Document:

e-PERCEPTION,
INC.

2000
STOCK OPTION PLAN

1.  Establishment,
Purpose and Term of Plan.

 

1.1  Establishment. This
e-Perception, Inc. 2000 Stock Option Plan (the “Plan”) was
established effective as of June 15, 2000 and hereby amended as of March 26,
2002.

 

1.2  Purpose. The
purpose of the Plan is to advance the interests of the Participating Company
Group and its shareholders by providing an incentive to attract, retain and
reward persons performing services for the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group.

 

1.3  Term
of Plan. The Plan
shall continue in effect until the earlier of its termination by the Board or
the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Options granted under the Plan have lapsed.
However, all Options shall be granted, if at all, within ten (10) years
from the earlier of the date the Plan is adopted by the Board or the date the
Plan is duly approved by the shareholders of the Company.

 

2.  Definitions
and Construction.

 

2.1  Definitions.
Whenever
used herein, the following terms shall have their respective meanings set forth
below:

 

(a)  “Board” means
the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan, “Board” also
means such Committee(s).

 

(b)  “Code” means
the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.

 

(c)  “Committee” means
the Compensation Committee or other committee of the Board duly appointed to
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.

 

(d)  “Company” means
e-Perception, Inc., a Nevada corporation, or any successor corporation
thereto.

 

(e)  “Consultant” means
any person, including an advisor, engaged by a Participating Company to render
services other than as an Employee or a Director.

 

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(f)  “Director” means a
member of the Board or of the board of directors of any other Participating
Company.

 

(g)  “Disability” means
the inability of the Optionee, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Optionee’s
position with the Participating Company Group because of the sickness or injury
of the Optionee.

 

(h)  “Employee” means
any person treated as an employee (including an officer or a Director who is
also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee
for purposes of Section 422 of the Code; provided, however, that neither service
as a Director nor payment of a director’s fee shall be sufficient to constitute
employment for purposes of the Plan.

 

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

 

(j)  “Fair
Market Value” means,
as of any date, the value of a share of Stock or other property as determined by
the Board, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the
following:

 

(i)  If, on
such date, the Stock is listed on a national or regional securities exchange or
is actively traded on any other market system, the Fair Market Value of a share
of Stock shall be the closing price of a share of Stock (or the mean of the
closing bid and asked prices of a share of Stock if the Stock is so quoted
instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or
such other national or regional securities exchange or market system
constituting the primary market for the Stock, as reported in The
Wall Street Journal or such
other source as the Company deems reliable. If the relevant date does not fall
on a day on which the Stock has traded on such securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date, or
such other appropriate day as shall be determined by the Board, in its
discretion. If the Stock is listed on a market system but is not actively traded
in such amounts and as frequently as the Board deems necessary, in its sole
discretion, to determine the Fair Market Value of a share of Stock, then Board
shall determine, in its sole discretion, the value of a share of
Stock.

 

(ii)  If, on
such date, there is no public market for the Stock, the Fair Market Value of a
share of Stock shall be as determined by the Board in good faith without regard
to any restriction other than a restriction which, by its terms, will never
lapse.

 

(k)  “Incentive
Stock Option” means an
Option intended to be (as set forth in the Option Agreement) and which qualifies
as an incentive stock option within the meaning of Section 422(b) of the
Code.

 

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(l)  “Insider” means an
officer or a Director of the Company or any other person whose transactions in
Stock are subject to Section 16 of the Exchange Act.

 

(m)  “Nonstatutory
Stock Option” means an
Option not intended to be (as set forth in the Option Agreement) or which does
not qualify as an Incentive Stock Option.

 

(n)  “Option” means a
right to purchase Stock (subject to adjustment as provided in Section 4.2)
pursuant to the terms and conditions of the Plan. An Option may be either an
Incentive Stock Option or a Nonstatutory Stock Option.

 

(o)  “Option
Agreement” means a
written agreement, including any related form of stock option grant agreement,
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares acquired upon
the exercise thereof.

 

(p)  “Optionee” means a
person who has been granted one or more Options.

 

(q)  “Parent
Corporation” means
any present or future “parent corporation” of the Company, as defined in
Section 424(e) of the Code.

 

(r)  “Participating
Company” means
the Company or any Parent Corporation or Subsidiary Corporation.

 

(s)  “Participating
Company Group” means,
at any point in time, all corporations collectively which are then Participating
Companies.

 

(t)  “Rule
16b-3” means
Rule 16b-3 under the Exchange Act, as amended from time to time, or any
successor rule or regulation.

 

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

 

(v)  “Service” means an
Optionee’s employment or service with the Participating Company Group, whether
in the capacity of an Employee, a Director or a Consultant. The Optionee’s
Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Optionee renders Service to the Participating Company
Group or a change in the Participating Company for which the Optionee renders
such Service, provided that there is no interruption or termination of the
Optionee’s Service. Furthermore, an Optionee’s Service with the Participating
Company Group shall not be deemed to have terminated if the Optionee takes any
military leave, sick leave, or other bona fide leave of absence approved by the
Company; provided, however, that if any such leave exceeds ninety (90) days, on
the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed
to have terminated unless the Optionee’s right to return to Service with the
Participating Company Group is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence shall not be treated as Service for purposes
of determining vesting under the Optionee’s Option Agreement. The Optionee’s
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the corporation for which the Optionee performs Service ceasing
to be a Participating Company. Subject to the foregoing, the Company, in its
discretion, shall determine whether the Optionee’s Service has terminated and
the effective date of such termination.

