Document:

Exhibit 10.6.1

                              QUALITY SYSTEMS, INC.

                            INDEMNIFICATION AGREEMENT

      This   Indemnification   Agreement  (this   "Agreement")  is  made  as  of
_____________,  by and between QUALITY SYSTEMS,  INC., a California  corporation
(the "Company"), and ____________ ("Indemnitee").

                                    RECITALS

      WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining quality directors' and officers' liability insurance,  the significant
increases  in the  cost of such  insurance  and the  general  reductions  in the
coverage of such insurance;

      WHEREAS,  the Company and  Indemnitee  further  recognize the  substantial
increase in corporate  litigation in general,  subjecting officers and directors
to expensive  litigation risks at the same time as the availability and coverage
of cost effective liability insurance has been severely limited; and

      WHEREAS,  the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify  its  officers and  directors so as to provide them
with the maximum protection permitted by law.

      NOW, THEREFORE,  in consideration for Indemnitee's  services as an officer
or  director of the  Company  (as the case may be),  the Company and  Indemnitee
hereby agree as follows:

      1.    Indemnification.

            (a)    Third  Party   Proceedings.   The  Company  shall   indemnify
Indemnitee  if  Indemnitee is or was a party or is threatened to be made a party
to  any  threatened,  pending  or  completed  action,  suit,  proceeding  or any
alternative   dispute   resolution   mechanism,    whether   civil,    criminal,
administrative or investigative  (other than an action by or in the right of the
Company) by reason of the fact that  Indemnitee  is or was a director,  officer,
employee or agent of the Company, or any subsidiary of the Company, or by reason
of the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation,  partnership, joint
venture,  trust or other  enterprise,  against  expenses  (including  reasonable
attorneys' fees and costs), judgments,  fines and amounts paid in settlement (if
such settlement is approved in advance by the Company,  which approval shall not
be  unreasonably  withheld)  actually and  reasonably  incurred by Indemnitee in
connection  with such action,  suit or proceeding  if  Indemnitee  acted in good
faith and in a manner Indemnitee  reasonably believed to be in or not opposed to
the best interests of the Company,  and, with respect to any criminal  action or
proceeding,  had  no  reasonable  cause  to  believe  Indemnitee's  conduct  was
unlawful. The termination of any action, suit or proceeding by judgment,  order,
settlement,  conviction,  or upon a plea of nolo  contendere or its  equivalent,
shall not, of itself,  create a presumption  that Indemnitee did not act in good
faith  and in a manner  which  Indemnitee  reasonably  believed  to be

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in or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that Indemnitee's
conduct was unlawful.

            (b)    Proceedings  By or in the Right of the  Company.  The Company
shall  indemnify  Indemnitee if Indemnitee is or was a party or is threatened to
be made a party to any threatened,  pending or completed action or suit by or in
the right of the Company or any  subsidiary of the Company to procure a judgment
in its  favor  by  reason  of the fact  that  Indemnitee  is or was a  director,
officer,  employee or agent of the Company, or any subsidiary of the Company, or
by reason of the fact that  Indemnitee  is or was  serving at the request of the
Company  as a  director,  officer,  employee  or agent of  another  corporation,
partnership,   joint  venture,  trust  or  other  enterprise,  against  expenses
(including  reasonable  attorneys'  fees and costs) and,  to the fullest  extent
permitted by law, amounts paid in settlement actually and reasonably incurred by
Indemnitee in  connection  with the defense or settlement of such action or suit
if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best  interests  of the  Company,  except that no
indemnification  shall be made in respect  of any  claim,  issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company unless and
only to the extent that the  Superior  Court of the State of  California  or the
court in which such action or suit was brought shall determine upon  application
that, despite the adjudication of liability but in view of all the circumstances
of the case,  Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Superior Court of the State of California or such other court
shall deem proper.

            (c)    Mandatory Payment of Expenses.  To the extent that Indemnitee
has been successful on the merits or otherwise in defense of any action, suit or
proceeding  referred  to in  subsections  (a) and (b) of this  Section  1, or in
defense of any claim,  issue or matter therein,  Indemnitee shall be indemnified
against expenses (including  reasonable  attorneys' fees and costs) actually and
reasonably incurred by Indemnitee in connection therewith.

      2.    Agreement to Serve. In consideration  of the protection  afforded by
this Agreement, if Indemnitee is a director of the Company he agrees to serve at
least for the 90 days after the effective  date of this  Agreement as a director
and not to resign  voluntarily during such period without the written consent of
a majority of the Board of Directors. If Indemnitee is an officer of the Company
not serving under an employment contract, he agrees to serve in such capacity at
least for the 90 days  after the  effective  date of this  Agreement  and not to
resign  voluntarily during such period without the written consent of a majority
of the Board of  Directors.  Following  the  applicable  period set forth above,
Indemnitee  agrees  to  continue  to serve in such  capacity  at the will of the
Company (or under separate agreement, if such agreement exists) so long as he is
duly  appointed  or elected and  qualified  in  accordance  with the  applicable
provisions  of the Bylaws of the  Company or any  subsidiary  of the  Company or
until such time as he tenders his resignation in writing.  Nothing  contained in
this  Agreement  is  intended  to create in  Indemnitee  any right to  continued
employment.

