Document:

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                                                                   Exhibit 10.45

                               PHARMACYCLICS, INC.
                             995 East Arques Avenue
                            Sunnyvale, CA 94086-4593

                                 March 23, 2000

Dear Cynthia:

        On behalf of the Company's Board of Directors, I am pleased to make you
an offer to join the Company as its Senior Vice President and General Counsel.
The purpose of this letter is to set forth the terms of your proposed employment
with the Company, including your compensation level and benefit entitlements.

        1. EMPLOYMENT AND DUTIES.

               A. The Company will employ you as Senior Vice President and
General Counsel, commencing not later than May 1, 2000, and you will accordingly
make yourself available on a full-time basis to assume that position on or
before such date. In that position, you will report directly to the President.

               B. You will perform the duties inherent in your position in good
faith and to the best of your ability and will render all services which may be
reasonably required of you in such position. While you are employed with the
company, you will devote your full time and effort to the business and affairs
of the Company. Your principal place of operations will be at the Company's
corporate offices, which are presently located in Sunnyvale, California.

        2. COMPENSATION.

               A. Your initial base salary will be at the rate of $250,000 per
year. Your base salary will be subject to adjustment by the Company's Board of
Directors for each calendar year of service following the 2000 calendar year.

               B. Your base salary will be paid at periodic intervals in
accordance with the Company's payroll practices for salaried employees.

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               C. The Company will deduct and withhold, from the base salary and
bonuses payable to you hereunder, any and all applicable Federal, state and
local income and employment withholding taxes and any other amounts required to
be deducted or withheld by the Company under applicable statute or regulation.

        3. EMPLOYEE STOCK OPTIONS. As soon as possible after you join the
Company as Senior Vice President and General Counsel, you will be granted a
stock option to purchase 100,000 shares of Pharmacyclics Common Stock. The
option will have an exercise price equal to 100% of the fair market value of the
Pharmacyclics Common Stock on the grant date and will have a maximum term of 10
years, subject to earlier termination upon your cessation of employment with the
Company. The option will become exercisable as follows: the option will become
exercisable for 20,000 shares upon completion of one year of service after your
date of hire, the option will become exercisable for the remaining 80,000 shares
in a series of 48 equal successive monthly installments upon completion of each
month of service thereafter. All vesting under your option will cease upon your
termination of employment. The remaining terms and conditions of your option
will be in accordance with the standard provisions utilized for stock option
grants under the Company's 1995 Stock Option Plan.

        4. EXPENSE REIMBURSEMENT. You will be entitled to reimbursement from the
Company for all customary, ordinary and necessary business expenses incurred by
you in the performance of your duties hereunder, provided you furnish the
Company with vouchers, receipts and other details of such expenses within thirty
(30) days after they are incurred.

        5. FRINGE BENEFITS. You will be eligible to participate in any group
life insurance plan, group medical and/or dental insurance plan, accidental
death and dismemberment plan, short-term disability program and other employee
benefit plans, including the Section 401(k) plan and the Employee Stock Purchase
Plan, which are made available to executive officers of the Company and for
which you otherwise qualify.

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        6. VACATION. You will accrue paid vacation benefits in accordance with
the Company policy in effect for executive officers.

        7. RESTRICTIVE COVENANTS. During the period of service as Senior Vice
President and General Counsel:

                (i)     you will devote your full working time and effort to the
                        performance of your duties as Senior Vice President and
                        General Counsel; and

                (ii)    except as approved by the President & CEO you will not
                        directly or indirectly, whether for your own account or
                        as an employee, consultant or advisor, provide services
                        to any business enterprise other than the Company.

               However, you will have the right to perform such incidental
services as are necessary in connection with (a) your private passive
investments, (b) your charitable or community activities, and (c) your
participation in trade or professional organizations, but only to the extent
such incidental services do not interfere with the performance of your services
as Senior Vice President and General Counsel.

        8. PROPRIETARY INFORMATION. Upon the commencement of your services as
Senior Vice President and General Counsel, you will sign and deliver to the
Company the standard-form Proprietary Information and Inventions Agreement
required of all key employees of the Company.

        9. TERMINATION OF EMPLOYMENT: SALARY CONTINUATION.

               A. Your employment as Senior Vice President and General Counsel
pursuant to this agreement will be entirely at will.

               B. The Company may terminate your employment under this agreement
at any time for any reason, with or without cause (as defined below), by
providing you with at least thirty (30) days prior written notice. However, such
notice requirement will not apply to the termination of your employment for
cause pursuant to subparagraph D below.