 

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(w)  “Stock” means
the common stock of the Company, as adjusted from time to time in accordance
with Section 4.2.

 

(x)  “Subsidiary
Corporation” means
any present or future “subsidiary corporation” of the Company, as defined in
Section 424(f) of the Code.

 

(y)  “Ten
Percent Owner Optionee” means an
Optionee who, at the time an Option is granted to the Optionee, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company within the meaning of
Section 422(b)(6) of the Code.

 

2.2  Construction. Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except when otherwise
indicated by the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not intended to be
exclusive, unless the context clearly requires otherwise.

 

3.  Administration.

 

3.1  Administration
by the Board. The Plan
shall be administered by the Board. All questions of interpretation of the Plan
or of any Option shall be determined by the Board, and such determinations shall
be final and binding upon all persons having an interest in the Plan or such
Option.

 

3.2  Authority
of Officers. Any
officer of a Participating Company shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the officer has apparent authority with respect to such matter,
right, obligation, determination or election.

 

3.3  Administration
with Respect to Insiders. With
respect to participation by Insiders in the Plan, at any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3.

 

3.4  Powers
of the Board. In
addition to any other powers set forth in the Plan and subject to the provisions
of the Plan, the Board shall have the full and final power and authority, in its
discretion:

 

(a)  to
determine the persons to whom, and the time or times at which, Options shall be
granted and the number of shares of Stock to be subject to each
Option;

 

(b)  to
designate Options as Incentive Stock Options or Nonstatutory Stock
Options;

 

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(c)  to
determine the Fair Market Value of shares of Stock or other
property;

 

(d)  to
determine the terms, conditions and restrictions applicable to each Option
(which need not be identical) and any shares acquired upon the exercise thereof,
including, without limitation, (i) the exercise price of the Option, (ii) the
method of payment for shares purchased upon the exercise of the Option, (iii)
the method for satisfaction of any tax withholding obligation arising in
connection with the Option or such shares, including by the withholding or
delivery of shares of stock, (iv) the timing, terms and conditions of the
exercisability of the Option or the vesting of any shares acquired upon the
exercise thereof, (v) the time of the expiration of the Option, (vi) the effect
of the Optionee’s termination of Service with the Participating Company Group on
any of the foregoing, and (vii) all other terms, conditions and restrictions
applicable to the Option or such shares not inconsistent with the terms of the
Plan;

 

(e)  to
approve one or more forms of Option Agreement;

 

(f)  to amend,
modify, extend, cancel, renew, reprice or otherwise adjust the exercise price
of, or grant a new Option in substitution for, any Option or to waive any
restrictions or conditions applicable to any Option or any shares acquired upon
the exercise thereof;

 

(g)  to
accelerate, continue, extend or defer the exercisability of any Option or the
vesting of any shares acquired upon the exercise thereof, including with respect
to the period following an Optionee’s termination of Service with the
Participating Company Group;

 

(h)  to
prescribe, amend or rescind rules, guidelines and policies relating to the Plan,
or to adopt supplements to, or alternative versions of, the Plan, including,
without limitation, as the Board deems necessary or desirable to comply with the
laws of, or to accommodate the tax policy or custom of, foreign jurisdictions
whose citizens may be granted Options; and

 

(i)  to
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Option Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Option as the Board may deem
advisable to the extent consistent with the Plan and applicable
law.

 

4.  Shares
Subject to Plan.

 

4.1  Maximum
Number of Shares Issuable. Subject
to adjustment as provided in Section 4.2, the maximum aggregate number of
shares of Stock that may be issued under the Plan shall be five million four
hundred thousand (5,400,000) and shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. If an outstanding Option
for any reason expires or is terminated or canceled or if shares of Stock are
acquired upon the exercise of an Option subject to a Company repurchase option
and are repurchased by the Company at the Optionee’s exercise price, the shares
of Stock allocable to the unexercised portion of such Option or such repurchased
shares of Stock shall again be available for issuance under the Plan.
Notwithstanding the foregoing, at any such time as the offer and sale of
securities pursuant to the Plan is subject to compliance with Section 260.140.45
of Title 10 of the California Code of Regulations (“Section
260.140.45”), the
total number of shares of Stock issuable upon the exercise of all outstanding
Options (together with options outstanding under any other stock option plan of
the Company) and the total number of shares provided for under any stock bonus
or similar plan of the Company shall not exceed thirty percent (30%) (or such
other higher percentage limitation as may be approved by the shareholders of the
Company pursuant to Section 260.140.45) of the then outstanding shares of the
Company as calculated in accordance with the conditions and exclusions of
Section 260.140.45.

 

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4.2  Adjustments
for Changes in Capital Structure. In the
event of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options and in the exercise price per
share of any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 8.1) shares of another
corporation (the “New
Shares”), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded down to the nearest whole number, and in no event may the
exercise price of any Option be decreased to an amount less than the par value,
if any, of the stock subject to the Option. The adjustments determined by the
Board pursuant to this Section 4.2 shall be final, binding and
conclusive.