      3.    Expenses; Indemnification Procedure.

            (a)    Advancement  of  Expenses.  The  Company  shall  advance  all
expenses incurred by Indemnitee in connection with the  investigation,  defense,
settlement  or  appeal  of any  civil or  criminal  action,  suit or  proceeding
referenced  in Section  1(a) or (b) hereof  (but not

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amounts  actually paid in settlement  of any such action,  suit or  proceeding).
Indemnitee  hereby undertakes to repay such amounts advanced only if, and to the
extent that, it shall  ultimately be determined  that Indemnitee is not entitled
to be indemnified by the Company as authorized  hereby.  The advances to be made
hereunder  shall be paid by the Company to  Indemnitee  within  thirty (30) days
following delivery of a written request therefor by Indemnitee to the Company.

            (b)    Notice/Cooperation  by  Indemnitee.  Indemnitee  shall,  as a
condition  precedent to his or her right to be indemnified under this Agreement,
give the Company  written  notice as soon as  practicable of any claim for which
Indemnitee will or could seek indemnification under this Agreement. In addition,
Indemnitee  shall give the Company such  information  and  cooperation as it may
reasonably require and as shall be within Indemnitee's power.

            (c)    Procedure.  Any indemnification  and advances provided for in
Section 1 and this  Section 3 shall be made no later than thirty (30) days after
receipt of the written  request of Indemnitee.  If a claim under this Agreement,
under  any  statute,  or  under  any  provision  of the  Company's  Articles  of
Incorporation  or Bylaws providing for  indemnification,  is not paid in full by
the Company within thirty (30) days after a written  request for payment thereof
has first been  received by the  Company,  Indemnitee  may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and,  subject to Section 8 and 10(g) of this Agreement,  Indemnitee
shall  also be  entitled  to be  paid  for the  expenses  (including  reasonable
attorneys' fees and costs) of bringing such action. It shall be a defense to any
such  action  (other  than an action  brought  to  enforce a claim for  expenses
incurred in  connection  with any action,  suit or  proceeding in advance of its
final  disposition)  that  Indemnitee has not met the standards of conduct which
make it permissible under applicable law for the Company to indemnify Indemnitee
for the amount claimed. However, Indemnitee shall be entitled to receive interim
payments of expenses  pursuant to Section 3(a) unless and until such defense may
be finally adjudicated by court order or judgment from which no further right of
appeal  exists.  It is the  parties'  intention  that  if the  Company  contests
Indemnitee's  right to  indemnification,  the question of Indemnitee's  right to
indemnification  shall be for a court of competent  jurisdiction to decide,  and
neither  the  failure of the  Company  (including  its Board of  Directors,  any
committee or subgroup of the Board of Directors,  independent legal counsel,  or
its  stockholders)  to  have  made  a  determination  that   indemnification  of
Indemnitee  is  proper  in the  circumstances  because  Indemnitee  has  met the
applicable  standard  of  conduct  required  by  applicable  law,  nor an actual
determination by the Company (including it Board of Directors,  any committee or
subgroup  of  the  Board  of  Directors,   independent  legal  counsel,  or  its
stockholders)  that Indemnitee has not met such applicable  standard of conduct,
shall create a presumption  that  Indemnitee  has or has not met the  applicable
standard of conduct.

            (d)    Notice  to  Insurers.  If, at the time of  the  receipt  of a
notice of a claim pursuant to Section 3(b) hereof,  the Company has director and
officer liability  insurance in effect,  the Company shall give prompt notice of
the  commencement  of such  proceeding  to the insurers in  accordance  with the
procedures set forth in the respective  policies.  The Company shall  thereafter
take all necessary or desirable  action to cause such insurers to pay, on behalf
of the  Indemnitee,  all  amounts  payable  as a result  of such  proceeding  in
accordance with the terms of such policies.

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<PAGE>

            (e)    Selection  of  Counsel.  In  the event the  Company  shall be
obligated  under  Section  3(a)  hereof to pay the  expenses  of any  proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding,  with counsel approved by Indemnitee (which approval
shall not be unreasonably withheld),  upon the delivery to Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of such
counsel by  Indemnitee  and the  retention of such  counsel by the Company,  the
Company will not be liable to  Indemnitee  under this  Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i)  Indemnitee  shall have the right to employ his counsel in any
such  proceeding  at  Indemnitee's  expense;  and (ii) if (A) the  employment of
counsel  by  Indemnitee  has been  previously  authorized  by the  Company,  (B)
Indemnitee  shall have  reasonably  concluded  that  there may be a conflict  of
interest  between the Company and Indemnitee in the conduct of any such defense,
or (C) the  Company  shall not,  in fact,  have  employed  counsel to assume the
defense of such proceeding,  then the fees and expenses of Indemnitee's  counsel
shall be at the expense of the Company.

      4.    Additional Indemnification Rights; Nonexclusivity.

            (a)    Scope. Notwithstanding any other provision of this Agreement,
the Company  hereby  agrees to indemnify the  Indemnitee  to the fullest  extent
permitted   by  the   California   General   Corporation   Law   (the   "CGCL"),
notwithstanding that such indemnification is not specifically  authorized by the
other provisions of this Agreement, the Company's Articles of Incorporation, the
Company's  Bylaws or by statute.  In the event of any change,  after the date of
this Agreement,  in any applicable law, statute, or rule which expands the right
of a California  corporation  to indemnify a member of its board of directors or
an  officer,   such  changes  shall  be,  ipso  facto,  within  the  purview  of
Indemnitee's  rights and Company's  obligations,  under this  Agreement.  In the
event of any change in any  applicable  law,  statute or rule which  narrows the
right  of a  California  corporation  to  indemnify  a  member  of its  board of
directors or an officer,  such changes,  to the extent not otherwise required by
such law,  statute or rule to be applied to this Agreement  shall have no effect
on this Agreement or the parties' rights and obligations hereunder.

