Document:

Exhibit 10.8

                                LOCKUP AGREEMENT

The undersigned understands that Money Flow Systems International Inc. (the
"Corporation") intends to complete a financing (a "Financing") as directed by
the board of directors of the Corporation (the "Board"), which Financing may be
effected by way of a public offering of the Corporation's securities, an
arm's-length private placement of the Corporation's securities to one or more
third parties in one or more tranches or, such other manner as may be directed
by the Board, within one year from the date that the Corporation's common shares
become listed and posted for trading on a stock exchange, bulletin board or
trading system (the "Listing Date").

For the sum of $1.00 and other good and valuable consideration, John F. Kearney,
(the "Securityholder") (the receipt and sufficiency of which is hereby
acknowledged), represents, warrants and agrees as follows:

1. The Securityholder represents that he has full power and authority to execute
and deliver this document and perform, his obligations hereunder and that he is
the beneficial owner of such number of common shares of the Corporation set
opposite his respective name (collectively, the "Lockup Shares") as listed
below:

                  John F. Kearney   611,000

2. The Securityholder irrevocably covenants and agrees not to sell, assign,
convey, transfer, encumber or otherwise dispose of their Lockup Shares (as
provided in paragraph 1 herein), until the earlier of (i) completion of a
Financing (as contemplated herein); and (ii) one year from the Listing Date; and

3. The Securityholder covenants not to delay, hinder, upset or challenge the
matters contemplated herein.

This Lock-Up Agreement will terminate upon the earlier of (i) completion of a
Financing as contemplated herein; and (ii) one year from the Listing Date.

Dated at Calgary, Alberta this ___ day of December, 2001.

------------------------------------     ---------------------------------------
Witness                                  John F. Kearney<PAGE>

                                                                     Exhibit 4.1

                                   HI/FN, INC.

                           1996 EQUITY INCENTIVE PLAN

                            ADOPTED NOVEMBER 21, 1996

                 AS AMENDED AND RESTATED EFFECTIVE MARCH 6, 2002

1. Purposes

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

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

        (c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof, or (iii) stock
appreciation rights granted pursuant to Section 8 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.

2. Definitions

        (a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 3 of the Plan.

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

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

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

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

<PAGE>

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

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

        (h) "Company" means hi/fn, inc., a Delaware corporation.

        (i) "Concurrent Stock Appreciation Right" or "Concurrent Right" means a
right granted pursuant to subsection 9(c)(ii) of the Plan.

        (j) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services; provided, however that a
Consultant shall not include a Director.

        (k) "Continuous Status as an Employee, Director or Consultant" means
that the service of an individual to the Company, whether as an Employee,
Director or Consultant, is not interrupted or terminated.

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

        (m) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

        (n) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. An individual's
continuous status as an Employee shall not be deemed to be interrupted or
terminated in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company and its
Affiliates, or any successor. For purposes of Incentive Stock Options, no such
leave may exceed ninety days, unless reemployment upon expiration of such leave
is guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, on the 181st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.

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

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

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

               (ii) If the Common Stock is regularly quoted by a recognized
        securities dealer but selling prices are not reported, the Fair Market
        Value of a share of Common Stock shall be the mean between the high bid
        and low asked prices for the Common Stock on the last market trading day
        prior to the day of determination, as reported in The Wall Street
        Journal or such other source as the Administrator deems reliable; or

<PAGE>

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

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

        (r) "Independent Stock Appreciation Right" or "Independent Right" means
a right granted pursuant to subsection 9(c)(iii) of the Plan.

        (s) "Inside Director" means a Director who is an Employee.

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

        (u) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

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

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

        (x) "Optionee" means a person who holds an outstanding Option.

        (y) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

        (z) "Outside Director" means a Director who is not an Employee.

        (aa) "Plan" means this hi/fn, inc. 1996 Equity Incentive Plan.

