Document:

EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of May
23, 2001 by and between VAXGEN, INC., a Delaware corporation with offices at
1000 Marina Blvd., Suite 200, Brisbane, California 94005 (the "Company"), and
each of the entities listed under "Purchasers" on the signature page hereto
(each a "Purchaser" and collectively the "Purchasers"), each with offices at the
address listed beside such Purchaser's name on Schedule I to the Purchase
Agreement (as defined below).

                              W I T N E S S E T H:

     WHEREAS, pursuant to that certain Securities Purchase Agreement dated as of
the date hereof by and between the Company and the Purchasers (the "Purchase
Agreement"), the Company has agreed to sell and issue to the Purchasers, and the
Purchasers have agreed to purchase from the Company, (i) an aggregate of 20,000
shares of the Company's Series A 6% Cumulative Convertible Preferred Stock
("Preferred Shares"), which are convertible into shares ("Common Shares") of the
Company's common stock, $0.01 par value ("Common Stock"), and (ii) 5-year
warrants (the "Warrants") to purchase up to 297,177 shares of Common Stock (the
"Warrant Shares"), all as more fully specified and subject to the terms and
conditions set forth in the Purchase Agreement; and

     WHEREAS, pursuant to the terms of, and in partial consideration for the
Purchasers' agreement to enter into, the Purchase Agreement, the Company has
agreed to provide the Purchasers with certain registration rights with respect
to the Common Shares and Warrant Shares, as well as certain other rights and
remedies as set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Purchase Agreement and
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:

     1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement and/or
the Warrants. As used in this Agreement, the following terms shall have the
following respective meanings:

     "Closing" and "Closing Date" shall have the meanings ascribed to such terms
in the Purchase Agreement.

     "Commission" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

     "Effectiveness Deadline" has the meaning specified in Section 2(a) herein.

     "Fair Market Price" shall have the meaning ascribed to such term in the
Warrants.

     "Fair Market Value" shall have the meaning ascribed to such term in the
Warrants.

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     "Holder" and "Holders" shall mean the Purchaser or the Purchasers,
respectively, and any transferee of Registrable Securities, Preferred Shares
and/or Warrants which have not been sold to the public to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement.

     "Interfering Events" shall have the meaning set forth in Section 2(b).

     "Monthly Delay Payment" shall have the meaning specified in Section
2(b)(i)(B).

     "Premium Redemption Price" shall mean the following:

          a. as to the Preferred Shares, the greater of (x) 120% of the
Liquidation Value (as defined in the Certificate) of all such Preferred Shares
being sold to the Company, or (y) 120% of the dollar amount which is the product
of (i) the number of Common Shares issuable upon conversion of the Preferred
Shares to be redeemed (without regard to any limitation on beneficial ownership
contained therein or in the Purchase Agreement) multiplied by (ii) the highest
Common Stock closing price on the Principal Market (or other Approved Market)
between and including the date of the event triggering the right of redemption
and the trading day immediately prior to the actual redemption of such Preferred
Shares, in each case payable in cash;

          b. as to the Common Shares and Warrant Shares, the greater of (x) 120%
of the dollar amount which is the product of (i) the number of shares to be
redeemed, multiplied by (ii) the highest Common Stock closing price on the
Principal Market (or other Approved Market) between and including date of the
event triggering the right of redemption and the trading day immediately prior
to the actual redemption of such shares, or (y) 120% of the Liquidation Value of
the Preferred Shares which were converted into the Common Shares being redeemed
or 120% of the aggregate exercise price for the Warrants which were exercised
for the Warrant Shares being redeemed, as the case may be, in each case payable
in cash; and

          c. as to the Warrants, 120% of the dollar amount which is the product
of (i) the number of Warrant Shares issuable to the Holder upon exercise thereof
(assuming full exercise without regard to any beneficial ownership limitations
set forth therein or in the Purchase Agreement) multiplied by (ii) the
difference between (A) the highest Common Stock closing price on the Principal
Market (or other Approved Market) between and including date of the event
triggering the right of redemption and the trading day immediately prior to the
actual redemption of such shares, less (B) the exercise price under such
Warrants, in each case payable in cash.

     "Registrable Securities" shall mean: (i) the Common Shares and the Warrant
Shares (without regard to any limitations on beneficial ownership contained in
the Certificate or Warrants) or other securities issued or issuable to each
Holder or its permitted transferee or designee (a) upon conversion of the
Preferred Shares and/or upon exercise of the Warrants, or (b) upon any
distribution with respect to, any exchange for or any replacement of such
Preferred Shares or Warrants or (c) upon any conversion, exercise or exchange of
any securities issued in connection with any such distribution, exchange or
replacement; (ii) securities issued or issuable upon any stock split, stock
dividend, recapitalization or similar event with respect to the

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foregoing; and (iii) any other security issued as a dividend or other
distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses. The term "Registrable
Securities" shall not include, in all cases, the Preferred Shares or Warrants
(or any convertible securities issued in replacement thereof) or any Registrable
Securities transferred by a person in a private transaction in which the
transferor's rights under this Agreement are not assigned, or any shares of
Common Stock which have been sold to the public either pursuant to a
registration statement or Rule 144 under the Securities Act, provided that the
foregoing shall not affect in any way any rights or obligations hereunder with
respect to Registrable Securities after any such sale, including without
limitation the indemnification and contribution provisions hereunder.

     The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

     "Registration Expenses" shall mean all expenses to be incurred by the
Company in effecting any registration pursuant to this Agreement, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, "blue sky" fees and expenses,
reasonable fees and disbursements of counsel to Holders (using a single counsel
selected by a majority in interest of the Holders) for a "due diligence"
examination of the Company and review of the Registration Statement and related
documents not to exceed $7,500, and the expense of any special audits incident
to or required by any such registration, (but shall not include Selling Expenses
and the compensation of regular employees of the Company, which shall be paid in
any event by the Company).

     "Registration Statement" shall have the meaning set forth in Section 2(a)
herein.

     "Registration Period" shall have the meaning specified in Section 5 herein.

     "Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.

     "Securities" means the Registrable Securities, the Preferred Shares and the
Warrants.

     "Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.

     "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities, and all fees and disbursements of counsel for Holders not included
within "Registration Expenses".