               C. You may terminate your employment under this agreement at any
time for any reason upon thirty (30) days prior written notice to the Company.

               D. The Company may at any time, upon written notice, terminate
your employment hereunder for cause. Such termination will be effective
immediately upon such notice.

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        For purposes of this agreement, your employment with the Company will be
deemed to have been involuntarily terminated for cause if your services are
terminated by the Company for one or more of the following reasons:

                (i)     acts of fraud or embezzlement or other intentional
                        misconduct which adversely affects the Company's
                        business, or

                (ii)    failure to correct any material deficiency in the
                        performance of your services as Senior Vice President
                        and General Counsel within thirty (30) after written
                        notification of such deficiency from the Board, or

                (iii)   misappropriation or unauthorized disclosure or use of
                        the Company's proprietary information.

        Please indicate your acceptance of the foregoing provisions of this
employment agreement by signing the enclosed copy of this agreement and
returning it to the Company.

                                   Very truly yours,

                                   PHARMACYCLICS, INC.

                                   By:     s/s Richard M. Miller
                                      ------------------------------------------
                                   Title:  President and Chief Executive Officer

ACCEPTED BY AND AGREED TO

Signature: s/s Cynthia J. Ladd

Dated:March 30, 2000<PAGE>   1
                                                                    EXHIBIT 10.1

                         VNUS MEDICAL TECHNOLOGIES, INC.

                           2000 EQUITY INCENTIVE PLAN

        1.      Purposes of the Plan. The purposes of the VNUS Medical
Technologies, Inc. 2000 Equity Incentive Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Directors and Consultants and to promote the
success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Non-Qualified Stock Options, as determined by the
Administrator at the time of grant. Stock Purchase Rights may also be granted
under the Plan.

        2.      Definitions. As used herein, the following definitions shall
apply:

                (a)     "Acquisition" means (i) any consolidation or merger of
the Company with or into any other corporation or other entity or person in
which the stockholders of the Company prior to such consolidation or merger own
less than fifty percent (50%) of the Company's voting power immediately after
such consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (ii) a sale of all or
substantially all of the assets of the Company.

                (b)     "Administrator" means the Board or the Committee
responsible for conducting the general administration of the Plan, as
applicable, in accordance with Section 4 hereof.

                (c)     "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.

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

                (e)     "Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute or statutes thereto. Reference to any
particular Code section shall include any successor section.

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

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

                (h)     "Company" means VNUS Medical Technologies, Inc., a
Delaware corporation.

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                (i)     "Consultant" means any consultant or adviser if: (i) the
consultant or adviser renders bona fide services to the Company or any Parent or
Subsidiary of the Company; (ii) the services rendered by the consultant or
adviser are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company's securities; and (iii) the consultant or
adviser is a natural person who has contracted directly with the Company or any
Parent or Subsidiary of the Company to render such services.

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

                (k)     "Employee" means any person, including an Officer or
Director, who is an employee (as defined in accordance with Section 3401(c) of
the Code) of the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient, by itself, to constitute "employment" by the
Company.

                (l)     "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor statute or statutes thereto. Reference to any
particular Exchange Act section shall include any successor section.

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

                        (i)     If the Common Stock is listed on any established
stock exchange or a national market system, including, without limitation, The
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for a share of such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

                        (ii)    If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for a
share of the Common Stock on the last market trading day prior to the day of
determination; or

                        (iii)   In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.

                (n)     "Holder" means a person who has been granted or awarded
an Option or Stock Purchase Right or who holds Shares acquired pursuant to the
exercise of an Option or Stock Purchase Right.

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                (o)     "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Administrator.

                (p)     "Independent Director" means a Director who is not an
Employee of the Company.

                (q)     "Non-Qualified Stock Option" means an Option (or portion
thereof) that is not designated as an Incentive Stock Option by the
Administrator, or which is designated as an Incentive Stock Option by the
Administrator but fails to qualify as an incentive stock option within the
meaning of Section 422 of the Code.

                (r)     "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.

                (s)     "Option" means a stock option granted pursuant to the
Plan.

                (t)     "Option Agreement" means a written agreement between the
Company and a Holder evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.

                (u)     "Parent" means any corporation, whether now or hereafter
existing (other than the Company), in an unbroken chain of corporations ending
with the Company if each of the corporations other than the last corporation in
the unbroken chain owns stock possessing more than fifty percent of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

                (v)     "Plan" means the VNUS Medical Technologies, Inc. 2000
Equity Incentive Plan.