            (b)    Nonexclusivity.   The   indemnification   provided  by   this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may be
entitled  under  the  Company's  Articles  of  Incorporation,  its  Bylaws,  any
agreement,  any vote of stockholders or  disinterested  Directors,  the CGCL, or
otherwise,  both as to action in Indemnitee's official capacity and as to action
in another  capacity  while holding such office.  The  indemnification  provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though he may have ceased to
serve  in such  capacity  at the  time of any  action,  suit  or  other  covered
proceeding.

      5.    Partial  Indemnification.   If  Indemnitee  is  entitled  under  any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of the expenses,  judgments,  fines or penalties actually and reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action, suit or proceeding,  but not, however,  for the total amount
thereof, the Company shall nevertheless  indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.

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      6.    Mutual Acknowledgement.  Both the Company and Indemnitee acknowledge
that in certain instances,  Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise.   Indemnitee  understands  and  acknowledges  that  the  Company  has
undertaken or may be required in the future to undertake with the Securities and
Exchange  Commission  to submit the  question of  indemnification  to a court in
certain  circumstances  for a determination  of the Company's right under public
policy to indemnify Indemnitee.

      7.    Officer and Director Liability  Insurance.  The Company shall,  from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and  maintain a policy or policies of  insurance  with
reputable  insurance  companies  providing  the  officers  and  directors of the
Company with coverage for losses from wrongful  acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations,  the Company  will weigh the costs of obtaining  such  insurance
coverage  against the protection  afforded by such coverage.  In all policies of
director  and  officer  liability  insurance,  Indemnitee  shall  be named as an
insured in such a manner as to provide  Indemnitee  the same rights and benefits
as are accorded to the most  favorably  insured of the Company's  directors,  if
Indemnitee is a director;  or of the Company's officers,  if Indemnitee is not a
director of the Company but is an officer.  Notwithstanding  the foregoing,  the
Company shall have no  obligation  to obtain or maintain  such  insurance if the
Company  determines  in  good  faith  that  such  insurance  is  not  reasonably
available,  if the premium costs for such insurance are  disproportionate to the
amount of coverage  provided,  if the  coverage  provided by such  insurance  is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar  insurance  maintained  by a  subsidiary  or parent of the
Company.

      8.    Exceptions.   Any   other   provision   herein   to   the   contrary
notwithstanding,  the Company  shall not be  obligated  pursuant to the terms of
this  Agreement:

            (a)    Claims  Initiated  by  Indemnitee.  To  indemnify  or advance
expenses to  Indemnitee  with  respect to  proceedings  or claims  initiated  or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification  under
this  Agreement  or any other  statute or law or  otherwise  as  required  under
Section 145 of the CGCL, but such indemnification or advancement of expenses may
be  provided  by the Company in  specific  cases if the Board of  Directors  has
approved the initiation or bringing of such suit; or

            (b)    Lack of Good Faith.  To indemnify Indemnitee for any expenses
incurred  by the  Indemnitee  with  respect  to  any  proceeding  instituted  by
Indemnitee  to enforce or  interpret  this  Agreement,  if a court of  competent
jurisdiction  determines  that  each  of the  material  assertions  made  by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

            (c)    Insured  Claims.  To  indemnify  Indemnitee  for  expenses or
liabilities of any type whatsoever  (including,  but not limited to,  judgments,
fines,  ERISA excise taxes or penalties,  and amounts paid in settlement)  which
have been paid directly to Indemnitee by an insurance  carrier under a policy of
officers' and directors' liability insurance maintained by the Company; or

                                      - 5 -
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            (d)    Claims  Under  Section  16(b).  To  indemnify  Indemnitee for
expenses  and the  payment  of profits  arising  from the  purchase  and sale by
Indemnitee  of  securities  in  violation  of  Section  16(b) of the  Securities
Exchange Act of 1934, as amended, or any similar successor statute.

      9.    Construction of Certain Phrases.

            (a)    For purposes of this  Agreement,  references to the "Company"
shall  include,  in  addition  to the  resulting  corporation,  any  constituent
corporation   (including  any  constituent  of  a  constituent)  absorbed  in  a
consolidation  or merger which, if its separate  existence had continued,  would
have had power and authority to indemnify its directors, officers, and employees
or agents,  so that if  Indemnitee  is or was a director,  officer,  employee or
agent of such  constituent  corporation,  or is or was serving at the request of
such  constituent  corporation  as a  director,  officer,  employee  or agent of
another  corporation,  partnership,  joint venture,  trust or other  enterprise,
Indemnitee  shall  stand in the  same  position  under  the  provisions  of this
Agreement  with respect to the resulting or surviving  corporation as Indemnitee
would  have  with  respect  to  such  constituent  corporation  if its  separate
existence had continued.

            (b)    For  purposes  of  this   Agreement,   references  to  "other
enterprises"  shall include employee benefit plans;  references to "fines" shall
include any excise  taxes  assessed on  Indemnitee  with  respect to an employee
benefit plan;  and  references to "serving at the request of the Company"  shall
include  any service as a  director,  officer,  employee or agent of the Company
which  imposes  duties on, or  involves  services  by, such  director,  officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries;  and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably  believed to be in the interest of the participants and beneficiaries
of an  employee  benefit  plan,  Indemnitee  shall be deemed to have  acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.