     "Trading Day" shall mean (x) if the Common Stock is listed on the New York
Stock Exchange or the American Stock Exchange, a day on which there is trading
on such stock exchange, or (y) if the Common Stock is not listed on either of
such stock exchanges but sale prices of the Common Stock are reported on an
automated quotation system, a day on which trading is reported on the principal
automated quotation system on which sales of the Common Stock are reported, or
(z) if the foregoing provisions are inapplicable, a day on which quotations are
reported by National Quotation Bureau Incorporated.

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     2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including, without
limitation, filing post-effective amendments, appropriate qualification under
applicable "blue sky" or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as would permit or
facilitate the sale and distribution of all the Registrable Securities in the
manner (including manner of sale) reasonably requested by the Holder. Such best
efforts by the Company shall include the following:

          a. The Company shall, as soon as reasonably practicable after the
Closing Date:

               i. But in any event within 45 days thereafter, prepare and file a
registration statement with the Commission on Form S-3, under the Securities Act
(or in the event that the Company is ineligible to use such form, such other
form as the Company is eligible to use under the Securities Act) covering the
Registrable Securities and naming each Holder as a selling stockholder
thereunder (and not as an "underwriter") (such registration statement, including
any amendments or supplements thereto and prospectuses contained therein, is
referred to herein as the "Registration Statement"), which Registration
Statement, to the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable to prevent dilution resulting from stock splits,
stock dividends or similar events; provided, however, that the Holders shall not
be identified as "underwriters" in the Registration Statement with respect to
the sale of Registrable Securities. The number of shares of Common Stock
initially included in such Registration Statement shall be no less than 175% of
the aggregate number of shares of Common Stock issuable upon full conversion of
the Preferred Stock (without regard to any beneficial ownership limitations set
forth therein), plus 175% of the number of shares of Common Stock issuable upon
exercise of the Warrants in full (without regard to any beneficial ownership
limitations set forth therein). Thereafter, the Company shall use its best
efforts to cause such Registration Statement to be declared effective as soon as
reasonably practicable, and in any event prior to the earlier of (i) 120
calendar days following the Closing Date or (ii) 5 Trading Days after SEC
clearance to request acceleration of effectiveness (the "Effectiveness
Deadline"). The Company shall provide Holders and a single firm of legal counsel
designated by a majority in interest of the Holders reasonable opportunity to
review any such Registration Statement or amendment or supplement thereto prior
to filing. Without limiting the foregoing, the Company will promptly respond to
all SEC comments, inquiries and requests, and shall as soon as reasonably
practicable request acceleration of effectiveness of the Registration Statement.
If the Company is not initially eligible to use Form S-3, it will, at the
request of a majority-in-interest of the holders of Registrable Securities,
amend its Form S-1 to a Form S-3 at such time that it becomes eligible to do so.

               ii. Prepare and file with the SEC such amendments and supplements
to such Registration Statement and the prospectus used in connection with such
Registration Statement, or prepare and file such additional registration
statements, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement in accordance with the intended methods of disposition by
the seller thereof as set forth in the Registration Statement (and the
disposition of all

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Registrable Securities as necessary to comply with this Agreement) and notify
the Holders of the filing and effectiveness of such Registration Statement and
any amendments or supplements thereto. The Company shall promptly forward to the
Holders' counsel a copy of any correspondence or other written communications
with the SEC or other regulatory authority, relating to the Registration
Statement or the Registrable Securities.

               iii. After the registration, furnish to each Holder such number
of copies of a current prospectus conforming with the requirements of the
Securities Act and other documents incident thereto, including any amendment or
supplement to the prospectus, as such Holder may from time to time reasonably
request.

               iv. Use its best efforts to register and qualify the securities
covered by such Registration Statement under applicable "blue sky" or other
state securities laws (except in any such jurisdiction where the registration
and qualification of the securities covered by such Registration Statement is
exempt under the laws and regulations of such jurisdiction); provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such jurisdictions.

               v. Notify each seller of Registrable Securities at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act of the happening of any event (but not the substance or details of any such
event) as a result of which the prospectus (including any supplements thereto or
thereof and any information incorporated or deemed to be incorporated by
reference therein) included in such Registration Statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and, pursuant to Section
2(f) below and subject to Section 2(g) below, use its best efforts to promptly
update and/or correct such prospectus.

               vi. Notify each seller of Registrable Securities immediately of
the issuance by the Commission or any state securities commission or agency of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. Subject to Section 2(g) below,
the Company shall use its best efforts to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the earliest
possible time.

               vii. Permit a single firm of counsel, designated as Holders'
counsel by the Holders of a majority of the Registrable Securities included in
the Registration Statement, to review the Registration Statement and all
amendments and supplements thereto within a reasonable period of time prior to
each filing, and shall not file any document in a form to which such counsel
reasonably objects.

               viii. Use its best efforts to cause the Registrable Securities
registered by the Registration Statement to be listed on each securities
exchange and/or markets on which the Common Stock is then listed and/or quoted
and prepare and file any required filings with the National Association of
Securities Dealers, Inc. or any exchange or market where the Common Stock is
then traded.

<PAGE>

               ix. If applicable, take all steps necessary to enable Holders to
avail themselves of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Securities Act.

          b. Set forth below in this Section 2(b) are (I) events that may arise
that the Purchasers consider will interfere with the full enjoyment of their
rights under the Purchase Agreement and this Agreement (the "Interfering
Events"), and (II) certain remedies applicable in each of these events.

     Paragraphs (i) through (v) of this Section 2(b) describe the Interfering
Events, provide a remedy to the Purchasers if an Interfering Event occurs and
provide that the Purchasers may require that the Company redeem outstanding
Securities at a specified price if certain Interfering Events are not timely
cured.

     Paragraph (vi) provides, inter alia, that if payments required as the
remedy in the case of certain of the Interfering Events are not paid when due,
the Company may be required by the Purchasers to redeem outstanding Securities
at a specified price.

     The preceding paragraphs in this Section 2(b) are meant to serve only as an
introduction to this Section 2(b), are for convenience only, and are not to be
considered in applying, construing or interpreting this Section 2(b).

               i. Delay in Effectiveness of Registration Statement.