 

5.  Eligibility
and Option Limitations.

 

5.1  Persons
Eligible for Options. Options
may be granted only to Employees, Consultants, and Directors. For purposes of
the foregoing sentence, “Employees,” “Consultants” and
“Directors” shall
include prospective Employees, prospective Consultants and prospective Directors
to whom Options are granted in connection with written offers of an employment
or other service relationships with the Participating Company Group. Eligible
persons may be granted more than one (1) Option.

 

5.2  Option
Grant Restrictions. Any
person who is not an Employee on the effective date of the grant of an Option to
such person may be granted only a Nonstatutory Stock Option. An Incentive Stock
Option granted to a prospective Employee upon the condition that such person
become an Employee shall be deemed granted effective on the date such person
commences Service with a Participating Company, with an exercise price
determined as of such date in accordance with Section 6.1.

 

5.3  Fair
Market Value Limitation. To the
extent that options designated as Incentive Stock Options (granted under all
stock option plans of the Participating Company Group, including the Plan)
become exercisable by an Optionee for the first time during any calendar year
for stock having a Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portions of such options which exceed such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5.3,
options designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth in
this Section 5.3, such different limitation shall be deemed incorporated
herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section 5.3, the Optionee may designate which
portion of such Option the Optionee is exercising. In the absence of such
designation, the Optionee shall be deemed to have exercised the Incentive Stock
Option portion of the Option first. Separate certificates representing each such
portion shall be issued upon the exercise of the Option.

 

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6.  Terms
and Conditions of Options.

 

Options
shall be evidenced by Option Agreements specifying the number of shares of Stock
covered thereby, in such form as the Board shall from time to time establish. No
Option or purported Option shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Option Agreement. Option Agreements
may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

6.1  Exercise
Price. The
exercise price for each Option shall be established in the discretion of the
Board; provided, however, that (a) the exercise price per share for an
Incentive Stock Option shall be not less than the Fair Market Value of a share
of Stock on the effective date of grant of the Option, (b) unless otherwise
permitted by applicable law, the exercise price per share for a Nonstatutory
Stock Option shall be not less than eighty-five percent (85%) of the Fair Market
Value of a share of Stock on the effective date of grant of the Option, and
(c) no Option granted to a Ten Percent Owner Optionee shall have an
exercise price per share less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
Nonstatutory Stock Option) may be granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner qualifying under the
provisions of Section 424(a) of the Code.

 

6.2  Exercise
Period. Options
shall be exercisable at such time or times, or upon such event or events, and
subject to such terms, conditions, performance criteria, and restrictions as
shall be determined by the Board and set forth in the Option Agreement
evidencing such Option; provided, however, that (a) no Option shall be
exercisable after the expiration of ten (10) years after the effective date of
grant of such Option, (b) no Incentive Stock Option granted to a Ten
Percent Owner Optionee shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option, (c) no Option
granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences
Service with a Participating Company, and (d) unless otherwise permitted by
applicable law, and with the exception of an Option granted to an officer,
Director or Consultant, no Option shall become exercisable at a rate less than
twenty percent (20%) per year over a period of five (5) years from the effective
date of grant of such Option, subject to the Optionee’s continued Service.
Subject to the foregoing, unless otherwise specified by the Board in the grant
of an Option, any Option granted hereunder shall have a term of ten (10) years
from the effective date of grant of the Option.

 

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6.3  Payment
of Exercise Price.

 

(a)  Forms
of Consideration Authorized. Except
as otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check or cash equivalent, (ii) by tender to the Company, or
attestation to the ownership, of shares of Stock owned by the Optionee having a
Fair Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of federal or
state securities laws or agreements with an underwriter for the Company) not
less than the exercise price, (iii) by the assignment of the proceeds of a
sale or loan with respect to some or all of the shares being acquired upon the
exercise of the Option (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated from time to
time by the Board of Governors of the Federal Reserve System) (a “Cashless
Exercise”), (iv)
by such other consideration as may be approved by the Board from time to time to
the extent permitted by applicable law, or (v) by any combination thereof.
The Board may at any time or from time to time, by adoption of or by amendment
to the standard forms of Option Agreement described in Section 7, or by
other means, grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration.

 

(b)  Limitations
on Forms of Consideration.

 

(i)  Tender
of Stock.
Notwithstanding the foregoing, an Option may not be exercised by tender to the
Company, or attestation to the ownership, of shares of Stock to the extent such
tender or attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.

 

(ii)  Cashless
Exercise. The
Company reserves, at any and all times, the right, in the Company’s sole and
absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless
Exercise.

 

6.4  Tax
Withholding. The
Company shall have the right, but not the obligation, to deduct from the shares
of Stock issuable upon the exercise of an Option, or to accept from the Optionee
the tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to such Option or the shares acquired upon the
exercise thereof. Alternatively or in addition, in its discretion, the Company
shall have the right to require the Optionee, through payroll withholding, cash
payment or otherwise, including by means of a Cashless Exercise, to make
adequate provision for any such tax withholding obligations of the Participating
Company Group arising in connection with the Option or the shares acquired upon
the exercise thereof. The Company shall have no obligation to deliver shares of
Stock or to release shares of Stock from an escrow established pursuant to the
Option Agreement until the Participating Company Group’s tax withholding
obligations have been satisfied by the Optionee.