      10.   Miscellaneous.

            (a)    Choice of Law.  This  Agreement shall be  governed by and its
provisions construed in accordance with the laws of the State of California , as
applied  to  contracts  between  California  residents  entered  into  and to be
performed  entirely  within  California  without  regard to the  conflict of law
principles thereof.

            (b)    Consent to  Jurisdiction.  The Company  and  Indemnitee  each
hereby  irrevocably  consent to the  jurisdiction  of the courts of the State of
California  for all purposes in connection  with any action or proceeding  which
arises out of or relates to this Agreement and agree that any action  instituted
under this  Agreement  shall be brought only in the state courts of the State of
California .

            (c)    Amendment  and  Termination.   No  amendment,   modification,
termination or cancellation of this Agreement shall be effective unless it is in
writing signed by both the parties hereto. No waiver of any of the provisions of
this  Agreement  shall be  deemed  or shall  constitute  a waiver  of any  other
provisions  hereof  (whether or not similar) nor shall such waiver  constitute a
continuing waiver.

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<PAGE>

            (d)    Entire  Agreement.  This  Agreement  sets  forth  the  entire
understanding  between the parties hereto and supersedes and merges all previous
written  and  oral  negotiations,  commitments,  understandings  and  agreements
relating to the subject matter hereof between the parties hereto.

            (e)    Successors and Assigns.  This Agreement shall be binding upon
the Company and its  successors  and assigns,  and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs and legal representatives.

            (f)    Severability.  Nothing  in  this  Agreement  is  intended  to
require or shall be construed  as requiring  the Company to do or fail to do any
act in violation of applicable law. The Company's  inability,  pursuant to court
order,  to perform its  obligations  under this Agreement shall not constitute a
breach of this  Agreement.  If this  Agreement  or any portion  hereof  shall be
invalidated  on any  ground by any  court of  competent  jurisdiction,  then the
Company shall nevertheless  indemnify Indemnitee to the full extent permitted by
any applicable  portion of this Agreement that shall not have been  invalidated,
and the balance of this  Agreement not so  invalidated  shall be  enforceable in
accordance with its terms.

            (g)    Attorneys'  Fees. In the event that any action is  instituted
by  Indemnitee  under this  Agreement to enforce or  interpret  any of the terms
hereof,  Indemnitee  shall be entitled to be paid all court costs and  expenses,
including  reasonable  attorneys'  fees,  incurred by Indemnitee with respect to
such  action,  unless  as  a  part  of  such  action,  the  court  of  competent
jurisdiction  determines that each of the material assertions made by Indemnitee
as a basis for such action were not made in good faith or were frivolous. In the
event of an  action  instituted  by or in the  name of the  Company  under  this
Agreement  or to  enforce  or  interpret  any of the  terms  of this  Agreement,
Indemnitee shall be entitled to be paid all court costs and expenses,  including
reasonable  attorneys'  fees,  incurred by  Indemnitee in defense of such action
(including with respect to Indemnitee's  counterclaims  and cross-claims made in
such action),  unless as a part of such action the court determines that each of
Indemnitee's  material  defenses  to such  action were made in bad faith or were
frivolous.

            (h)    Notice.   All   notices,   requests,   demands   and    other
communications  required or permitted  under this Agreement  shall be in writing
and shall be delivered personally by hand or by courier, mailed by United States
first-class mail, postage prepaid,  sent by facsimile or sent by electronic mail
directed  to the  party to be  notified  at the  address,  facsimile  number  or
electronic mail address  indicated for such person on the signature page hereof,
or at such other address,  facsimile  number or electronic  mail address as such
party  may  designate  by ten (10)  days'  advance  written  notice to the other
parties hereto. All such notices and other  communications shall be deemed given
upon personal delivery,  on the date of mailing,  upon confirmation of facsimile
transfer or when directed to the electronic  mail address set forth on signature
page hereof.

            (i)    Period of  Limitations.  No legal action shall be brought and
no cause of action  shall be asserted by or in the right of the Company  against
Indemnitee,  Indemnitee's estate,  spouse, heirs, executors or personal or legal
representatives  after the  expiration  of two years from the date of accrual of
such cause of action,  and any claim or cause of action of the Company  shall be
extinguished and deemed released unless asserted by the timely filing of a

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legal action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise  applicable to any such cause of action, such
shorter period shall govern.

            (j)    Subrogation.  In the event of payment under  this  Agreement,
the  Company  shall be  subrogated  to the extent of such  payment to all of the
rights of recovery of Indemnitee,  who shall execute all documents  required and
shall do all acts that may be  necessary to secure such rights and to enable the
Company effectively to bring suit to enforce such rights.

            (k)    Counterparts.  This  Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

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<PAGE>

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

                                     QUALITY SYSTEMS, INC.

                                     By:________________________________________

                                     Its:_______________________________________

                                     Address:
                                     18191 Von Karman Avenue, Suite 450
                                     Irvine, CA  92612
                                     Facsimile #: 949-255-2610
                                     Email: pholt@qsii.com (Corporate Secretary)

AGREED TO AND ACCEPTED:

"Indemnitee"

_____________________________________
Signature

_____________________________________
Print Name

Address:

_____________________________________
_____________________________________
_____________________________________
Facsimile #:_________________________
Email:_______________________________

                                      - 9 -Exhibit 10.10.1

                              QUALITY SYSTEMS, INC.