                    (a) In the event that the Registration Statement has not
been declared effective by the Effectiveness Deadline, then the Company shall
pay to each Holder a Monthly Delay Payment (as defined below) on the first
business day following the Effectiveness Deadline. In addition, the Company
shall pay to each Holder a Monthly Delay Payment for each 30 day period (or
portion thereof) thereafter during which the Registration Statement has not been
declared effective. Such Monthly Delay Payments shall not in the aggregate
exceed the maximum percentage permitted by law. In the event that the
Registration Statement has not been declared effective within 150 days following
the Effective Deadline, then each Holder, may at its option, cause the Company
to redeem the Securities held by such Holder, at the Premium Redemption Price.

                    (b) As used in this Agreement, a "Monthly Delay Payment"
shall be a cash payment equal to (x) 1.5% of the aggregate Purchase Price paid
by a Holder, payable on the date on which the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency has not been
remedied, and (y) 2% of the sum of the aggregate Purchase Price paid for the
Preferred Shares then held by such Holder and the aggregate Fair Market Price of
the Registrable Securities then held by such Holder (with Warrants considered on
an as-exercised basis), payable for each 30-day period thereafter (or portion
thereof) that the specified condition in this Section 2(b) has not been
fulfilled or the specified deficiency has not been remedied. Payment of the
Monthly Delay Payments, and any Premium Redemption Price payment due pursuant to
the other provisions of this Section 2(b), shall be due and payable from the
Company to such Holder within 5 business days of demand therefor. Without
limiting the foregoing, if payment in immediately available funds of the Premium
Redemption Price is not

<PAGE>

made within such 5 business day period, the Holder may revoke and withdraw in
whole or in part its election to cause the Company to make such mandatory
purchase at any time prior to its receipt of such cash, without prejudice to its
ability to elect to receive that particular or other Premium Redemption Price
payments in the future.

                    (c) Notwithstanding anything herein to the contrary, in the
event any delay described hereunder entitles the Holders to any Monthly Delay
Payments and/or redemption rights set forth in this Section 2(b), the number of
days constituting such delay shall exclude any days in which such delay was
caused solely by the Holders as a result of an action by the Holders to
restrain, enjoin, or otherwise delay any registration.

               ii. No Listing; Premium Price Redemption for Delisting of Class
of Shares.

                    (a) In the event that the Company fails, refuses or is
unable to cause the Registrable Securities covered by the Registration Statement
to be listed and/or quoted, as the case may be, with the Approved Market and
each other securities exchange and market on which the Common Stock is then
traded at all times during the Registration Period, then the Company shall make
to each Holder a Monthly Delay Payment on the first business day following any
such delisting or failure to be quoted or suspension (except to the extent such
failure is solely due to lack of registration which is covered by Section
2(b)(i) above). In addition, the Company shall pay to each Holder a Monthly
Delay Payment for each 30 day period (or portion thereof) during the
Registration Period from and after such failure, refusal or inability or
suspension until the Registrable Securities are so listed and/or quoted and
traded on such Approved Markets (except to the extent such failure is solely due
to lack of registration which is covered by Section 2(b)(i) above).

                    (b) In the event that shares of Common Stock of the Company
are delisted from or not quoted on, or trading in the Common Stock is otherwise
suspended on, an Approved Market at any time following the Closing Date and
prior to the end of the Registration Period, and remains so delisted, not quoted
or suspended for 5 consecutive Trading Days, then at the option of each Holder
and to the extent such Holder so elects, the Company shall on 2 business days
notice either (1) make to such Holder a Monthly Delay Payment for each 30 day
period (or portion thereof) that the shares are delisted, not quoted or
suspended or (2) redeem the Securities held by such Holder, in whole or in part,
at a redemption price equal to the Premium Redemption Price; provided, however,
that such Holder may revoke such request at any time prior to receipt of such
Monthly Delay Payments or Premium Redemption Price, as the case may be.

               iii. Blackout Periods. In the event any Holder is unable to sell
Registrable Securities under the Registration Statement for more than (A) 12
consecutive Trading Days or (B) an aggregate of 25 Trading Days in any 12 month
period ("Suspension Grace Period"), including without limitation by reason of
the Company's failure to deliver unlegended shares as required by (and within
the time frames required by), and in accordance with the provisions of, the
Certificate, Warrants, this Agreement or the Purchase Agreement, any suspension
or stop order with respect to the Registration Statement or the fact that an
event has occurred as a result of which the prospectus (including any
supplements thereto) included in such

<PAGE>

Registration Statement then in effect includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, or the number of shares of Common Stock covered by
the Registration Statement is insufficient at such time to make such sales (any
of the foregoing, a "Blackout"), then the Company shall make to each Holder a
Monthly Delay Payment on the first business day following any such Blackout
after the Suspension Grace Period. In addition, the Company shall pay to each
Holder a Monthly Delay Payment for each 30 day period (or portion thereof) that
there exists a Blackout from and after the expiration of the Suspension Grace
Period. In addition to such Monthly Delay Payments, in the event there exists a
Blackout for more than 5 days after any Suspension Grace Period, each Holder
shall have the right but not the obligation to elect to have the Company redeem
its Securities at a price equal to the Premium Redemption Price (and no
additional Monthly Delay Payments shall accrue after such redemption).

               iv. Redemption for Conversion/Exercise Deficiency. In the event
that (x) the Company does not have a sufficient number of shares of Common Stock
available to satisfy the Company's obligations to any Holder upon conversion of
Preferred Shares or receipt of a notice of exercise of a Warrant from a
Purchaser, (y) after June 1, 2001 the Company does not have a sufficient number
of authorized and unissued shares of Common Stock available at all times to
effect full conversion of the Preferred Shares and full exercise of the Warrants
(without regard to any limitations on beneficial ownership), or (z) the Company
is otherwise unable or unwilling for any reason to issue unlegended Common Stock
as required by (and within the time frames required by), and in accordance with
the provisions of, the Certificate, Warrants, this Agreement or the Purchase
Agreement (each, a "Conversion/Exercise Deficiency"), then:

                    (a) The Company shall provide to each Holder a Monthly Delay
Payment on the first business day following any such Conversion/Exercise
Deficiency; in addition, the Company shall pay to each Holder a Monthly Delay
Payment for each 30-day period (or portion thereof) thereafter until such
Conversion/Exercise Deficiency has been remedied in full; and

                    (b) At any time seven days after the commencement of the
running of the first 30-day period described above in clause (A) of this
paragraph (iv), at the request of any Holder, the Company promptly shall
purchase from such Holder, for the Premium Redemption Price and on the terms set
forth in Section 2(b)(i)(B) above, any or all outstanding Securities.