                (w)     "Public Trading Date" means the first date upon which
Common Stock of the Company is listed (or approved for listing) upon notice of
issuance on any securities exchange or designated (or approved for designation)
upon notice of issuance as a national market security on an interdealer
quotation system.

                (x)     "Restricted Stock" means Shares acquired pursuant to the
exercise of an unvested Option in accordance with Section 10(h) below or
pursuant to a Stock Purchase Right granted under Section 14 below.

                (y)     "Rule 16b-3" means that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.

                (z)     "Section 16(b)" means Section 16(b) of the Exchange Act,
as such Section may be amended from time to time.

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                (aa)    "Securities Act" means the Securities Act of 1933, as
amended, or any successor statute or statutes thereto. Reference to any
particular Securities Act section shall include any successor section.

                (bb)    "Service Provider" means an Employee, Director or
Consultant.

                (cc)    "Share" means a share of Common Stock, as adjusted in
accordance with Section 15 below.

                (dd)    "Stock Purchase Right" means a right to purchase Common
Stock pursuant to Section 14 below.

                (ee)    "Subsidiary" means any corporation, whether now or
hereafter existing (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 more than fifty
percent of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

        3.      Stock Subject to the Plan. Subject to the provisions of Section
15 of the Plan, the shares of stock subject to Options or Stock Purchase Rights
shall be Common Stock, initially shares of the Company's Common Stock, par value
$.001 per share. Subject to the provisions of Section 15 of the Plan, the
maximum aggregate number of Shares which may be issued upon exercise of such
Options or Stock Purchase Rights is 1,500,000 Shares; provided, however, that,
during the term of the Plan, on each anniversary of the date of the Plan's
initial adoption by the Board (commencing with the first such anniversary), such
maximum aggregate number of Shares shall be increased by 350,000 Shares. Shares
issued upon exercise of Options or Stock Purchase Rights may be authorized but
unissued, or reacquired Common Stock. If an Option or Stock Purchase Right
expires or becomes unexercisable without having been exercised in full, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). Shares which are
delivered by the Holder or withheld by the Company upon the exercise of an
Option or Stock Purchase Right under the Plan, in payment of the exercise price
thereof or tax withholding thereon, may again be optioned, granted or awarded
hereunder, subject to the limitations of this Section 3. If Shares of Restricted
Stock are repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan. Notwithstanding
the provisions of this Section 3, no Shares may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an Incentive Stock Option under Code Section 422.

        4.      Administration of the Plan.

                (a)     Administrator. Unless and until the Board delegates
administration to a Committee as set forth below, the Plan shall be administered
by the Board. The Board may delegate administration of the Plan to a Committee
or Committees of one or more members of the Board, and the term "Committee"
shall apply to any person or persons to whom such authority has been delegated.
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

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Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. Notwithstanding the
foregoing, however, from and after the Public Trading Date, a Committee of the
Board shall administer the Plan and the Committee shall consist solely of two or
more Independent Directors each of whom is both an "outside director," within
the meaning of Section 162(m) of the Code, and a "non-employee director" within
the meaning of Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Independent Directors the authority to grant awards under the Plan
to eligible persons who are either (1) not then "covered employees," within the
meaning of Section 162(m) of the Code and are not expected to be "covered
employees" at the time of recognition of income resulting from such award or (2)
not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (ii) delegate to a committee of one or more members of
the Board who are not "non-employee directors," within the meaning of Rule
16b-3, the authority to grant awards under the Plan to eligible persons who are
not then subject to Section 16 of the Exchange Act. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.

                (b)     Powers of the Administrator. Subject to the provisions
of the Plan and the specific duties delegated by the Board to such Committee,
and subject to the approval of any relevant authorities, the Administrator shall
have the authority in its sole discretion:

                        (i)     to determine the Fair Market Value;

                        (ii)    to select the Service Providers to whom Options
and Stock Purchase Rights may from time to time be granted hereunder;

                        (iii)   to determine the number of Shares to be covered
by each such award granted hereunder;

                        (iv)    to approve forms of agreement for use under the
Plan;

                        (v)     to determine the terms and conditions of any
Option or Stock Purchase Right granted hereunder (such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options or Stock Purchase Rights may vest or be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine);

                        (vi)    to determine whether to offer to buyout a
previously granted Option as provided in subsection 10(i) and to determine the
terms and conditions of such offer and buyout (including whether payment is to
be made in cash or Shares);

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                        (vii)   to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

                        (viii)  to allow Holders to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld
based on the statutory withholding rates for federal and state tax purposes that
apply to supplemental taxable income. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by Holders to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;

                        (ix)    to amend the Plan or any Option or Stock
Purchase Right granted under the Plan as provided in Section 17; and

                        (x)     to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan and to exercise such powers and perform
such acts as the Administrator deems necessary or desirable to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.