 

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6.5  Repurchase
Rights. Shares
issued under the Plan may be subject to a right of first refusal, one or more
repurchase options, or other conditions and restrictions as determined by the
Board in its discretion at the time the Option is granted. The Company shall
have the right to assign at any time any repurchase right it may have, whether
or not such right is then exercisable, to one or more persons as may be selected
by the Company. Upon request by the Company, each Optionee shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares
of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.

 

6.6  Effect
of Termination of Service.

 

(a)  Option
Exercisability. Subject
to earlier termination of the Option as otherwise provided herein, an Option
shall be exercisable after an Optionee’s termination of Service as
follows:

 

(i)  Disability. If the
Optionee’s Service with the Participating Company Group is terminated because of
the Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee (or the Optionee’s guardian or legal representative)
at any time prior to the expiration of six (6) months (or such longer period of
time as determined by the Board, in its discretion) after the date on which the
Optionee’s Service terminated, but in any event no later than the date of
expiration of the Option’s term as set forth in the Option Agreement evidencing
such Option (the “Option
Expiration Date”).

 

(ii)  Death. If the
Optionee’s Service with the Participating Company Group is terminated because of
the death of the Optionee, the Option, to the extent unexercised and exercisable
on the date on which the Optionee’s Service terminated, may be exercised by the
Optionee’s legal representative or other person who acquired the right to
exercise the Option by reason of the Optionee’s death at any time prior to the
expiration of six (6) months (or such longer period of time as determined by the
Board, in its discretion) after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date. The
Optionee’s Service shall be deemed to have terminated on account of death if the
Optionee dies within thirty (30) days (or such longer period of time as
determined by the Board, in its discretion) after the Optionee’s termination of
Service.

 

(iii)  Termination
After Change in Control. The
Board may, in its discretion, provide in any Option Agreement that if the
Optionee’s Service with the Participating Company Group ceases as a result of
“Termination After Change in Control” (as defined in such Option Agreement),
then (1) the Option, to the extent unexercised and exercisable on the date on
which the Optionee’s Service terminated, may be exercised by the Optionee (or
the Optionee’s guardian or legal representative) at any time prior to the
expiration of six (6) months (or such longer period of time as determined by the
Board, in its discretion) after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date, and
(2) the exercisability and vesting of the Option and any shares acquired
upon the exercise thereof shall be accelerated effective as of the date on which
the Optionee’s Service terminated to such extent, if any, as shall have been
determined by the Board, in its discretion, and set forth in the Option
Agreement. Notwithstanding the foregoing, if it is determined that the
provisions or operation of this Section 6.6(a)(iii) would preclude treatment of
a Change in Control as a “pooling-of-interests” for accounting purposes and
provided further that in the absence of the preceding sentence such Change in
Control would be treated as a “pooling-of-interests” for accounting purposes,
then this Section 6.6(a)(iii) shall be void ab
initio, and the
vesting and exercisability of the Option shall be determined under any other
applicable provision of the Plan or the Option Agreement evidencing such
Option.

 

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(iv)  Other
Termination of Service. If the
Optionee’s Service with the Participating Company Group terminates for any
reason, except Disability or death, the Option, to the extent unexercised and
exercisable by the Optionee on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee within ninety (90) days (or such
longer period of time as determined by the Board, in its discretion) after the
date on which the Optionee’s Service terminated, but in any event no later than
the Option Expiration Date.

 

(b)  Extension
if Exercise Prevented by Law.
Notwithstanding the foregoing, if the exercise of an Option within the
applicable time periods set forth in Section 6.6(a) is prevented by the
provisions of Section 11 below, the Option shall remain exercisable until
thirty (30) days (or such longer period of time as determined by the Board, in
its discretion) after the date the Optionee is notified by the Company that the
Option is exercisable, but in any event no later than the Option Expiration
Date.

 

(c)  Extension
if Optionee Subject to Section 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.6(a) of shares acquired upon the exercise of the Option
would subject the Optionee to suit under Section 16(b) of the Exchange Act,
the Option shall remain exercisable until the earliest to occur of (i) the
tenth (10th) day following the date on which a sale of such shares by the
Optionee would no longer be subject to such suit, (ii) the one hundred and
ninetieth (190th) day after the Optionee’s termination of Service, or
(iii) the Option Expiration Date.

 

7.  Standard
Forms of Option Agreement.

 

7.1  General. Unless
otherwise provided by the Board at the time the Option is granted, an Option
shall comply with and be subject to the terms and conditions set forth in the
standard form of Option Agreement adopted by the Board concurrently with its
adoption of the Plan and as amended from time to time.

 

7.2  Authority
to Vary Terms. The
Board shall have the authority from time to time to vary the terms of any of the
standard form of Option Agreement described in this Section 7 either in
connection with the grant or amendment of an individual Option or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Option Agreement are not inconsistent with the terms of the
Plan.

 

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8.  Change
in Control.