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

        (cc) "Stock Appreciation Right" means any of the various types of rights
which may be granted under Section 9 of the Plan.

        (dd) "Stock Award" means any right granted under the Plan, including any
Option, any stock bonus, any right to purchase restricted stock, and any Stock
Appreciation Right.

        (ee) "Stock Award Agreement" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

        (ff) "Tandem Stock Appreciation Right" or "Tandem Right" means a right
granted pursuant to subsection 9(c)(i) of the Plan.

<PAGE>

3. Administration

        (a) Procedure.

               (i) Multiple Administrative Bodies. The Plan may be administered
        by different Committees with respect to different groups of Employees,
        Directors or Consultants.

               (ii) Section 162(m). To the extent that the Administrator
        determines it to be desirable to qualify transactions hereunder as
        "performance-based compensation" within the meaning of Section 162(m) of
        the Code, the transactions contemplated hereunder shall be administered
        by a Committee of two or more "outside directors" within the meaning of
        Section 162(m) of the Code.

               (iii) Rule 16b-3. Except as provided in Section 8, to the extent
        that the Administrator determines it to be desirable to qualify
        transactions hereunder as exempt under Rule 16b-3, the transactions
        contemplated hereunder shall be structured to satisfy the requirements
        for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan
        shall be administered by (A) the Board or (B) a Committee, which
        committee shall be constituted to satisfy Applicable Laws.

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

               (i) to determine the Fair Market Value;

               (ii) to select the Employees, Directors and Consultants to whom
        Stock Awards may be granted hereunder;

               (iii) to determine the number of shares of Common Stock to be
        covered by each Stock Award granted hereunder;

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

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

               (vi) to reduce the exercise price of any Stock Award to the then
        current Fair Market Value if the Fair Market Value of the Common Stock
        covered by such Stock Award shall have declined since the date the Stock
        Award was granted;

               (vii) to institute an Option Exchange Program;

<PAGE>

               (viii) to construe and interpret the terms of the Plan and awards
        granted pursuant to the Plan;

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

               (x) to modify or amend each Stock Award (subject to Section 15(c)
        of the Plan);

               (xi) to allow holders of Stock Awards to satisfy withholding tax
        obligations by electing to have the Company withhold from the shares to
        be issued upon exercise of a Stock Award that number of shares having a
        Fair Market Value equal to the amount required to be withheld. The Fair
        Market Value of the shares to be withheld shall be determined on the
        date that the amount of tax to be withheld is to be determined. All
        elections by a holder of a Stock Award to have shares withheld for this
        purpose shall be made in such form and under such conditions as the
        Administrator may deem necessary or advisable;

               (xii) to authorize any person to execute on behalf of the Company
        any instrument required to effect the grant of Stock Award previously
        granted by the Administrator;

               (xiii) to make all other determinations deemed necessary or
        advisable for administering the Plan.

        (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all holders of
Stock Awards.

4. Shares Subject to the Plan

        (a) Subject to the provisions of the Plan relating to adjustments upon
changes in stock, the stock that may be issued pursuant to all Stock Awards
under this Plan shall not exceed in the aggregate four million four hundred and
forty-nine thousand nine hundred (4,449,900) shares of the Company's Common
Stock. If any Stock Award shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full, or is surrendered
pursuant to an Option Exchange Program, the stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan.
Shares subject to Stock Appreciation Rights exercised in accordance with Section
9 of the Plan shall not be available for subsequent issuance under the Plan.

        (b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5. Eligibility

        (a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be granted
only to Employees, Directors or Consultants.

<PAGE>

6. Discretionary Option Provisions

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

        (a) Option Designation. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Affiliate) exceeds $100,000, such Options shall
be treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the shares shall be determined as of the
time the Option with respect to such shares is granted.

        (b) Share Limitations. The following limitations shall apply to grants
of Options:

               (i) No Employee, Director or Consultant shall be granted, in any
        fiscal year of the Company, Options to purchase more than 1,000,000
        shares.