                (c)     Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Holders.

        5.      Eligibility. Non-Qualified Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees. If otherwise eligible, an Employee or Consultant who
has been granted an Option or Stock Purchase Right may be granted additional
Options or Stock Purchase Rights. Each Independent Director shall be eligible to
be granted Options at the times and in the manner set forth in Section 12.

        6.      Limitations.

                (a)     Each Option shall be designated by the Administrator in
the Option Agreement as either an Incentive Stock Option or a Non-Qualified
Stock Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares subject to a Holder's Incentive Stock
Options and other incentive stock options granted by the Company, any Parent or
Subsidiary, which become exercisable for the first time during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options or other options shall be treated as Non-Qualified Stock
Options.

                For purposes of this Section 6(a), Incentive Stock Options shall
be taken into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the time of grant.

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                (b)     Neither the Plan, any Option nor any Stock Purchase
Right shall confer upon a Holder any right with respect to continuing the
Holder's employment or consulting relationship with the Company, nor shall they
interfere in any way with the Holder's right or the Company's right to terminate
such employment or consulting relationship at any time, with or without cause.

                (c)     No Service Provider shall be granted, in any calendar
year, Options or Stock Purchase Rights to purchase more than 500,000 Shares;
provided, however, that the foregoing limitation shall not apply prior to the
Public Trading Date and, following the Public Trading Date, the foregoing
limitation shall not apply until the earliest of: (i) the first material
modification of the Plan (including any increase in the number of shares
reserved for issuance under the Plan in accordance with Section 3); (ii) the
issuance of all of the shares of Common Stock reserved for issuance under the
Plan; (iii) the expiration of the Plan; (iv) the first meeting of stockholders
at which Directors of the Company are to be elected that occurs after the close
of the third calendar year following the calendar year in which occurred the
first registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. The foregoing limitation shall
be adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 15. For purposes of this Section 6(c), if
an Option is canceled in the same calendar year it was granted (other than in
connection with a transaction described in Section 15), the canceled Option will
be counted against the limit set forth in this Section 6(c). For this purpose,
if the exercise price of an Option is reduced, the transaction shall be treated
as a cancellation of the Option and the grant of a new Option.

        7.      Term of Plan. The Plan shall become effective upon its initial
adoption by the Board and shall continue in effect until it is terminated under
Section 17 of the Plan. No Options or Stock Purchase Rights may be issued under
the Plan after the tenth (10th) anniversary of the earlier of (i) the date upon
which the Plan is adopted by the Board or (ii) the date the Plan is approved by
the stockholders.

        8.      Term of Option. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to a Holder who, at the time the Option is granted, owns (or is
treated as owning under Code Section 424) stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option shall be five (5) years from the
date of grant or such shorter term as may be provided in the Option Agreement.

        9.      Option Exercise Price and Consideration.

                (a)     Except as provided in Section 13, the per share exercise
price for the Shares to be issued upon exercise of an Option shall be such price
as is determined by the Administrator, but shall be subject to the following:

                        (i)     In the case of an Incentive Stock Option

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                                (A)     granted to an Employee who, at the time
of grant of such Option, owns (or is treated as owning under Code Section 424)
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than one hundred ten percent (110%) of the Fair
Market Value per Share on the date of grant.

                                (B)     granted to any other Employee, the per
Share exercise price shall be no less than one hundred percent (100%) of the
Fair Market Value per Share on the date of grant.

                        (ii)    In the case of a Non-Qualified Stock Option the
per share exercise price shall be no less than the par value of the Common Stock
on the date of grant.

                        (iii)   Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant to
a merger or other corporate transaction.

                (b)     The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, a full recourse promissory
note bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code) and payable upon such terms as may be
prescribed by the Administrator, (4) with the consent of the Administrator,
other Shares which (x) in the case of Shares acquired from the Company, have
been owned by the Holder for more than six (6) months on the date of surrender,
and (y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (5)
with the consent of the Administrator, surrendered Shares then issuable upon
exercise of the Option having a Fair Market Value on the date of exercise equal
to the aggregate exercise price of the Option or exercised portion thereof, (6)
property of any kind which constitutes good and valuable consideration, (7) with
the consent of the Administrator, delivery of a notice that the Holder has
placed a market sell order with a broker with respect to Shares then issuable
upon exercise of the Options and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price, provided, that payment of such
proceeds is then made to the Company upon settlement of such sale, or (8) with
the consent of the Administrator, any combination of the foregoing methods of
payment.