                              AMENDED AND RESTATED

                             1998 STOCK OPTION PLAN

NOTICE:  QUALIFIED OPTIONS UNDER THIS PLAN BEAR RESTRICTIONS GOVERNED BY SECTION
422 OF THE INTERNAL  REVENUE CODE. PLAN  PARTICIPANTS  ARE URGED TO READ SECTION
422 AND TO UNDERSTAND THE RESTRICTIONS  CONTAINED  THEREIN.  NOT ALL SECTION 422
RESTRICTIONS  ARE REFERENCED IN THIS PLAN.  OPTIONS  GRANTED  HEREUNDER MAY BEAR
RESTRICTIONS IMPOSED BY FEDERAL AND STATE SECURITIES LAWS. PLAN PARTICIPANTS ARE
URGED TO CONSULT  WITH THEIR TAX AND LEGAL  ADVISORS  CONCERNING  THE NATURE AND
RESTRICTIONS UPON THE OPTIONS GOVERNED HEREBY.

1.    Purposes.

      (a)   The  purpose  of the Plan is to  provide  a means by which  selected
Employees,  Directors and Consultants of the Company and its Affiliates,  may be
given an  opportunity  to benefit  from  increases  in value of the stock of the
Company through the granting of Incentive Stock Options and  Nonstatutory  Stock
Options,  as defined  below.

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

      (c)   The Company intends that the Options issued under the Plan shall, in
the  discretion  of the  Board  or any  Committee  to which  responsibility  for
administration  of the Plan has been  delegated  pursuant  to Section  3(c),  be
either Incentive Stock Options or Nonstatutory Stock Options.  All Options shall
be separately  designated  Incentive Stock Options or Nonstatutory Stock Options
at the time of grant,  and in such form as issued  pursuant  to Section 6, and a
certificate or certificates  will be issued for shares  purchased on exercise of
such Options.

2.    Definitions.

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

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

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

<PAGE>

      (d)   "Committee"  means a Committee  appointed by the Board in accordance
with Section 3(c) of the Plan.

      (e)   "Company" means Quality Systems, Inc., a California corporation.

      (f)   "Consultant" means any person,  including an advisor, engaged by the
Company or an Affiliate  to render  consulting  or advisory  services and who is
compensated  for such services,  provided that the term  "Consultant"  shall not
include  Directors who are paid only a director's  fee by the Company or who are
not compensated by the Company for their services as Directors.

      (g)   "Continuous Status as an Employee, Director or Consultant" means the
employment or  relationship  as a Director or Consultant is not  interrupted  or
terminated.  The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence  approved  by the  Board,  including  sick
leave, military leave or any other personal leave;  provided,  however, that for
purposes of  Incentive  Stock  Options,  any such leave may not exceed three (3)
months,  unless  reemployment upon the expiration of such leave is guaranteed by
contract,  Company policies or statute;  or (ii) transfers  between locations of
the  Company  or  between  the  Company,  Affiliates  or their  successors.

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

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

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

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

            (i)    If the  Common  Stock  is listed  on  any  established  stock
      exchange or a national  market system,  including  without  limitation the
      National Market System of the National  Association of Securities Dealers,
      Inc.  Automated  Quotation  ("NASDAQ")  System, the Fair Market Value of a
      share of Common Stock shall be the closing  sales price for such stock (or
      the closing  bid, if no sales were  reported)  as quoted on such system or
      exchange on the day the Option is granted,  as reported in the Wall Street
      Journal or such other source as the Board deems reliable;

            (ii)   If the Common  Stock is quoted on the NASDAQ  System (but not
      on the  National  Market  System  thereof)  or is  regularly  quoted  by a
      recognized securities dealer but selling prices are not reported, the Fair
      Market  Value of a share of Common  Stock  shall be the mean  between  the
      closing bid and asked prices for the Common Stock on the day the Option is
      granted,  as reported in the Wall Street  Journal or such other  source as
      the Board deems reliable;

                                       -2-
<PAGE>

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

      (l)   "Incentive  Stock Option" means an Option  intended to qualify as an
incentive  stock  option  within the  meaning of Section 422 of the Code and the
regulations  promulgated  thereunder.

      (m)   "Non-Employee Director" shall mean a Director who:

            (i)    Is not  currently an officer (as defined in  Rule 16a-1(f) of
      the Exchange Act) of the Company or a parent or subsidiary of the Company,
      or otherwise  currently  employed by the Company or a parent or subsidiary
      of the Company;

            (ii)   Does not receive compensation, either directly or indirectly,
      from the Company or a parent or  subsidiary  of the Company,  for services
      rendered  as a  consultant  or in any  capacity  other than as a Director,
      except for an amount  that does not  exceed  the  dollar  amount for which
      disclosure would be required pursuant to Rule 404(a) of the Exchange Act;

            (iii)  Does not possess an interest  in any  other  transaction  for
      which disclosure would be required pursuant to Rule 404(a) of the Exchange
      Act; and

            (iv)   Is  not  engaged  in  a  business   relationship  for   which
      disclosure would be required pursuant to Rule 404(b) of the Exchange Act.

      (n)   "Nonstatutory  Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.

      (o)   "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.