                    (c) The Holder shall have the right to withdraw any request
for redemption hereunder at any time prior to its receipt of the Mandatory
Repurchase Price.

               v. Additional Interfering Events. In the event that:

          (a) the Company fails, after thirty (30) days written notice has been
          received by the Company, to comply with any material provision in the
          Transaction Documents (as defined in the Purchase Agreement);

<PAGE>

          (b) there is a material breach by the Company of any representations
          or warranties contained in the Transaction Documents; or

               (c) the Company pursuant to or within the meaning of any
               Bankruptcy Law: (1) commences a voluntary case; (2) consents to
               the entry of an order for relief against it in an involuntary
               case; (3) consents to the appointment of a Custodian of it or for
               all or substantially all of its property; (4) makes a general
               assignment for the benefit of its creditors; or (5) makes a
               general assignment for the benefit of its creditors; or (6)
               admits in writing that it is generally unable to pay its debts as
               the same become due; or (7) a court of competent jurisdiction
               enters an order or decree under any Bankruptcy Law that: (I) is
               for relief against the Company in an involuntary case; (II)
               appoints a Custodian of the Company or for all or substantially
               all of its property; or (III) order the liquidation of the
               Company or any subsidiary, and such order or decree remains
               unstayed and in effect for ninety (90) days. The Term "Bankruptcy
               Law" means Title 11, U.S. Code, or any similar Federal or State
               law for the relief of debtors. The term "Custodian" means any
               receiver, trustee, assignee, liquidator or similar official under
               any Bankruptcy Law;

     then, each Holder, shall at its option, have the right to cause the Company
     to redeem its Securities at the Premium Redemption Price.

               vi. Premium Redemption Price for Defaults.

                    (a) The Company acknowledges that any failure, refusal or
inability by the Company to perform the obligations described in the foregoing
paragraphs (i) through (iv) will cause the Holders to suffer damages in an
amount that will be difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Registrable Securities and the
additional investment risk in holding the Registrable Securities. Accordingly,
the parties agree, after consulting with counsel, that it is appropriate to
include in this Agreement the foregoing provisions for Monthly Delay Payments
and mandatory redemptions in order to compensate the Holders for such damages.
The parties acknowledge and agree that the Monthly Delay Payments and mandatory
redemptions set forth above represent the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such payments and
mandatory redemptions are reasonable and will not constitute a penalty.

                    (b) In the event that the Company fails to pay any Monthly
Delay Payment due within 10 calendar days of demand therefor, each Holder shall
have the right to sell to the Company any or all of its Securities at the
Premium Redemption Price on the terms set forth in Section 2(b)(i)(B) above.

               vii. Cumulative Remedies. Each Monthly Delay Payment triggered by
an Interfering Event provided for in the foregoing paragraphs (i) through (v)
shall be in addition to each other Monthly Delay Payment triggered by another
Interfering Event; provided, however,

<PAGE>

that in no event shall the Company be obligated to make to any Holder Monthly
Delay Payments in an aggregate amount greater than 3% of the aggregate Purchase
Price for any 30 day period (or portion thereof). The Monthly Delay Payments and
mandatory redemptions provided for above are in addition to and not in lieu or
limitation of any other rights the Holders may have at law, in equity or under
the terms of the Transaction Documents including without limitation the right to
specific performance. Each Holder shall be entitled to specific performance of
any and all obligations of the Company in connection with the registration
rights of the Holders hereunder.

          c. If the Holder(s) intend to distribute the Registrable Securities by
means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by investment bankers reasonably
satisfactory to the Company.

          d. The Company shall enter into such customary agreements for
secondary offerings (including without limitation a customary underwriting
agreement with the underwriter or underwriters, if any, and including without
limitation such representations and warranties to the Holders and the
underwriter or underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in secondary offerings, and
including without limitation customary indemnification and contribution
provisions to and from the underwriters and procedures for secondary
underwritten offerings), provided such agreements contain reasonable or
customary provisions, and take all such other reasonable actions reasonably
requested by the Holders in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities. In the event that the
offering in which the Registrable Securities are to be sold is deemed to be an
underwritten offering or a Purchaser selling Registrable Securities is deemed to
be an underwriter, the Company shall at the request of any Holder, furnish on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registrations pursuant to this Agreement or, if such
securities are not being sold through underwriters, on the date the
registrations statement with respect to such securities becomes effective, and
on all other dates as same would customarily be given in continuous underwritten
offers such as those contemplated herein, (i) an opinion, dated each such date,
of the independent counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering and reasonably satisfactory to a majority of
interest of the Holders, addressed to the underwriters, if any, and to the
Holders selling Registrable Securities, (ii) a "comfort" letter, dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to a majority-in-interest of the Holders, addressed to the
underwriters, if any, and to the Holders selling Registrable Securities, and
(iii) such other documents as are customarily given, in the form and substance
customarily given, in such underwritten offerings.

          e. The Company shall make available for inspection by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate

<PAGE>

documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with such
Registration Statement, provided that such parties agree to keep such
information confidential. The Company shall not be required to disclose any
confidential information unless and until such party or parties shall have
entered into confidentiality agreements (in form and substance reasonably
satisfactory to the Company) with the Company with respect thereto.

          f. The Company shall file a Registration Statement with respect to any
newly authorized and/or reserved shares representing Registrable Securities that
are not covered by an existing Registration Statement within twenty (20)
business days of any shareholders meeting authorizing or reserving same and
shall use its best efforts to cause such Registration Statement to become
effective within ninety (90) days of such shareholders meeting. If the Holders
become entitled, pursuant to an event described in clause (iii) of the
definition of Registrable Securities, to receive any securities in respect of
Registrable Securities that were already included in a Registration Statement,
subsequent to the date such Registration Statement is declared effective, and
the Company is unable under the securities laws to add such securities to the
then effective Registration Statement, the Company shall promptly file, in
accordance with the procedures set forth herein, an additional Registration
Statement with respect to such newly Registrable Securities. The Company shall
use its best efforts to (i) cause any such additional Registration Statement,
when filed, to become effective under the Securities Act, and (ii) keep such
additional Registration Statement effective during the period described in
Section 5 below. All of the registration rights and remedies under this
Agreement shall apply to the registration of such newly reserved shares and such
new Registrable Securities, including without limitation the provisions
providing for Monthly Delay Payments contained herein.