10.     Exercise of Option.

        (a)     Vesting; Fractional Exercises. Except as provided in Section 13,
Options granted hereunder shall be vested and exercisable according to the terms
hereof at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement; provided, however, that,
except with regard to Options granted to Officers, Directors or Consultants, in
no event shall an Option granted hereunder become vested and exercisable at a
rate of less than twenty percent (20%) per year over five (5) years from the
date the Option is

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granted, subject to reasonable conditions, such as continuing to be a Service
Provider. An Option may not be exercised for a fraction of a Share.

                (b)     Deliveries upon Exercise. All or a portion of an
exercisable Option shall be deemed exercised upon delivery of all of the
following to the Secretary of the Company or his or her office:

                        (i)     A written or electronic notice complying with
the applicable rules established by the Administrator stating that the Option,
or a portion thereof, is exercised. The notice shall be signed by the Holder or
other person then entitled to exercise the Option or such portion of the Option;

                        (ii)    Such representations and documents as the
Administrator, in its sole discretion, deems necessary or advisable to effect
compliance with Applicable Laws. The Administrator may, in its sole discretion,
also take whatever additional actions it deems appropriate to effect such
compliance, including, without limitation, placing legends on share certificates
and issuing stop transfer notices to agents and registrars;

                        (iii)   Upon the exercise of all or a portion of an
unvested Option pursuant to Section 10(h), a Restricted Stock purchase agreement
in a form determined by the Administrator and signed by the Holder or other
person then entitled to exercise the Option or such portion of the Option; and

                        (iv)    In the event that the Option shall be exercised
pursuant to Section 10(f) by any person or persons other than the Holder,
appropriate proof of the right of such person or persons to exercise the Option.

                (c)     Conditions to Delivery of Share Certificates. The
Company shall not be required to issue or deliver any certificate or
certificates for Shares purchased upon the exercise of any Option or portion
thereof prior to fulfillment of all of the following conditions:

                        (i)     The admission of such Shares to listing on all
stock exchanges on which such class of stock is then listed;

                        (ii)    The completion of any registration or other
qualification of such Shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Administrator shall, in its sole
discretion, deem necessary or advisable;

                        (iii)   The obtaining of any approval or other clearance
from any state or federal governmental agency which the Administrator shall, in
its sole discretion, determine to be necessary or advisable;

                        (iv)    The lapse of such reasonable period of time
following the exercise of the Option as the Administrator may establish from
time to time for reasons of administrative convenience; and

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<PAGE>   10

                        (v)     The receipt by the Company of full payment for
such Shares, including payment of any applicable withholding tax, which in the
sole discretion of the Administrator may be in the form of consideration used by
the Holder to pay for such Shares under Section 9(b).

                (d)     Termination of Relationship as a Service Provider. If a
Holder ceases to be a Service Provider other than by reason of the Holder's
disability or death, such Holder may exercise his or her Option within such
period of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of the Option as set forth in the Option Agreement). In
the absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months following the Holder's termination. If, on the
date of termination, the Holder is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option immediately cease to be
issuable under the Option and shall again become available for issuance under
the Plan. If, after termination, the Holder does not exercise his or her Option
within the time period specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under
the Plan.

                (e)     Disability of Holder. If a Holder ceases to be a Service
Provider as a result of the Holder's disability, the Holder may exercise his or
her Option within such period of time as is specified in the Option Agreement to
the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Holder's
termination. If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock
Option from and after the day which is three (3) months and one (1) day
following such termination. If, on the date of termination, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan. If, after
termination, the Holder does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan.

                (f)     Death of Holder. If a Holder dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Holder's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Holder's
termination. If, at the time of death, the Holder is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
immediately cease to be issuable under the Option and shall again become
available for issuance under the Plan. The Option may be exercised by the
executor or administrator of the Holder's

                                       10
<PAGE>   11

estate or, if none, by the person(s) entitled to exercise the Option under the
Holder's will or the laws of descent or distribution. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under
the Plan.

                (g)     Regulatory Extension. A Holder's Option Agreement may
provide that if the exercise of the Option following the termination of the
Holder's status as a Service Provider (other than upon the Holder'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 set forth in Section 8 or (ii) the expiration of a period of three
(3) months after the termination of the Holder's status as a Service Provider
during which the exercise of the Option would not be in violation of such
registration requirements.