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

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

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

      (s)   "Participant"  means an  Employee,  Director or  Consultant  who  is
granted Options.

      (t)   "Plan" means this 1998 Stock Option Plan.

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

      (v)   "Securities Act" means the Securities Act of 1933, as amended.

                                       -3-
<PAGE>

3.    Administration.

      (a)   The Plan  shall be  administered  by the Board  unless and until the
Board delegates  administration to a Committee, as provided in Section 3(c).

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

            (i)    To determine  from time to time which of the persons eligible
      under the Plan shall be granted  Options;  when and how  Options  shall be
      granted;  whether  an  Option  will  be an  Incentive  Stock  Option  or a
      Nonstatutory  Stock Option,  the  provisions of each Option granted (which
      need not be  identical),  including the vesting  schedule for the Options,
      and the  number of shares  underlying  such  Options to be granted to each
      such person;

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

            (iii)  To amend the Plan as provided in Section 12; and

            (iv)   Generally,  to exercise such powers and to  perform such acts
      as the Board deems necessary or advisable to promote the best interests of
      the Company.

      (c)   The Board may  delegate  administration  of the Plan to a  committee
composed of not fewer than two (2) members of the Board (the  "Committee"),  all
of  the  members  of  which  Committee  shall  be  Non-Employee   Directors.  If
administration  is  delegated  to a  Committee,  the  Committee  shall have,  in
connection with the administration of the Plan, the powers theretofore possessed
by the Board (and  references  in this Plan to the Board shall  thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the
provisions  of the Plan,  as may be adopted from time to time by the Board.  The
Board  may  abolish  the  Committee  at any time and  revest  in the  Board  the
administration of the Plan.

4.    Shares Subject to the Plan.

      Subject to the  provisions  of Section 11  relating  to  adjustments  upon
changes in stock,  the stock that may be issued  pursuant  to Options  shall not
exceed in the aggregate One Million  (1,000,000)  shares of the Company's Common
Stock.  If any Option shall for any reason  expire or otherwise  terminates,  in
whole or in part,  without having been exercised in full, the stock not acquired
under such Option shall revert to and again become  available for issuance under
the Plan.

5.    Eligibility.

      (a)   Incentive   Stock  Options  may   be  granted  only   to  Employees.
Nonstatutory  Stock  Options  may be granted  only to  Employees,  Directors  or
Consultants.

                                       -4-
<PAGE>

      (b)   A Director  shall be eligible for the benefits of the Plan  provided
that such Director's  participation  conforms to the requirements of Rule 16b-3,
if applicable.

      (c)   No person  shall be  eligible  for the grant of an  Incentive  Stock
Option if, at the time of grant,  such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock  possessing  more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent  (110%) of the Fair Market  Value of such stock at
the date of grant.

6.    Option Provisions.

      Each  Option  shall be in such  form and  shall  contain  such  terms  and
conditions  as the Board  shall deem  appropriate.  The  provisions  of separate
Options  need  not  be  identical,   but  each  Option  shall  include  (through
incorporation of provisions  hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

      (a)   Term.  No Option shall be  exercisable  after the  expiration of ten
(10) years from the date it was granted.  In addition,  any option  granted to a
person who owns (or is deemed to own  pursuant  to  Section  424(d) of the Code)
stock  possessing more than ten percent (10%) of the total combined voting power
of all  classes  of stock of the  Company  or of any  Affiliate  may not be made
exercisable  after the  expiration of five (5) years from the date the Option is
granted.

      (b)   Price.  The exercise price of each  Incentive  Stock Option shall be
not less than one hundred  percent  (100%) of the Fair Market Value of the stock
subject  to the Option on the date the Option is  granted.  Notwithstanding  the
foregoing, the exercise price of any Incentive Stock Option granted hereunder to
any  stockholder  possessing at least 10% of the total combined  voting power of
all  classes  of stock of the  Company  shall be not less than one  hundred  ten
percent  (110%) of the Fair Market  Value of the stock  subject to the Option on
the date the Option is granted.

      (c)   Consideration.  The purchase price  of stock acquired pursuant to an
Option  shall be paid,  to the  extent  permitted  by  applicable  statutes  and
regulations, either (i) in cash at the time the Option is exercised, (ii) at the
discretion  of the  Board or the  Committee,  either at the time of the grant or
exercise of the Option,  by  delivering  to the Company  other  shares of Common
Stock of the  Company  (provided  that the shares  have been held for the period
required to avoid a charge to the  Company's  reported  earnings),  (iii) at the
discretion  of the  Board or the  Committee,  either at the time of the grant or
exercise  of the  Option,  by  delivering  to the  Company all or any part of an
Option  granted  under this Plan for a  cashless  exercise  (provided  that such
cashless  exchange  will  not  result  in a  charge  to the  Company's  reported
earnings),  or (iv) by tendering any other form of legal  consideration that may
be acceptable to the Board.