                 (A) In connection with his or her initial service, an Employee
           Director or Consultant may be granted Options to purchase up to an
           additional 1,000,000 shares which shall not count against the limit
           set forth in subsection (i) above.

                 (B) The foregoing limitations shall be adjusted proportionately
           in connection with any change in the Company's capitalization as
           described in Section 14.

                 (C) If an Option is cancelled in the same fiscal year of the
           Company in which it was granted (other than in connection with a
           transaction described in Section 14), the cancelled Option will be
           counted against the limits set forth in subsections (A) and (B)
           above. For this purpose, if the exercise price of an Option is
           reduced, the transaction will be treated as a cancellation of the
           Option and the grant of a new Option.

        (c) Term. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Affiliate, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Option Agreement.

        (d) Price. The per share exercise price for the stock to be issued
pursuant to exercise of an Option shall be determined by the administrator,
subject to the following:

               (i) In the case of an Incentive Stock Option

<PAGE>

                 (A) granted to an Employee who, at the time the Incentive Stock
           Option is granted, owns stock representing more than ten percent
           (10%) of the voting power of all classes of stock of the Company or
           any Affiliate, the per share exercise price shall be no less than
           110% of the Fair Market Value per share on the date of grant.

                 (B) granted to any Employee other than an Employee described in
           paragraph (A) immediately above, the per share exercise price shall
           be no less than 100% of the Fair Market Value per share on the date
           of grant.

               (ii) In the case of a Nonstatutory Stock Option, the per share
        exercise price shall be determined by the Administrator. In the case of
        a Nonstatutory Stock Option intended to qualify as "performance-based
        compensation" within the meaning of Section 162(m) of the Code, the per
        share exercise price shall be no less than 100% of the Fair Market Value
        per share on the date of grant.

               (iii) Notwithstanding the foregoing, Options may be granted with
        per share exercise price of less than 100% of the Fair Market Value per
        share on the date of grant pursuant to a merger or other corporate
        transaction.

        (e) Consideration. The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of payment. In
the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:

               (i) cash;

               (ii) check;

               (iii) promissory note;

               (iv) other shares which (A) in the case of shares acquired upon
        exercise of an option, have been owned by the Optionee 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 Option shall be exercised;

               (v) consideration received by the Company under a cashless
        exercise program implemented by the Company in connection with the Plan;

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

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

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

        (f) Transferability. Unless otherwise provided by the Administrator, an
Option shall not be transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person. Notwithstanding the foregoing, the person to whom the Option is
granted may, by delivering written notice to the Company,

<PAGE>

in a form satisfactory to the Company, designate a third party who, in the event
of the death of the Optionee, shall thereafter be entitled to exercise the
Option. If the Administrator makes an Option transferable, such Option shall
contain such additional terms and conditions as the Administrator deems
appropriate.

        (g) Vesting. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised.

        (h) Termination of Employment or Relationship as a Director or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months after the termination of the Optionee's Continuous Status as an Employee,
Director or Consultant (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionee does not exercise his or
her Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

        An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee, Director, or Consultant (other than upon the Optionee's death or
Disability) would result in liability under Section 16(b) of the Exchange Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day
after the last date on which such exercise would result in such liability under
Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may
also provide that if the exercise of the Option following the Termination of the
Optionee's Continuous Status as an Employee, Director or Consultant (other than
upon the Optionee's death or Disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Act, then the Option shall terminate on the earlier of (i) the expiration of
the term of the Option set forth in the first paragraph of this subsection 6(f),
or (ii) the expiration of a period of three (3) months after the termination of
the Optionee's Continuous Status as an Employee, Director or Consultant during
which the exercise of the Option would not be in violation of such registration
requirements.

        (i) Disability of Optionee. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within

<PAGE>

the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.