                (h)     Early Exercisability. The Administrator may provide in
the terms of a Holder's Option Agreement that the Holder may, at any time before
the Holder's status as a Service Provider terminates, exercise the Option in
whole or in part prior to the full vesting of the Option; provided, however,
that subject to Section 22, Shares acquired upon exercise of an Option which has
not fully vested may be subject to any forfeiture, transfer or other
restrictions as the Administrator may determine in its sole discretion.

                (i)     Buyout Provisions. The Administrator may at any time
offer to buyout for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Holder at the time that such offer is made.

        11.     Non-Transferability of Options and Stock Purchase Rights.
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Holder, only by the Holder.

        12.     Granting of Options to Independent Directors. During the term of
the Plan, each person who is an Independent Director automatically shall be
granted an Option to purchase fifteen thousand (15,000) shares of Common Stock
(subject to adjustment as provided in Section 15) on the date of each annual
meeting of stockholders after the date of the Board's adoption of the Plan (an
"Annual Option"). Members of the Board who are employees of the Company who
subsequently retire from the Company and remain on the Board, to the extent that
they are otherwise eligible, will receive, after retirement from employment with
the Company, Options as described in the preceding sentence. All the foregoing
Option grants authorized by this Section 12 are subject to stockholder approval
of the Plan.

        13.     Terms of Options Granted to Independent Directors. The per Share
price of each Option granted to an Independent Director shall equal 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted.
Annual Options (as defined in Section 12) granted to Independent Directors shall
become vested as follows: (i) 1/3 of the Shares subject to such Option shall
become vested on the one year anniversary of the date of Annual Option grant

                                       11
<PAGE>   12

and (ii) 1/36 of the Shares subject to such Option shall become vested on each
of the monthly anniversaries of the date of Annual Option grant, commencing on
the monthly anniversary immediately following the one year anniversary of the
date of Annual Option grant, such that each Annual Option shall be one hundred
percent (100%) vested on the three year anniversary of the date of Annual Option
grant. Subject to Section 10, the term of each Option granted to an Independent
Director shall be ten (10) years from the date the Option is granted. No portion
of an Option which is unexercisable at the time of an Independent Director's
termination of membership on the Board shall thereafter become exercisable.

        14.     Stock Purchase Rights.

                (a)     Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with Options granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, and the time within which such person must
accept such offer. The offer shall be accepted by execution of a Restricted
Stock purchase agreement in the form determined by the Administrator.

                (b)     Repurchase Right. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company the
right to repurchase Shares acquired upon exercise of a Stock Purchase Right upon
the termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 22, the purchase price for Shares repurchased by the Company
pursuant to such repurchase right and the rate at which such repurchase right
shall lapse shall be determined by the Administrator in its sole discretion, and
shall be set forth in the Restricted Stock purchase agreement.

                (c)     Other Provisions. The Restricted Stock purchase
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its sole
discretion.

                (d)     Rights as a Shareholder. Once the Stock Purchase Right
is exercised, the purchaser shall have rights equivalent to those of a
shareholder and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the Stock Purchase Right is exercised, except as provided in Section
15 of the Plan.

        15.     Adjustments upon Changes in Capitalization, Merger or Asset
Sale.

                (a)     In the event that the Administrator determines that any
dividend or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or

                                       12
<PAGE>   13

other similar corporate transaction or event, in the Administrator's sole
discretion, affects the Common Stock such that an adjustment is determined by
the Administrator to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended by the Company to be made
available under the Plan or with respect to any Option, Stock Purchase Right or
Restricted Stock, then the Administrator shall, in such manner as it may deem
equitable, adjust any or all of:

                        (i)     the number and kind of shares of Common Stock
(or other securities or property) with respect to which Options or Stock
Purchase Rights may be granted or awarded (including, but not limited to,
adjustments of the limitations in Section 3 on the maximum number and kind of
shares which may be issued and adjustments of the maximum number of Shares that
may be purchased by any Holder in any calendar year pursuant to Section 6(c));

                        (ii)    the number and kind of shares of Common Stock
(or other securities or property) subject to outstanding Options, Stock Purchase
Rights or Restricted Stock; and

                        (iii)   the grant or exercise price with respect to any
Option or Stock Purchase Right.