      (d)   Transferability. An Incentive Stock Option shall not be transferable
except  by will  or by the  laws of  descent  and  distribution,  and  shall  be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted  only by such  person.  A  Nonstatutory  Stock  Option  granted to an
Optionee  subject to Section 16 of the  Exchange  Act on the date of grant shall
not be transferable  except by will or by the laws of descent and  distribution,
and shall

                                       -5-
<PAGE>

be  exercisable  during the lifetime of the person to whom the Option is granted
only by such person.  A Nonstatutory  Stock Option granted to an Optionee who is
not  subject to Section 16 of the  Exchange  Act on the date of grant may not be
transferable  except by will or by the laws of descent and distribution,  unless
otherwise  permitted by the Board, and shall be exercisable  during the lifetime
of the person to whom the Option is granted  only by such person or,  subsequent
to any permitted transfer,  only by a permitted  transferee.  The person to whom
the Option is granted may, by  delivering  written  notice to the Company,  in a
form  satisfactory to the Company,  designate a third party who, in the event of
the  death  of  the  Optionee  or in  the  case  of a  permitted  transfer  of a
Nonstatutory  Stock Option during the Optionee's  lifetime,  shall thereafter be
entitled to exercise the Option.

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

      (f)   Termination  of  Employment  or  Relationship   as  a   Director  or
Consultant  Other than by Disability  or Death.  In the event that an Optionee's
Continuous Status as an Employee, Director or Consultant is terminated either by
the  voluntary  resignation  by the  Optionee or for cause by the  Company,  all
Options  granted to the Optionee shall  terminate  immediately.  In the event an
Optionee's  Continuous  Status  as  an  Employee,   Director  or  Consultant  is
terminated  without  cause by the Company,  the Optionee may exercise his or her
Option (to the extent that the  Optionee was entitled to exercise it at the date
of termination) but only within such period of time ending on the earlier of (i)
the date thirty (30) days after the  termination  of the  Optionee's  Continuous
Status as an Employee,  Director or Consultant (or such longer period  specified
in the Option  Agreement),  or (ii) the  expiration of the term of the Option as
set forth in the Option Agreement. If, at the date of termination,  the Optionee
is not entitled to exercise his or her entire Option or the Option terminated as
specified above, the shares covered by the  unexercisable  portion of the Option
or  terminated  Option shall revert to and again become  available  for issuance
under the Plan. If, after termination, the Optionee does not exercise his or her
Option  within the time  specified  in the Option  Agreement,  the Option  shall
terminate,  and the shares  covered  by such  Option  shall  revert to and again
become available for issuance under the Plan.

      (g)   Disability of Optionee. In the event an Optionee's Continuous Status
as an Employee,  Director or Consultant terminates as a result of the Optionee's
disability,  the Optionee may exercise his or her Option (to the extent that the
Optionee  was  entitled  to exercise  it at the date of  termination),  but only
within such  period of time ending on the earlier of (i) the date three  hundred
sixty-five  (365)  days  following  such  termination  (or  such  longer  period
specified in the Option  Agreement),  or (ii) the  expiration of the term of the
Option as set forth in the Option Agreement. If, at the date of termination, the
Optionee  is not  entitled  to  exercise  his

                                       -6-
<PAGE>

or her entire  Option,  the shares covered by the  unexercisable  portion of the
Option shall revert to and again become  available for issuance  under the Plan.
If, after  termination,  the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become  available  for issuance  under the
Plan.

      (h)   Death of Optionee.  In the event of the death of an Optionee during,
or within a period  specified  in the  Option  after  the  termination  of,  the
Optionee's Continuous Status as an Employee,  Director or Consultant, the Option
may be exercised (to the extent the Optionee was entitled to exercise the Option
at the date of death) by the  Optionee's  estate,  by a person who  acquired the
right to exercise the Option by bequest or inheritance or by a person designated
to exercise the option upon the  Optionee's  death pursuant to Section 6(d), but
only  within the  period  ending on the  earlier  of (i) the date three  hundred
sixty-five  (365)  days  following  the date of death  (or  such  longer  period
specified in the Option  Agreement),  or (ii) the expiration of the term of such
Option  as set forth in the  Option  Agreement.  If,  at the time of death,  the
Optionee  was not  entitled to  exercise  his or her entire  Option,  the shares
covered by the  unexercisable  portion of the Option  shall  revert to and again
become available for issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate,  and the
shares  covered by such Option shall revert to and again  become  available  for
issuance under the Plan.

7.    Cancellation and Regrant of Option.

      The Board or the Committee shall have the authority to effect, at any time
and from time to time,  (i) the repricing of any  outstanding  Options under the
Plan,  and/or (ii) with the  consent of the  affected  holders of  Options,  the
cancellation  of any  outstanding  Options  under  the  Plan  and the  grant  in
substitution  therefor  of new  Options  under  the  Plan  covering  the same or
different numbers of shares of stock, but having an exercise price per share not
less than one hundred  percent (100%) of the Fair Market Value in the case of an
Incentive  Stock Option or, in the case of a ten percent (10%)  stockholder  (as
described in Section  5(c)) not less than one hundred ten percent  (110%) of the
Fair Market Value in the case of an Incentive Stock Option.

8.    Covenants of the Company.

      (a)   During the terms of the Options, the Company shall keep available at
all times the  number of shares of stock  which  would be  issuable  under  such
outstanding Options.

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

                                       -7-
<PAGE>

9.    Use of Proceeds from Stock.

      Proceeds  from the sale of Common Stock upon exercise of the Options shall
constitute general funds of the Company.

10.   Miscellaneous.

      (a)   Neither an Optionee nor any person to whom an Option is  transferred
under  Section  6(d)  shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has  satisfied  all  requirements  for  exercise of the Option
pursuant to its terms.