 

8.1  Definitions.

 

(a)  An
“Ownership
Change Event” shall be
deemed to have occurred if any of the following occurs with respect to the
Company: (i) the direct or indirect sale or exchange in a single or series of
related transactions by the shareholders of the Company of more than fifty
percent (50%) of the voting stock of the Company; (ii) a merger or consolidation
in which the Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

 

(b)  A
“Change
in Control” shall
mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, a “Transaction”) wherein
the shareholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the “Transferee
Corporation(s)”), as the
case may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting stock of one or more corporations which, as a result of
the Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple sales or exchanges of
the voting stock of the Company or multiple Ownership Change Events are related,
and its determination shall be final, binding and conclusive.

 

8.2  Effect
of Change in Control on Options. In the
event of a Change in Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
“Acquiring
Corporation”), may
either assume the Company’s rights and obligations under outstanding Options or
substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation’s stock. In the event the Acquiring Corporation elects not
to assume or substitute for outstanding Options in connection with a Change in
Control, any unexercisable or unvested portions of outstanding Options and any
shares acquired upon the exercise thereof held by Optionees whose Service has
not terminated prior to such date shall be immediately exercisable and vested in
full as of the date ten (10) days prior to the date of the Change in Control.
The exercise or vesting of any Option and any shares acquired upon the exercise
thereof that was permissible solely by reason of this Section 8.2 shall be
conditioned upon the consummation of the Change in Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Change in Control nor exercised as of the date of the Change
in Control shall terminate and cease to be outstanding effective as of the date
of the Change in Control. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Change in
Control is the surviving or continuing corporation and immediately after such
Ownership Change Event less than fifty percent (50%) of the total combined
voting power of its voting stock is held by another corporation or by other
corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of
Section 1504(b) of the Code, the outstanding Options shall not terminate
unless the Board otherwise provides in its discretion.

 

11

9.  Provision
of Information.

 

Unless
not required by applicable law, at least annually, copies of the Company’s
balance sheet and income statement for the just completed fiscal year shall be
made available to each Optionee and purchaser of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to key employees whose duties in connection with the Company assure
them access to equivalent information.

10.  Nontransferability
of Options.

 

During
the lifetime of the Optionee, an Option shall be exercisable only by the
Optionee or the Optionee’s guardian or legal representative. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution.

11.  Compliance
with Securities Law.

 

The grant
of Options and the issuance of shares of Stock upon exercise of Options shall be
subject to compliance with all applicable requirements of federal, state and
foreign law with respect to such securities. Options may not be exercised if the
issuance of shares of Stock upon exercise would constitute a violation of any
applicable federal, state or foreign securities laws or other law or regulations
or the requirements of any stock exchange or market system upon which the Stock
may then be listed. In addition, no Option may be exercised unless (a) a
registration statement under the Securities Act shall at the time of exercise of
the Option be in effect with respect to the shares issuable upon exercise of the
Option or (b) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal 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. As a
condition to the exercise of any Option, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the
Company.

12

12.  Indemnification.

 

In
addition to such other rights of indemnification as they may have as members of
the Board or officers or employees of the Participating Company Group, members
of the Board and any officers or employees of the Participating Company Group to
whom authority to act for the Board or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

13.  Termination
or Amendment of Plan.

 

The Board
may terminate or amend the Plan at any time. However, subject to changes in
applicable law, regulations or rules that would permit otherwise, without the
approval of the Company’s shareholders, there shall be (a) no increase in
the maximum aggregate number of shares of Stock that may be issued under the
Plan (except by operation of the provisions of Section 4.2), (b) no
change in the class of persons eligible to receive Incentive Stock Options, and
(c) no other amendment of the Plan that would require approval of the
Company’s shareholders under any applicable law, regulation or rule. No
termination or amendment of the Plan may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such termination or amendment is required to enable an Option designated
as an Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law, regulation or rule.

14.  Shareholder
Approval.

 

The Plan
or any increase in the maximum aggregate number of shares of Stock issuable
thereunder as provided in Section 4.1 (the “Authorized
Shares”) shall
be approved by the shareholders of the Company within twelve (12) months of the
date of adoption thereof by the Board. Options granted prior to shareholder
approval of the Plan or in excess of the Authorized Shares previously approved
by the shareholders shall become exercisable no earlier than the date of
shareholder approval of the Plan or such increase in the Authorized Shares, as
the case may be.

13

IN
WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the
e-Perception, Inc. 2000 Stock Option Plan, as duly adopted by the Board on June
15, 2000, and as amended by the Board on March 26, 2002.

____________________________

Patricia
Harris, Secretary

 

14

PLAN
HISTORY

June 15,
2000  Board
adopts Plan, with an initial reserve of 2,200,000 shares.

June 15,
2000      
Stockholders
approve Plan, with an initial reserve of 2,200,000 shares.

March 26,
2002           
Board
approves an amendment to the Plan.e-PERCEPTION, INC.
                             2001 STOCK OPTION PLAN

      1. Establishment, Purpose and Term of Plan.

            1.1 Establishment. This e-Perception, Inc. 2001 Stock Option Plan
(the "Plan") was established effective as of October 11, 2001, and hereby
amended as of March ___, 2002.

            1.2 Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.