          g. Delay Period. Subject to Section 2(b)(iii) above, if, at any time
prior to the expiration of the Registration Period (as defined below), in the
good faith reasonable judgment of the Company's Board of Directors, the
disposition of Registrable Securities would require the premature disclosure of
material non-public information which may reasonably be expected to have a
material adverse effect on the Company, then the Company shall not be required
to amend or supplement the prospectus included in the Registration Statement for
a period (a "Disclosure Delay Period") expiring upon the earlier to occur of (i)
the date on which such material information is disclosed to the public or ceases
to be material or (ii) up to 10 consecutive trading days after the date on which
the Company provides a notice to the Purchasers under Section 2(a) hereof
stating that the failure to disclose such non-public information causes the
prospectus included in the Registration Statement, as then in effect, to include
an untrue statement of a material fact or to omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (each, a "Disclosure Delay Period Notice"). For the avoidance of
doubt, in no event shall a Disclosure Delay Period exceed the permitted
Suspension Grace Period. The Company will give prompt written notice, in the
manner prescribed by Section 14 hereof, to the Purchasers of each Disclosure
Delay Period. If practicable, such notice shall estimate the duration of such
Disclosure Delay Period. Each Purchaser agrees that, upon receipt of a
Disclosure Delay Period Notice prior to Purchaser's disposition of all such
Registrable Securities, Purchaser will forthwith discontinue disposition of such
Registrable Securities pursuant to the Registration Statement, and will not

<PAGE>

deliver any prospectus forming a part thereof in connection with any sale of
such Registrable Securities until the expiration of such Disclosure Delay
Period.

     3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.

     4. Registration on Form S-3; Other Forms. The Company shall use its best
efforts to qualify for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act.

     5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will, subject to Sections
2(b)(iii) and 2(g), use its best efforts to keep such registration effective at
all times during the period ("Registration Period") commencing on the earlier of
the effective date of the Registration Statement or the Effectiveness Deadline
and continuing thereafter until the later to occur of (a) the date on which
sales are permitted of all Registrable Securities without registration under
Rule 144(k) (provided that the Company's transfer agent has accepted an
instruction from the Company to such effect and assuming there is no cashless
exercise of the Warrants) or (b) the earlier of the date on which (i) there are
no longer any Preferred Shares or Warrants outstanding and all Registrable
Securities have been sold pursuant to the Registration Statement or Rule 144,
and (ii) the fifth (5th) anniversary of the Closing Date.

     6. Indemnification.

          a. The Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors and partners, and each person controlling each
Holder, within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors and partners, and
each person controlling such Holder, each such underwriter, and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by such

<PAGE>

Holder or underwriter and stated to be specifically for use therein. The
indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).

          b. Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s), against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company and such other
Holder(s) and their directors, officers and partners, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).

          c. Procedure. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be

<PAGE>

reasonably required in connection with the defense of such claim and litigation
resulting therefrom.

     7. Contribution. If the indemnification provided for in Section 6 herein is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein (other than by reason of the exceptions
provided therein), then each such Indemnifying Party, in lieu of indemnifying
each of such Indemnified Parties, shall contribute to the amount paid or payable
by each such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.

     In no event shall the obligation of any Indemnifying Party to contribute
under this Section 7 exceed the amount that such Indemnifying Party would have
been obligated to pay by way of indemnification if the indemnification provided
for under Section 6(a) or 6(b) hereof had been available under the
circumstances.

     The Company and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

     8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement or the Purchase Agreement or any
underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.

<PAGE>

     9. Information by Holders. Each Holder shall reasonably promptly furnish to
the Company such information regarding such Holder and the distribution and/or
sale proposed by such Holder as the Company may reasonably request in writing
and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement. The intended method
or methods of disposition and/or sale (Plan of Distribution) of such securities
as so provided by such Purchaser shall be included without alteration in the
Registration Statement covering the Registrable Securities and shall not be
changed without written consent of such Holder, except that such Holder may not
require an intended method of disposition which violates applicable securities
law.

     10. Nasdaq Limit on Stock Issuances. Section 3.14 of the Purchase Agreement
shall govern limits imposed by Nasdaq rules on the issuance of Common Stock.

     11. Replacement Certificates. The certificate(s) representing the
Registrable Securities held by the Purchaser (or then Holder) may be exchanged
by the Purchaser (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Registrable Securities, as reasonably requested by the Purchaser (or such
Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.

     12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchasers by
the Company under this Agreement to cause the Company to register Registrable
Securities and all other rights granted to the Purchasers hereunder may be
transferred or assigned (in whole or in part) by a Holder only to a transferee
or assignee of not less than 1,000 shares of Registrable Securities (or the
equivalent amount of Preferred Shares or Warrants on an as-converted,
as-exercised basis) (subject to adjustments for stock splits, stock dividends,
reverse stock splits and the like), provided in each case that the Company is
given written notice by such Purchaser at the time of or within a reasonable
time after the transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned; and provided further that
the transferee or assignee of such rights agrees in writing to be bound by the
provisions of this Agreement.

     13. Miscellaneous.

          a. Remedies. The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall each be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.

          b. Jurisdiction. THE COMPANY AND EACH OF THE PURCHASERS (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE NEW YORK STATE COURTS AND OTHER

<PAGE>

COURTS OF THE UNITED STATES SITTING IN NEW YORK COUNTY, NEW YORK FOR THE
PURPOSES OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND (II) HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER. THE COMPANY AND EACH OF THE PURCHASERS CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH
PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND
NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

          c. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by facsimile, mail or personal delivery
and shall be effective upon actual receipt of such notice. The addresses for
such communications shall be:

             to the Company:

                    VaxGen, Inc.
                    1000 Marina Blvd., Suite 200
                    Brisbane, California 94005
                    Telephone: (650) 624-1000
                    Facsimile: 650-624-1007
                    Attention: Carter A. Lee

                    with a copy to:

                    Gray Cary Ware & Freidenrich, LLP
                    999 Third Avenue, Suite 4000
                    Seattle, Washington 98104-4099
                    Telephone: (206) 839-4800
                    Facsimile: (206) 839-4801
                    Attention: John M. Steel

             to the Purchasers:

                    To each Purchaser at the address and/or fax number set forth
                    on Schedule I of the Purchase Agreement

                    with copies to:

                    Kleinberg, Kaplan, Wolff & Cohen, P.C.
                    551 Fifth Avenue
                    New York, New York 10176
                    Telephone: (212) 986-6000
                    Facsimile: (212) 986-8866
                    Attention: Peter J. Weisman, Esq.