        (j) Death of Optionee. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise the
Option as of the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionee's death pursuant to
subsection 6(g), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

        (k) Early Exercise. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a repurchase right in favor of the Company, with
the repurchase price to be equal to the original purchase price of the stock, or
to any other restriction the Administrator determines to be appropriate.

        (l) Re-Load Options. Without in any way limiting the authority of the
Administrator to make or not to make grants of Options hereunder, the
Administrator shall have the authority (but not an obligation) to include as
part of any Option Agreement a provision entitling the Optionee to a further
Option (a "Re-Load Option") in the event the Optionee exercises the Option
evidenced by the Option agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms and conditions
of the Option Agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of the exercise
price of such Option; (ii) shall have an expiration date which is the same as
the expiration date of the Option the exercise of which gave rise to such
Re-Load Option; and (iii) shall have an exercise price on the date of exercise
of the Original Option which complies with Section 6(d).

        Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Administrator may designate at the time of the
grant of the original Option; provided, however, that the designation of any
Re-Load Option as an Incentive Stock Option shall be subject to the one hundred
thousand dollar ($100,000) annual limitation on exercisability of Incentive
Stock Options described in Section 6(a) of the Plan and in Section 422(d) of the
Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load
Option shall be subject to the availability of sufficient shares under
subsection 4(a) and shall be subject to such other terms and conditions as the
Administrator may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of Options.

<PAGE>

7. Formula Option Provisions.

        All grants of Options to Outside Directors pursuant to this Section
shall be automatic and nondiscretionary and shall be made strictly in accordance
with the following provisions:

        (a) All Options granted pursuant to this Section shall be Nonstatutory
Stock Options and, except as otherwise provided herein, shall be subject to the
other terms and conditions of the Plan.

        (b) No person shall have any discretion to select which Outside
Directors shall be granted Options under this Section or to determine the number
of shares to be covered by such Options.

        (c) Each person who first becomes an Outside Director following the
effective date of the distribution of the Company's Common Stock held by Stac,
Inc., a Delaware corporation and parent company of the Company, pursuant to a
registration statement on Form 10 filed with the Securities and Exchange
Commission shall be automatically granted an Option to purchase 30,000 shares
(the "First Option") or the date on which such person first becomes an Outside
Director, whether through election by the stockholders of the Company or
appointment by the Board to fill a vacancy; provided, however, that an Inside
Director who ceases to be an Inside Director but who remains a Director shall
not receive a First Option.

        (d) Each Outside Director shall be automatically granted an Option to
purchase 10,000 shares (a "Subsequent Option") on the date of the annual meeting
of the stockholders of the Company (beginning in 1999), if as of such date, he
or she shall have served on the Board for at least the preceding six (6) months.

        (e) Notwithstanding the provisions of subsections (c) and (d) hereof,
any exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 16 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with Section
16 hereof.

        (f) The terms of each Option granted pursuant to this Section shall be
as follows:

               (i) the term of the Option shall be ten (10) years;

               (ii) the exercise price per share shall be 100% of the Fair
        Market Value per share on the date of grant of the Option;

               (iii) subject to Section 14 hereof, the First Option shall vest
        and become exercisable as to 20% of the shares subject to the Option on
        the first anniversary of its date of grant, and as to 1/60th of the
        shares subject to the Option each full month thereafter, provided that
        the Optionee continues to serve as a Director on such dates;

               (iv) subject to Section 14 hereof, the Subsequent Option shall
        vest and become exercisable as to 100% of the shares subject to the
        Option the anniversary of its date of grant, provided that the Optionee
        continues to serve as a Director on such date.

<PAGE>

8. Terms of Stock Bonuses and Purchases of Restricted Stock

        Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Administrator shall deem
appropriate. The terms and conditions of stock bonus or restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:

        (a) Purchase Price. The purchase price under each restricted stock
purchase agreement shall be such amount as the Administrator shall determine and
designate in such agreement. Notwithstanding the foregoing, the Administrator
may determine that eligible participants in the Plan may be awarded stock
pursuant to a stock bonus agreement in consideration for past services actually
rendered to the Company or for its benefit.

