Funds.  The proceeds received by the Company from the
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sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.

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