<PAGE>

     Any party hereto may from time to time change its address for notices by
giving at least 10 days' written notice of such changed address to the other
parties hereto.

          d. Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.

          e. Waivers. No waiver by any party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Purchaser contained herein shall survive the
Closing.

          f. Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.

          g. Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of any Purchaser without its
express written approval, unless and until the Company believes such disclosure
is required by law or applicable regulation, and then only to the extent of such
requirement. The Company agrees to deliver a copy of any public announcement
regarding the matters covered by this Agreement or any agreement or document
executed herewith to each Purchaser and any public announcement including the
name of a Purchaser to such Purchaser, prior to the publication of such
announcements.

          h. Entire Agreement, Waiver. This Agreement, together with the
Purchase Agreement, the Warrants and the agreements and documents contemplated
hereby and thereby, contains the entire understanding and agreement of the
parties. Neither this Agreement nor any term hereof may amended, modified,
waived, discharged or terminated, except by a written instrument signed by the
Company and the holders of at least 66-2/3% percent of the Registrable
Securities, on an as-converted, as-exercised basis, and any such amendment,
modification, waiver, discharge or termination shall be binding on all the
Holders, but in no event shall the obligation of any Holder hereunder be
materially increased, except upon the written consent of such Holder.

          i. Governing Law. THIS AGREEMENT AND THE VALIDITY AND PERFORMANCE OF
THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED
AND TO BE PERFORMED ENTIRELY IN SUCH STATE.

<PAGE>

          j. Severability. The parties acknowledge and agree that the Purchasers
are not agents, affiliates or partners of each other, that all representations,
warranties, covenants and agreements of the Purchasers hereunder are several and
not joint, that no Purchaser shall have any responsibility or liability for the
representations, warrants, agreements, acts or omissions of any other Purchaser,
and that any rights granted to "Purchasers" hereunder shall be enforceable by
each Purchaser hereunder.

          k. Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.

          l. Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.

                       * * * Signature page follows * * *

<PAGE>

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

                                            COMPANY:

                                            VAXGEN, INC.,

                                            By:________________________________
                                               Name:
                                               Title:

                                            PURCHASERS:

                                            HALIFAX FUND, L.P.

                                            By:________________________________
                                               Name:
                                               Title:

                                            SOCIETE GENERALE:

                                            By:________________________________
                                               Name:
                                               Title:

                                            SDS MERCHANT FUND, L.P.:

                                            By:________________________________
                                               Name:
                                               Title:

<PAGE>

                                            VELOCITY INVESTMENT PARTNERS LTD.:

                                            By:________________________________
                                               Name:
                                               Title:

                 Signature page to Registration Rights Agreement<PAGE>   1
                                                                     EXHIBIT 4.1

                              CONNETICS CORPORATION

                       INTERNATIONAL STOCK INCENTIVE PLAN

        1. Purposes of the Plan. The purposes of this International Stock
Incentive Plan are to attract and retain the best available personnel, to
provide additional incentive to Employees, Directors and Consultants and to
promote the success of the Company's business internationally.

        2. Definitions. As used in this Plan, the following definitions shall
apply:

           (a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.

           (b) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any jurisdiction other than the United States applicable to Awards granted to
residents in such jurisdictions.

           (c) "Award" means the grant of an Option or Restricted Stock under
the Plan.

           (d) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.

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

           (f) "Code" means the United States Internal Revenue Code of 1986, as
amended.

           (g) "Committee" means any committee appointed by the Board to
administer the Plan.

           (h) "Common Stock" means the common stock of the Company.

           (i) "Company" means Connetics Corporation, a Delaware corporation.

           (j) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity, whether
compensated for such services or not.

           (k) "Continuous Service" means that the provision of services to the
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entity, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as

                                       1
<PAGE>   2

long as the individual remains in the service of the Company or a Related Entity
in any capacity of Employee, Director or Consultant (except as otherwise
provided in the Award Agreement). An approved leave of absence shall include
sick leave, military leave, or any other authorized personal leave including any
authorized leave (such as annual leave and long service leave) in any
jurisdiction in which the Grantee resides.

           (l) "Corporate Transaction" means any of the following transactions:

               (i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

               (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the company's subsidiary corporations) to a person or persons that are not
Related Entities;

               (iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger; and

               (iv) acquisition by any person or related group of persons (other
than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities,

but excluding any such transaction that the Administrator determines shall not
be a Corporate Transaction.

           (m) "Director" means a member of the board of directors of any
Related Entity.

           (n) "Disability" means a Grantee would qualify for benefit payments
under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered
by such policy. If the Company or the Related Entity to which the Grantee
provides service does not have a long-term disability plan in place,
"Disability" means that a Grantee is permanently unable to carry out the
responsibilities and functions of the position held by the Grantee by reason of
any medically determinable physical or mental impairment. A Grantee will not be
considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its discretion.

           (o) "Employee" means any person, including an Officer or Director,
who is an employee of the Company or any Related Entity. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

                                       2
<PAGE>   3

           (p) "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.

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

           (i) Where there exists a public market for the Common Stock, the Fair
        Market Value shall be:

                      (A) the closing sales price for a Share for the last
           market trading day prior to the time of the determination (or, if no
           closing price was reported on that date, the closing bid) on the
           stock exchange determined by the Administrator to be the primary
           market for the Common Stock or the Nasdaq National Market, whichever
           is applicable; or

                      (B) if the Common Stock is regularly quoted by a
           recognized securities dealer but selling prices are not reported, the
           mean between the high bid and low asked prices of a Share on the last
           market trading day prior to the time of the determination (or, if no
           such prices were reported on that date, on the last date on which
           such prices were reported);

        in each case, as reported in The Wall Street Journal or such other
        source as the Administrator deems reliable; or

           (ii) In the absence of an established market for the Common
        Stock of the type described in (i), above, the Fair Market Value of the
        Common Stock shall be determined by the Administrator in good faith.

           (r) "Grantee" means an Employee, Director or Consultant who receives
an Award pursuant to an Award Agreement under the Plan.