        (b) Transferability. Unless otherwise provided by the Administrator, no
rights under a stock bonus or restricted stock purchase agreement shall be
transferable except by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order, provided, however that any stock
awarded under such agreement remains subject to the terms of the applicable
agreement. If the Administrator makes a stock bonus or right to purchase stock
transferable, such stock bonus or right to purchase stock shall contain such
additional terms and conditions as the Administrator deems appropriate.

        (c) Consideration. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Administrator, according to a deferred
payment or other arrangement with the person to whom the stock is sold; or (iii)
in any other form of legal consideration that may be acceptable to the
Administrator in its discretion. Notwithstanding the foregoing, the
Administrator to which administration of the Plan has been delegated may award
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.

        (d) Vesting. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Administrator.

        (e) Termination of Employment or Relationship as a Director or
Consultant. In the event an individual's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.

        (f) Share Limitations. The following limitations shall apply to grants
of stock bonuses and/or stock purchase right:

               (i) No Employee, Director or Consultant shall be granted, in any
        fiscal year of the Company, stock bonuses and/or stock purchase right to
        purchase more than 1,000,000 shares.

                   (A) In connection with his or her initial service, an
               Employee, Director or Consultant may be granted a stock bonus
               and/or stock purchase right to purchase up to an additional
               1,000,000 shares

<PAGE>

               which shall not count against the limit set forth in subsection
               (i) above.

                   (B) The foregoing limitations shall be adjusted
               proportionately in connection with any change in the Company's
               capitalization as described in Section 14.

                   (C) If a stock bonus and/or stock purchase right is cancelled
               in the same fiscal year of the Company in which it was granted
               (other than in connection with a transaction described in Section
               14), the cancelled stock bonus and/or restricted stock will be
               counted against the limits set forth in subsections (A) and (B)
               above. For this purpose, if the exercise price of a stock
               purchase right is reduced, the transaction will be treated as a
               cancellation of the stock purchase right and the grant of a new
               stock purchase right.

9. Stock Appreciation Rights

        (a) The Administrator shall have full power and authority, exercisable
in its sole discretion, to grant Stock Appreciation Rights under the Plan to
Employees or Directors of or Consultants to, the Company or its Affiliates. To
exercise any outstanding Stock Appreciation Right, the holder must provide
written notice of exercise to the Company in compliance with the provisions of
the Stock Award Agreement evidencing such right. If a Stock Appreciation Right
is granted to an individual who is at the time subject to Section 16(b) of the
Exchange Act (a "Section 16(b) Insider"), the Stock Award Agreement of grant
shall incorporate all the terms and conditions at the time necessary to assure
that the subsequent exercise of such right shall qualify for the safe-harbor
exemption from short-swing profit liability provided by Rule 16b-3 promulgated
under the Exchange Act (or any successor rule or regulation). No limitation
shall exist on the aggregate amount of cash payments the Company may make under
the Plan in connection with the exercise of a Stock Appreciation Rights.

        (b) Unless otherwise provided by the Administrator, no Stock
Appreciation Right shall be transferable except by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order, provided,
however, the cash or stock awarded under such agreement remains subject to the
terms of the Stock Appreciation Right. If the Administrator makes a Stock
Appreciation Right transferable, such Stock Appreciation Right shall contain
such additional terms and conditions as the Administrator deems appropriate.