            1.3 Term of Plan. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the earlier of the date
the Plan is adopted by the Board or the date the Plan is duly approved by the
shareholders of the Company.

      2. Definitions and Construction.

            2.1 Definitions. Whenever used herein, the following terms shall
have their respective meanings set forth below:

                  (a) "Board" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).

                  (b) "Code" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

                  (c) "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

                  (d) "Company" means e-Perception, Inc., a Nevada corporation,
or any successor corporation thereto.

                  (e) "Consultant" means any person, including an advisor,
engaged by a Participating Company to render services other than as an Employee
or a Director.

                                       1
<PAGE>

                  (f) "Director" means a member of the Board or of the board of
directors of any other Participating Company.

                  (g) "Disability" means the inability of the Optionee, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of the Optionee's position with the Participating Company Group because
of the sickness or injury of the Optionee.

                  (h) "Employee" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan.

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

                  (j) "Fair Market Value" means, as of any date, the value of a
share of Stock or other property as determined by the Board, in its discretion,
or by the Company, in its discretion, if such determination is expressly
allocated to the Company herein, subject to the following:

                        (i) If, on such date, the Stock is listed on a national
or regional securities exchange or is actively traded on any other market
system, the Fair Market Value of a share of Stock shall be the closing price of
a share of Stock (or the mean of the closing bid and asked prices of a share of
Stock if the Stock is so quoted instead) as quoted on the Nasdaq National
Market, The Nasdaq SmallCap Market or such other national or regional securities
exchange or market system constituting the primary market for the Stock, as
reported in The Wall Street Journal or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the last day on which the Stock was
so traded prior to the relevant date, or such other appropriate day as shall be
determined by the Board, in its discretion. If the Stock is listed on a market
system but is not actively traded in such amounts and as frequently as the Board
deems necessary, in its sole discretion, to determine the Fair Market Value of a
share of Stock, then Board shall determine, in its sole discretion, the value of
a share of Stock.

                        (ii) If, on such date, there is no public market for the
Stock, the Fair Market Value of a share of Stock shall be as determined by the
Board in good faith without regard to any restriction other than a restriction
which, by its terms, will never lapse.

                  (k) "Incentive Stock Option" means an Option intended to be
(as set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.

                                       2
<PAGE>

                  (l) "Insider" means an officer or a Director of the Company or
any other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.

                  (m) "Nonstatutory Stock Option" means an Option not intended
to be (as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.

                  (n) "Option" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.

                  (o) "Option Agreement" means a written agreement, including
any related form of stock option grant agreement, between the Company and an
Optionee setting forth the terms, conditions and restrictions of the Option
granted to the Optionee and any shares acquired upon the exercise thereof.

                  (p) "Optionee" means a person who has been granted one or more
Options.

                  (q) "Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.

                  (r) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.

                  (s) "Participating Company Group" means, at any point in time,
all corporations collectively which are then Participating Companies.

                  (t) "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.

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

                  (v) "Service" means an Optionee's employment or service with
the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. The Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. Furthermore,
an Optionee's Service with the Participating Company Group shall not be deemed
to have terminated if the Optionee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however,
that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day
of such leave the Optionee's Service shall be deemed to have terminated unless
the Optionee's right to return to Service with the Participating Company Group
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as Service for purposes of determining vesting under the
Optionee's Option Agreement. The Optionee's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Optionee performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Optionee's Service has terminated and the effective date of such
termination.

                                       3
<PAGE>

                  (w) "Stock" means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.2.

                  (x) "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

                  (y) "Ten Percent Owner Optionee" means an Optionee who, at the
time an Option is granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

            2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

      3. Administration.

            3.1 Administration by the Board. The Plan shall be administered by
the Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option.

            3.2 Authority of Officers. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election which is the responsibility
of or which is allocated to the Company herein, provided the officer has
apparent authority with respect to such matter, right, obligation, determination
or election.

            3.3 Administration with Respect to Insiders. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

            3.4 Powers of the Board. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its discretion:

                  (a) to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;

                  (b) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;

                                       4
<PAGE>

                  (c) to determine the Fair Market Value of shares of Stock or
other property;

                  (d) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of Service with the
Participating Company Group on any of the foregoing, and (vii) all other terms,
conditions and restrictions applicable to the Option or such shares not
inconsistent with the terms of the Plan;

                  (e) to approve one or more forms of Option Agreement;

                  (f) to amend, modify, extend, cancel, renew, reprice or
otherwise adjust the exercise price of, or grant a new Option in substitution
for, any Option or to waive any restrictions or conditions applicable to any
Option or any shares acquired upon the exercise thereof;

                  (g) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of Service with the Participating Company Group;

                  (h) to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and

                  (i) to correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.