           (s) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.

           (t) "Officer" means a person who is an officer of a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated under the Exchange Act.

           (u) "Option" means an option to purchase Shares pursuant to an Award
Agreement granted under the Plan and not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

                                       3
<PAGE>   4

           (v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

           (w) "Plan" means this International Stock Incentive Plan.

           (x) "Post-Termination Exercise Period" means the amount of time after
the Termination Date during which the Grantee may exercise an Option, as
specified in the Notice of Stock Option Award, subject to the terms of the Award
Agreement.

           (y) "Related Entity" means any Parent, Subsidiary and any business,
corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly.

           (z) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

           (aa) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor thereto.

           (bb) "Share" means a share of the Common Stock.

           (cc) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

           (dd) "Termination Date" means the date on which the Grantee's
Continuous Service terminates, whether by death, Disability or otherwise.

        3. Stock Subject to the Plan.

           (a) Subject to the provisions of Section 10 below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards is 250,000
Shares. The Shares to be issued pursuant to Awards may be authorized, but
unissued, or reacquired Common Stock.

           (b) Any Shares covered by an Award (or portion of an Award) which is
forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan. Shares that actually have been issued
under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if unvested
Shares are forfeited, or repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.

                                       4
<PAGE>   5

        4. Administration of the Plan.

           (a) Plan Administrator.

               (i) Administration with Respect to Directors and Officers. With
respect to grants of Awards to Directors or Employees who are also Officers or
Directors of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the
Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board.

               (ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Awards to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Awards and may limit such authority as the Board
determines from time to time.

               (iii) Administration Errors. In the event an Award is granted in
a manner inconsistent with the provisions of this subsection (a), such Award
shall be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.

           (b) Powers of the Administrator. Subject to Applicable Laws and the
provisions of the Plan (including any other powers given to the Administrator
under this Plan), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:

               (i) to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time under this Plan;

               (ii) to determine whether and to what extent Awards are granted
under this Plan;

               (iii) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted under this Plan;

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

               (v) to determine the terms and conditions of any Award granted
under this Plan and the Fair Market Value;

               (vi) to amend the terms of any outstanding Award granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent;

                                       5
<PAGE>   6

               (vii) to implement a program whereby outstanding Options are
surrendered in exchange for Options with a lower exercise price;

               (viii) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan, including without limitation, any notice of Award
or Award Agreement, granted pursuant to the Plan;

               (ix) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and

               (x) to take such other action, not inconsistent with the terms of
the Plan, as the Administrator deems appropriate.

        5. Eligibility. Awards may be granted at the Company's sole discretion
to Employees, Directors and Consultants who reside in jurisdictions other than
the United States at the time of grant. An Employee, Director or Consultant who
has been granted an Award may, if otherwise eligible, be granted additional
Awards, also at the Company's sole discretion. Awards granted to an Employee,
Director or Consultant do not confer on the Grantee the right to receive or to
be granted additional Awards or give rise to any obligation by the Company to
make any additional Awards.

        6. Terms and Conditions of Awards.

           (a) Type of Awards. The Administrator is authorized under the Plan to
award Options and Restricted Stock to Employees, Directors and Consultants who
reside in jurisdictions other than the United States at the time of grant and
may not award Options or Restricted Stock to any Employee, Director or
Consultant who is then serving as a member of the Board or as an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated under the Exchange Act.

           (b) Designation of Award. Each Award shall be designated in the Award
Agreement.

           (c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award and payment
contingencies.

           (d) Acquisitions and Other Transactions. The Administrator may issue
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring

                                       6
<PAGE>   7

another entity, an interest in another entity or an additional interest in a
Related Entity whether by merger, stock purchase, asset purchase or other form
of transaction.

           (e) Deferral of Award Payment. The Administrator may establish one or
more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.

           (f) Award Exchange Programs. The Administrator may establish one or
more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.

           (g) Separate Programs. The Administrator may establish one or more
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.

           (h) Individual Option Limit. The maximum number of Shares with
respect to which Options may be granted to any Grantee in any fiscal year of the
Company shall be 25,000 Shares. In connection with a Grantee's commencement of
Continuous Service, a Grantee may be granted Options for up to an additional
100,000 Shares which shall not count against the limit set forth in the previous
sentence. The foregoing limitations shall be adjusted proportionately pursuant
to Section 10 below in connection with any change in the Company's
capitalization. In applying the foregoing limitations with respect to a Grantee,
if any Option is canceled, the canceled Option shall continue to count against
the maximum number of Shares with respect to which Options may be granted to the
Grantee.

           (i) Early Exercise. The Award Agreement may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a repurchase right in favor of the Company or a Related Entity or to any
other restriction the Administrator determines to be appropriate.

           (j) Term of Award. The term of each Award shall be the term stated in
the Award Agreement, provided, however, that the term may not be more than ten
(10) years from the date of grant thereof.

           (k) Transferability of Awards. Awards may be transferred by will, by
the laws of descent and distribution, or during the lifetime of the Grantee by
gift or through a court order in any divorce or custody proceeding to members of
the Grantee's Immediate Family to the

                                       7
<PAGE>   8

extent provided in the Award Agreement or in the manner and to the extent
determined by the Administrator.

           (l) Time of Granting Awards. The date of grant of an Award shall for
all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

           (m) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares an Award previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Grantee at the time that such offer is made.

        7. Award Exercise or Purchase Price, Consideration and Taxes.

           (a) Exercise or Purchase Price. The exercise or purchase price, if
any, for an Award shall be as follows:

               (i) In the case of an Option, the per Share exercise price shall
be not less than eighty-five percent (85%) of the Fair Market Value per Share on
the date of grant.

               (ii) In the case of other Awards, such price as is determined by
the Administrator.

               (iii) Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(d) above, the
exercise or purchase price for the Award shall be determined in accordance with
the principles of Section 424(a) of the Code.