      (b)   Nothing in the Plan or any Option  granted  pursuant  thereto  shall
confer upon any  Employee,  Director,  Consultant or other holder of Options any
right to continue in the employ of the Company or any  Affiliate (or to continue
acting as a Director or  Consultant) or shall affect the right of the Company or
any  Affiliate to terminate  the  employment  or  relationship  as a Director or
Consultant of any Employee, Director, Consultant or other holder of Options with
or without cause.

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

      (d)   The Company may require any person to whom an Option is granted,  or
any person to whom an Option is  transferred  under Section 6(d), as a condition
of exercising any Option,  (1) to give written  assurances  satisfactory  to the
Company as to such person's  knowledge and  experience in financial and business
matters and/or to employ a purchaser  representative  reasonably satisfactory to
the Company who is  knowledgeable  and  experienced  in  financial  and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (2)
to give written assurances  satisfactory to the Company stating that such person
is acquiring  the stock  subject to the Option for such person's own account and
not with any present  intention of selling or otherwise  distributing the stock.
The  foregoing   requirements,   and  any  assurances  given  pursuant  to  such
requirements,  shall be  inoperative  if (i) the issuance of the shares upon the
exercise or  acquisition of stock under the Option has been  registered  under a
then currently  effective  registration  statement  under the Securities Act, or
(ii) as to any particular  requirement,  a determination  is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable  securities laws. The Company may, upon advice of counsel to the
Company,  place  legends  on stock  certificates  issued  under the Plan as such
counsel  deems  necessary  or  appropriate  in order to comply  with  applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

      (e)   To the  extent  provided  by the terms of an Option  Agreement,  the
person to whom an Option is granted may, at the discretion of the Board, satisfy
any mandatory federal, state or

                                       -8-
<PAGE>

local tax  withholding  obligation  relating to the exercise or  acquisition  of
stock under an Option by any of the following  means or by a combination of such
means:  (1) tendering  cash  payment;  (2)  authorizing  the Company to withhold
shares from the shares of the Common Stock otherwise issuable to the Participant
as a result of the exercise or  acquisition  of stock under the Option  provided
that such  arrangement  will not  result in a charge to the  Company's  reported
earnings;  or (3) delivering to the Company owned and unencumbered shares of the
Common Stock of the Company that have been held for the period required to avoid
a charge to the Company's reported  earnings.  The exercise of the Option may be
conditioned  upon the  receipt by the  Company of  satisfactory  evidence of the
Participant's satisfaction of any withholding obligations.

11.   Adjustments Upon Changes in Stock.

      (a)   Subject to any required action by stockholders,  the number and type
of (i) shares which have been  authorized for issuance under this Plan but as to
which  Options have not yet been granted or that have been  returned to the Plan
upon  cancellation  or  expiration  of an Option,  and (ii) shares  which may be
purchased upon the exercise of each outstanding  Option,  shall be appropriately
changed and  proportionately  increased or decreased  upon the occurrence of any
change,  increase or decrease in the number and type of issued  shares of Common
Stock of the Company,  without receipt of  consideration  by the Company,  which
change  results  from a stock  split,  stock  dividend,  merger,  consolidation,
reorganization, reincorporation, recapitalization, combination of shares, change
in  corporate  structure or other like  capital  adjustment.  As a result of the
foregoing  adjustment,  appropriate  adjustment  shall be made in the number and
type of shares for which  Options may be granted  under this Plan and,  upon the
exercise of each then  outstanding  Option,  the holders of such  Options  shall
receive the number and type of securities  which the holders would have received
had the Options been exercised on the date  preceding  such change,  increase or
decrease. In the event of any such adjustment, the exercise price for each share
shall be likewise adjusted in inverse  proportion to the increase or decrease in
the number of shares purchasable.

      (b)   In  the  event  of:   (1) a  dissolution,  liquidation  or  sale  of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving  corporation;  or (3) a reverse merger in
which the Company is the surviving  corporation  but the shares of the Company's
Common  Stock  outstanding  immediately  preceding  the merger are  converted by
virtue of the merger  into other  property,  whether in the form of  securities,
cash or  otherwise,  then to the extent  permitted  by  applicable  law: (i) any
surviving  corporation  shall assume any Options  outstanding  under the Plan or
shall substitute  similar Options for those  outstanding under the Plan, or (ii)
such Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute similar
options for those outstanding under the Plan, then, with respect to Options held
by persons then performing services as Employees,  Directors or Consultants, the
time during  which such  Options vest may, at the  discretion  of the Board,  be
accelerated and the Options terminated if not exercised prior to such event.

                                       -9-
<PAGE>

12.   Amendment of the Plan.

      (a)   The  Board at any time,  and from  time to time,  may amend the Plan
provided that the  implementation of such amendment by the Company complies with
all applicable law.

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

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

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

13.   Termination or Suspension of the Plan.

      (a)   The Board may  suspend  or  terminate  the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on December 31, 2007, which shall be
within ten (10) years from the date the Plan is adopted by the Board or approved
by the  stockholders  of the Company,  whichever  is earlier.  No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.

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

14.   Effective Date of Plan.

      The Plan shall become effective as determined by the Board, but no Options
granted  under the Plan  shall be  exercised  unless and until the Plan has been
approved by the  stockholders  of the Company,  which  approval  shall be within
twelve  (12)  months  before or after the date the Plan is adopted by the Board.

15.   Financial Information.

      The Company  will provide to each  Optionee  financial  statements  of the
Company at least annually in accordance  with Section  260.140.46 of Title 10 of
the California Code of Regulations.

                                      -10-

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