      4. Shares Subject to Plan.

            4.1 Maximum Number of Shares Issuable. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be five million four hundred thousand
(5,400,000) and shall consist of authorized but unissued or reacquired shares of
Stock or any combination thereof. If an outstanding Option for any reason
expires or is terminated or canceled or if shares of Stock are acquired upon the
exercise of an Option subject to a Company repurchase option and are repurchased
by the Company at the Optionee's exercise price, the shares of Stock allocable
to the unexercised portion of such Option or such repurchased shares of Stock
shall again be available for issuance under the Plan. Notwithstanding the
foregoing, at any such time as the offer and sale of securities pursuant to the
Plan is subject to compliance with Section 260.140.45 of Title 10 of the
California Code of Regulations ("Section 260.140.45"), the total number of
shares of Stock issuable upon the exercise of all outstanding Options (together
with options outstanding under any other stock option plan of the Company) and
the total number of shares provided for under any stock bonus or similar plan of
the Company shall not exceed thirty percent (30%) (or such other higher
percentage limitation as may be approved by the shareholders of the Company
pursuant to Section 260.140.45) of the then outstanding shares of the Company as
calculated in accordance with the conditions and exclusions of Section
260.140.45.

                                       5
<PAGE>

            4.2 Adjustments for Changes in Capital Structure. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options and in the exercise price per
share of any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 8.1) shares of another corporation
(the "New Shares"), the Board may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any
such amendment, the number of shares subject to, and the exercise price per
share of, the outstanding Options shall be adjusted in a fair and equitable
manner as determined by the Board, in its discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded down to the nearest whole number, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the stock subject to the Option. The adjustments determined by
the Board pursuant to this Section 4.2 shall be final, binding and conclusive.

      5. Eligibility and Option Limitations.

            5.1 Persons Eligible for Options. Options may be granted only to
Employees, Consultants, and Directors. For purposes of the foregoing sentence,
"Employees," "Consultants" and "Directors" shall include prospective Employees,
prospective Consultants and prospective Directors to whom Options are granted in
connection with written offers of an employment or other service relationships
with the Participating Company Group. Eligible persons may be granted more than
one (1) Option.

            5.2 Option Grant Restrictions. Any person who is not an Employee on
the effective date of the grant of an Option to such person may be granted only
a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences Service with a Participating
Company, with an exercise price determined as of such date in accordance with
Section 6.1.

            5.3 Fair Market Value Limitation. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such options which exceed such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.

                                       6
<PAGE>

      6. Terms and Conditions of Options.

            Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. No Option or purported Option shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Option
Agreement. Option Agreements may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:

            6.1 Exercise Price. The exercise price for each Option shall be
established in the discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) unless otherwise permitted by applicable law, the exercise price per
share for a Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of a share of Stock on the effective date of
grant of the Option, and (c) no Option granted to a Ten Percent Owner Optionee
shall have an exercise price per share less than one hundred ten percent (110%)
of the Fair Market Value of a share of Stock on the effective date of grant of
the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a manner
qualifying under the provisions of Section 424(a) of the Code.

            6.2 Exercise Period. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
(c) no Option granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on which such
person commences Service with a Participating Company, and (d) unless otherwise
permitted by applicable law, and with the exception of an Option granted to an
officer, Director or Consultant, no Option shall become exercisable at a rate
less than twenty percent (20%) per year over a period of five (5) years from the
effective date of grant of such Option, subject to the Optionee's continued
Service. Subject to the foregoing, unless otherwise specified by the Board in
the grant of an Option, any Option granted hereunder shall have a term of ten
(10) years from the effective date of grant of the Option.

                                       7
<PAGE>

            6.3 Payment of Exercise Price.

                  (a) Forms of Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Optionee having a Fair Market Value (as
determined by the Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state securities laws or
agreements with an underwriter for the Company) not less than the exercise
price, (iii) by the assignment of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "Cashless Exercise"), (iv) by such
other consideration as may be approved by the Board from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The Board
may at any time or from time to time, by adoption of or by amendment to the
standard forms of Option Agreement described in Section 7, or by other means,
grant Options which do not permit all of the foregoing forms of consideration to
be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

                  (b) Limitations on Forms of Consideration.

                        (i) Tender of Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Board, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.

                        (ii) Cashless Exercise. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

            6.4 Tax Withholding. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its discretion, the Company shall have the right to require the
Optionee, through payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.

                                       8
<PAGE>

            6.5 Repurchase Rights. Shares issued under the Plan may be subject
to a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its discretion at the time the
Option is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to
one or more persons as may be selected by the Company. Upon request by the
Company, each Optionee shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.

            6.6 Effect of Termination of Service.

                  (a) Option Exercisability. Subject to earlier termination of
the Option as otherwise provided herein, an Option shall be exercisable after an
Optionee's termination of Service as follows:

                        (i) Disability. If the Optionee's Service with the
Participating Company Group is terminated because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior to the
expiration of six (6) months (or such longer period of time as determined by the
Board, in its discretion) after the date on which the Optionee's Service
terminated, but in any event no later than the date of expiration of the
Option's term as set forth in the Option Agreement evidencing such Option (the
"Option Expiration Date").

                        (ii) Death. If the Optionee's Service with the
Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee's death at any time prior to the expiration of six (6)
months (or such longer period of time as determined by the Board, in its
discretion) after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date. The Optionee's Service shall
be deemed to have terminated on account of death if the Optionee dies within
thirty (30) days (or such longer period of time as determined by the Board, in
its discretion) after the Optionee's termination of Service.