           (b) Consideration. Subject to Applicable Laws, the consideration to
be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator. In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following; provided that the portion of the consideration
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:

               (i) cash;

               (ii) check;

               (iii) surrender of Shares (including withholding of Shares
otherwise deliverable upon exercise of the Award) which (A) in the case of
Shares acquired upon exercise of an option, have been owned by the Grantee for
more than six months on the date of surrender, and (B) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Award shall be exercised (but only to the extent that such
exercise

                                       8
<PAGE>   9

of the Award would not result in an accounting compensation charge with respect
to the Shares used to pay the exercise price unless otherwise determined by the
Administrator);

               (iv) with respect to Options, payment through a broker-dealer
sale and remittance procedure pursuant to which the Grantee (A) shall provide
written or electronic instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
Shares and (B) shall provide written or electronic directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage
firm in order to complete the sale transaction;

               (v) a reduction in the amount of any Company liability to the
Grantee, including any liability attributable to the Grantee's participation in
any Company-sponsored deferred compensation program or arrangement;

               (vi) any combination of the foregoing methods of payment; or

               (vii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

           (c) Taxes. No Shares shall be delivered under the Plan to any Grantee
or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations. Upon exercise
of an Award, if required by Applicable Law, the Company shall withhold or
collect from Grantee an amount sufficient to satisfy such tax obligations.

        8. Exercise of Award, Procedure for Exercise; Rights as a Stockholder.

           (a) Any Award granted under this Plan shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement. An Award may not be
exercised for a fraction of a Share.

           (b) An Award shall be deemed to be exercised when (i) written or
electronic notice of such exercise has been given to the Company in accordance
with the terms of the Award by the person entitled to exercise the Award and
(ii) full payment is made for the Shares with respect to which the Award is
exercised, including, to the extent selected, use of the broker-dealer sale and
remittance procedure to pay the purchase price as provided in Section 7(b)(iv).
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to Shares subject to an
Award, notwithstanding the exercise of an Option or other Award. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Award. No adjustment will be made for a dividend or other right
for which the record date is

                                       9
<PAGE>   10

prior to the date the stock certificate is issued, except as provided in the
Award Agreement or Section 10 below.

        9. Conditions Upon Issuance of Shares.

           (a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant to the Award comply with all Applicable Laws to the satisfaction of
legal counsel for the Company with respect to such compliance.

           (b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of legal counsel for the Company, such a representation is required by
any Applicable Laws.

        10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, as well as any other terms that the Administrator determines
require adjustment shall be proportionately adjusted for:

           (a) any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares, or similar event affecting the Shares;

           (b) any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company; or

           (c) as the Administrator may determine in its discretion, any other
transaction with respect to Common Stock to which Section 424(a) of the Code
applies or any similar transaction.

Conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration" for purposes of this
Section. The Administrator shall make such adjustment and its determination
shall be final, binding and conclusive. Except as the Administrator determines,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason of this Section shall be made with respect to, the number or price of
Shares subject to an Award.

        11. Dissolution or Liquidation. In the event of the Company's proposed
dissolution or liquidation, the Administrator shall notify each Grantee as soon
as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for a Grantee to have the right to
exercise his or her Option until ten (10) days prior to such transaction as to
all of the Shares covered by the Option, including Shares as to which the Award
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or

                                       10
<PAGE>   11

Restricted Stock shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, the Option
will terminate immediately prior to the consummation of such proposed
dissolution or liquidation.

        12. Corporate Transactions. In the event of a Corporate Transaction, the
successor corporation or a Parent or Subsidiary of the successor corporation
shall assume each outstanding Award or shall substitute an equivalent option or
right. If the successor corporation or the Parent or Subsidiary of the successor
corporation refuses to assume or substitute for the Award, the Grantee shall
fully vest in and have the right to exercise the Award as to all of the Shares,
including Shares as to which it would not otherwise be vested or exercisable. If
an Award becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a Corporate Transaction, the Administrator shall
notify the Grantee in writing or electronically that the Award shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Award shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Award shall be considered assumed if,
following the Corporate Transaction, the option or right confers the right to
purchase or receive, for each Share subject to the Award immediately prior to
the Corporate Transaction, the consideration (whether stock, cash, or other
securities or property) received in the Corporate Transaction by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Corporate Transaction is not
solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Award, for each Share
subject to the Award, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the Corporate Transaction.

        13. Effective Date and Term of Plan. The Plan shall become effective
upon its adoption by the Board and shall continue in effect for a term of ten
(10) years unless sooner terminated. Subject to Applicable Laws, Awards may be
granted under the Plan upon its becoming effective.

        14. Amendment, Suspension or Termination of the Plan.

            (a) The Board may at any time amend, suspend or terminate the Plan.
To the extent necessary to comply with Applicable Laws, but not otherwise, the
Company shall obtain stockholder approval of any Plan amendment in such a manner
and to such a degree as required.

            (b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.

            (c) No amendment, suspension or termination of the Plan (including
termination of the Plan under Section 13 above) shall affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or

                                       11
<PAGE>   12

terminated. Notwithstanding the foregoing, with respect to any Award, the
Grantee and the Administrator may mutually agree that such an amendment,
suspension or termination of the Plan shall affect such Award, provided that the
agreement must be in writing and signed by the Grantee and the Company, which
writing and signature may be in electronic form.

        15. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available such number of Shares as are
sufficient to satisfy the requirements of the Plan.

        16. Inability to Obtain Authority. If the Company is unable to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary for the lawful issuance and sale
of any Shares under this Plan, if obtaining the necessary authority would, in
the opinion of the Administrator, be unduly onerous or impractical for the
Company, or if the issuance and sale of any Shares under this Plan would
contravene Applicable Laws, the Company shall not have any liability in respect
of the failure to issue or sell such Shares.

        17. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, and does not confer on any Grantee the right to continue as
an Employee, Director or Consultant. This Plan does not affect any rights that
the Company or any Related Entity may have to terminate the employment or office
of any Employee or Director or the contract of any Consultant, and shall not
interfere in any way with the Grantee's right or the Company's right to
terminate the Grantee's Continuous Service at any time, with or without cause.

        18. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the United States Employee
Retirement Income Security Act of 1974, as amended.

        19. Contracts of Employment and Services and Other Rights. This Plan
does not form part of any contract of employment or services between the Company
or any Related Entity and any Employee, Director or Consultant. Nothing in this
Plan confers on any Employee, Director or Consultant the right to receive any
Awards. It is a condition of this Plan that the Plan may be terminated at any
time at the discretion of the Board, and that no compensation, including under
any employment or services contract, will arise as a result. This Plan may not
be used to increase damages in any action that may be brought against the
Company or any Related Entity in respect of the termination of the Grantee's
Continuous Service.

                                      ****

                                       12

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