                (b)     In the event of any transaction or event described in
Section 15(a), the Administrator, in its sole discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Option, Stock
Purchase Right or Restricted Stock or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Holder's request,
is hereby authorized to take any one or more of the following actions whenever
the Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Option, Stock
Purchase Right or Restricted Stock granted or issued under the Plan or to
facilitate such transaction or event:

                        (i)     To provide for either the purchase of any such
Option, Stock Purchase Right or Restricted Stock for an amount of cash equal to
the amount that could have been obtained upon the exercise of such Option or
Stock Purchase Right or realization of the Holder's rights had such Option,
Stock Purchase Right or Restricted Stock been currently exercisable or payable
or fully vested or the replacement of such Option, Stock Purchase Right or
Restricted Stock with other rights or property selected by the Administrator in
its sole discretion;

                        (ii)    To provide that such Option or Stock Purchase
Right shall be exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in the Plan or the provisions of such Option or Stock
Purchase Right;

                        (iii)   To provide that such Option, Stock Purchase
Right or Restricted Stock be assumed by the successor or survivor corporation,
or a parent or subsidiary thereof, or shall be substituted for by similar
options, rights or awards covering the stock of the successor or

                                       13
<PAGE>   14

survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

                        (iv)    To make adjustments in the number and type of
shares of Common Stock (or other securities or property) subject to outstanding
Options and Stock Purchase Rights, and/or in the terms and conditions of
(including the grant or exercise price), and the criteria included in,
outstanding Options, Stock Purchase Rights or Restricted Stock or Options, Stock
Purchase Rights or Restricted Stock which may be granted in the future; and

                        (v)     To provide that immediately upon the
consummation of such event, such Option or Stock Purchase Right shall not be
exercisable and shall terminate; provided, that for a specified period of time
prior to such event, such Option or Stock Purchase Right shall be exercisable as
to all Shares covered thereby, and the restrictions imposed under an Option
Agreement or Restricted Stock purchase agreement upon some or all Shares may be
terminated and, in the case of Restricted Stock, some or all shares of such
Restricted Stock may cease to be subject to repurchase, notwithstanding anything
to the contrary in the Plan or the provisions of such Option, Stock Purchase
Right or Restricted Stock purchase agreement.

                (c)     Subject to Section 3, the Administrator may, in its sole
discretion, include such further provisions and limitations in any Option, Stock
Purchase Right, Restricted Stock agreement or certificate, as it may deem
equitable and in the best interests of the Company.

                (d)     If the Company undergoes an Acquisition, then any
surviving corporation or entity or acquiring corporation or entity, or affiliate
of such corporation or entity, may assume any Options, Stock Purchase Rights or
Restricted Stock outstanding under the Plan or may substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 15(d)) for those
outstanding under the Plan. In the event any surviving corporation or entity or
acquiring corporation or entity in an Acquisition, or affiliate of such
corporation or entity, does not assume such Options, Stock Purchase Rights or
Restricted Stock or does not substitute similar stock awards for those
outstanding under the Plan, then with respect to (i) Options, Stock Purchase
Rights or Restricted Stock held by participants in the Plan whose status as a
Service Provider has not terminated prior to such event, the vesting of such
Options, Stock Purchase Rights or Restricted Stock (and, if applicable, the time
during which such awards may be exercised) shall be accelerated and made fully
exercisable and all restrictions thereon shall lapse at least ten (10) days
prior to the closing of the Acquisition (and the Options or Stock Purchase
Rights terminated if not exercised prior to the closing of such Acquisition),
and (ii) any other Options or Stock Purchase Rights outstanding under the Plan,
such Options or Stock Purchase rights shall be terminated if not exercised prior
to the closing of the Acquisition.

                (e)     Notwithstanding the foregoing, in the event that the
Company becomes a party to a transaction that is intended to qualify for
"pooling of interests" accounting treatment and, but for one or more of the
provisions of this Plan or any Option Agreement or any Restricted Stock purchase
agreement would so qualify, then this Plan and any such agreement shall be
interpreted so as to preserve such accounting treatment, and to the extent that
any

                                       14
<PAGE>   15

provision of the Plan or any such agreement would disqualify the transaction
from pooling of interests accounting treatment (including, if applicable, an
entire Option Agreement or Restricted Stock purchase agreement), then such
provision shall be null and void. All determinations to be made in connection
with the preceding sentence shall be made by the independent accounting firm
whose opinion with respect to "pooling of interests" treatment is required as a
condition to the Company's consummation of such transaction.

                (f)     The existence of the Plan, any Option Agreement or
Restricted Stock purchase agreement and the Options or Stock Purchase Rights
granted hereunder shall not affect or restrict in any way the right or power of
the Company or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

        16.     Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.