                        (iii) Termination After Change in Control. The Board
may, in its discretion, provide in any Option Agreement that if the Optionee's
Service with the Participating Company Group ceases as a result of "Termination
After Change in Control" (as defined in such Option Agreement), then (1) the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or the
Optionee's guardian or legal representative) at any time prior to the expiration
of six (6) months (or such longer period of time as determined by the Board, in
its discretion) after the date on which the Optionee's Service terminated, but
in any event no later than the Option Expiration Date, and (2) the
exercisability and vesting of the Option and any shares acquired upon the
exercise thereof shall be accelerated effective as of the date on which the
Optionee's Service terminated to such extent, if any, as shall have been
determined by the Board, in its discretion, and set forth in the Option
Agreement. Notwithstanding the foregoing, if it is determined that the
provisions or operation of this Section 6.6(a)(iii) would preclude treatment of
a Change in Control as a "pooling-of-interests" for accounting purposes and
provided further that in the absence of the preceding sentence such Change in
Control would be treated as a "pooling-of-interests" for accounting purposes,
then this Section 6.6(a)(iii) shall be void ab initio, and the vesting and
exercisability of the Option shall be determined under any other applicable
provision of the Plan or the Option Agreement evidencing such Option.

                                       9
<PAGE>

                        (iv) Other Termination of Service. If the Optionee's
Service with the Participating Company Group terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within ninety (90) days (or such longer period of time
as determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.

                  (b) Extension if Exercise Prevented by Law. Notwithstanding
the foregoing, if the exercise of an Option within the applicable time periods
set forth in Section 6.6(a) is prevented by the provisions of Section 11 below,
the Option shall remain exercisable until thirty (30) days (or such longer
period of time as determined by the Board, in its discretion) after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date.

                  (c) Extension if Optionee Subject to Section 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.6(a) of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.

      7. Standard Forms of Option Agreement.

            7.1 General. Unless otherwise provided by the Board at the time the
Option is granted, an Option shall comply with and be subject to the terms and
conditions set forth in the standard form of Option Agreement adopted by the
Board concurrently with its adoption of the Plan and as amended from time to
time.

            7.2 Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of any of the standard form of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.

                                       10
<PAGE>

      8. Change in Control.

            8.1 Definitions.

                  (a) An "Ownership Change Event" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

                  (b) A "Change in Control" shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, a "Transaction")
wherein the shareholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

            8.2 Effect of Change in Control on Options. In the event of a Change
in Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring Corporation"),
may either assume the Company's rights and obligations under outstanding Options
or substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation's stock. In the event the Acquiring Corporation elects not
to assume or substitute for outstanding Options in connection with a Change in
Control, any unexercisable or unvested portions of outstanding Options and any
shares acquired upon the exercise thereof held by Optionees whose Service has
not terminated prior to such date shall be immediately exercisable and vested in
full as of the date ten (10) days prior to the date of the Change in Control.
The exercise or vesting of any Option and any shares acquired upon the exercise
thereof that was permissible solely by reason of this Section 8.2 shall be
conditioned upon the consummation of the Change in Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Change in Control nor exercised as of the date of the Change
in Control shall terminate and cease to be outstanding effective as of the date
of the Change in Control. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Change in Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its discretion.

                                       11
<PAGE>

      9. Provision of Information.

            Unless not required by applicable law, at least annually, copies of
the Company's balance sheet and income statement for the just completed fiscal
year shall be made available to each Optionee and purchaser of shares of Stock
upon the exercise of an Option. The Company shall not be required to provide
such information to key employees whose duties in connection with the Company
assure them access to equivalent information.

      10. Nontransferability of Options.

            During the lifetime of the Optionee, an Option shall be exercisable
only by the Optionee or the Optionee's guardian or legal representative. No
Option shall be assignable or transferable by the Optionee, except by will or by
the laws of descent and distribution.

      11. Compliance with Securities Law.

            The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such securities.
Options may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal 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. As a condition to the exercise of any
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

                                       12
<PAGE>

      12. Indemnification.

            In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.

      13. Termination or Amendment of Plan.

            The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's shareholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of Section 4.2),
(b) no change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would require approval of
the Company's shareholders under any applicable law, regulation or rule. No
termination or amendment of the Plan may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such termination or amendment is required to enable an Option designated
as an Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law, regulation or rule.

      14. Shareholder Approval.

            The Plan or any increase in the maximum aggregate number of shares
of Stock issuable thereunder as provided in Section 4.1 (the "Authorized
Shares") shall be approved by the shareholders of the Company within twelve (12)
months of the date of adoption thereof by the Board. Options granted prior to
shareholder approval of the Plan or in excess of the Authorized Shares
previously approved by the shareholders shall become exercisable no earlier than
the date of shareholder approval of the Plan or such increase in the Authorized
Shares, as the case may be.

                                       13
<PAGE>

            IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the e-Perception, Inc. 2001 Stock Option Plan, as duly adopted by
the Board on October 11, 2001, and as amended by the Board on March ____, 2002.

                                                 ----------------------------
                                                 Patricia Harris, Secretary

<PAGE>

                                  PLAN HISTORY

October 11,2001   Board adopts Plan, with an initial reserve of
                  5,400,000 shares.

_________, 2001   Stockholders approve Plan, with an initial reserve of
                  5,400,000 shares.

March ____, 2002  Board approves an amendment to the Plan.

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