        17.     Amendment and Termination of the Plan.

                (a)     Amendment and Termination. The Board may at any time
wholly or partially amend, alter, suspend or terminate the Plan. However,
without approval of the Company's stockholders given within twelve (12) months
before or after the action by the Board, no action of the Board may, except as
provided in Section 15, increase the limits imposed in Section 3 on the maximum
number of Shares which may be issued under the Plan or extend the term of the
Plan under Section 7.

                (b)     Stockholder Approval. The Board shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

                (c)     Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Holder, unless mutually agreed otherwise between the Holder and the
Administrator, which agreement must be in writing and signed by the Holder and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options,
Stock Purchase Rights or Restricted Stock granted or awarded under the Plan
prior to the date of such termination.

                                       15
<PAGE>   16

        18.     Stockholder Approval. The Plan will be submitted for the
approval of the Company's stockholders within twelve (12) months after the date
of the Board's initial adoption of the Plan. Options, Stock Purchase Rights or
Restricted Stock may be granted or awarded prior to such stockholder approval,
provided that such Options, Stock Purchase Rights and Restricted Stock shall not
be exercisable, shall not vest and the restrictions thereon shall not lapse
prior to the time when the Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Stock Purchase Rights and Restricted Stock
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void.

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

        20.     Reservation of Shares. The Company, during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

        21.     Information to Holders and Purchasers. Prior to the Public
Trading Date and to the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall provide to each Holder and to
each individual who acquires Shares pursuant to the Plan, not less frequently
than annually during the period such Holder or purchaser has one or more Options
or Stock Purchase Rights outstanding, and, in the case of an individual who
acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. Notwithstanding the
preceding sentence, the Company shall not be required to provide such statements
to key employees whose duties in connection with the Company assure their access
to equivalent information.

        22.     Repurchase Provisions. The Administrator in its sole discretion
may provide that the Company may repurchase Shares acquired upon exercise of an
Option or Stock Purchase Right upon the occurrence of certain specified events,
including, without limitation, a Holder's termination as a Service Provider,
divorce, bankruptcy or insolvency; provided, however, that any such repurchase
right shall be set forth in the applicable Option Agreement or Restricted Stock
purchase agreement or in another agreement referred to in such agreement and,
provided further, that to the extent required by Section 260.140.41 and Section
260.140.42 of Title 10 of the California Code of Regulations, any such
repurchase right set forth in an Option or Stock Purchase Right granted prior to
the Public Trading Date to a person who is not an Officer, Director or
Consultant shall be upon the following terms: (i) if the repurchase option gives
the Company the right to repurchase the shares upon termination as a Service
Provider at not less than the Fair Market Value of the shares to be purchased on
the date of termination of status as a Service Provider, then (A) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within ninety (90) days of termination of status as
a Service Provider (or in the case of shares issued upon exercise of Options or
Stock Purchase

                                       16
<PAGE>   17

Rights after such date of termination, within ninety (90) days after the date of
the exercise) or such longer period as may be agreed to by the Administrator and
the Plan participant and (B) the right terminates when the shares become
publicly traded; and (ii) if the repurchase option gives the Company the right
to repurchase the Shares upon termination as a Service Provider at the original
purchase price for such Shares, then (A) the right to repurchase at the original
purchase price shall lapse at the rate of at least twenty percent (20%) of the
shares per year over five (5) years from the date the Option or Stock Purchase
Right is granted (without respect to the date the Option or Stock Purchase Right
was exercised or became exercisable) and (B) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the shares
within ninety (90) days of termination of status as a Service Provider (or, in
the case of shares issued upon exercise of Options or Stock Purchase Rights,
after such date of termination, within ninety (90) days after the date of the
exercise) or such longer period as may be agreed to by the Company and the Plan
participant.

        23.     Investment Intent. The Company may require a Plan participant,
as a condition of exercising or acquiring stock under any Option or Stock
Purchase Right, (i) to give written assurances satisfactory to the Company as to
the participant'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 Option or Stock
Purchase Right; and (ii) to give written assurances satisfactory to the Company
stating that the participant is acquiring the stock subject to the Option or
Stock Purchase Right for the participant'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 (A) the issuance of the shares upon the exercise or acquisition
of stock under the applicable Option or Stock Purchase Right has been registered
under a then currently effective registration statement under the Securities Act
or (B) 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.

        24.     Governing Law. The validity and enforceability of this Plan
shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to otherwise governing principles of conflicts of law.

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