        (c) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:

               (i) Tandem Stock Appreciation Rights. Tandem Stock Appreciation
        Rights will be granted appurtenant to an Option, and shall, except as
        specifically set forth in this Section 8, be subject to the same terms
        and conditions applicable to the particular Option grant to which it
        pertains. Tandem Stock Appreciation Rights will require the holder to
        elect between the exercise of the underlying Option for shares of stock
        and the surrender, in whole or in part, of such Option for an
        appreciation distribution. The appreciation distribution payable on the
        exercised Tandem Right shall be in cash (or, if so provided, in an
        equivalent number of shares of stock based on Fair Market Value on the
        date of the Option surrender) in an amount up to the excess of (A) the
        Fair Market Value (on the date of the Option surrender) of the number of
        shares of stock covered by that portion of the surrendered Option in
        which the Optionee is vested over (B) the aggregate exercise price
        payable for such vested shares.

<PAGE>

               (ii) Concurrent Stock Appreciation Rights. Concurrent Rights will
        be granted appurtenant to an Option and may apply to all or any portion
        of the shares of stock subject to the underlying Option and shall,
        except as specifically set forth in this Section 8, be subject to the
        same terms and conditions applicable to the particular Option grant to
        which it pertains. A Concurrent Right shall be exercised automatically
        at the same time the underlying Option is exercised with respect to the
        particular shares of stock to which the Concurrent Right pertains. The
        appreciation distribution payable on an exercised Concurrent Right shall
        be in cash (or, if so provided, in an equivalent number of shares of
        stock based on Fair Market Value on the date of the exercise of the
        Concurrent Right) in an amount equal to such portion as shall be
        determined by the Administrator at the time of the grant of the excess
        of (A) the aggregate Fair Market Value (on the date of the exercise of
        the Concurrent Right) of the vested shares of stock purchased under the
        underlying Option which have Concurrent Rights appurtenant to them over
        (B) the aggregate exercise price paid for such shares.

               (iii) Independent Stock Appreciation Rights. Independent Rights
        will be granted independently of any Option and shall, except as
        specifically set forth in this Section 8, be subject to the same terms
        and conditions applicable to Nonstatutory Stock Options as set forth in
        Section 6. They shall be denominated in share equivalents. The
        appreciation distribution payable on the exercised Independent Right
        shall be not greater than an amount equal to the excess of (A) the
        aggregate Fair Market Value (on the date of the exercise of the
        Independent Right) of a number of shares of Company stock equal to the
        number of share equivalents in which the holder is vested under such
        Independent Right, and with respect to which the holder is exercising
        the Independent Right on such date, over (B) the aggregate Fair Market
        Value (on the date of the grant of the Independent Right) of such number
        of shares of Company stock. The appreciation distribution payable on the
        exercised Independent Right shall be in cash or, if so provided, in an
        equivalent number of shares of stock based on Fair Market Value on the
        date of the exercise of the Independent Right.

        (d) Share Limitations. The following limitations shall apply to grants
of Stock Appreciation Rights:

               (i) No Employee, Director or Consultant shall be granted, in any
        fiscal year of the Company, Stock Appreciation Rights to purchase more
        than 1,000,000 shares.

                 (A) In connection with his or her initial service, an Employee,
           Director or Consultant may be granted Stock Appreciation Rights to
           purchase up to an additional 1,000,000 shares which shall not count
           against the limit set forth in subsection (i) above.

                 (B) The foregoing limitations shall be adjusted proportionately
           in connection with any change in the Company's capitalization as
           described in Section 14.

                 (C) If a Stock Appreciation Right is cancelled in the same
           fiscal year of the Company in which it was granted (other than in
           connection with a transaction described in Section 14), the cancelled
           Stock Appreciation Right will be counted against the limits set forth
           in subsections (A) and (B) above. For this purpose, if the exercise
           price of a Stock Appreciation Right is reduced, the transaction will
           be treated as a cancellation of the Stock Appreciation Right and the
           grant of a new Stock Appreciation Right.

<PAGE>

10. Cancellation and Re-Grant of Options

        The Administrator shall have the authority to effect, at any time and
from time to time, (i) the repricing of any outstanding Options and/or any Stock
Appreciation Rights under the Plan and/or (ii) with the consent of the affected
holders of Options and/or Stock Appreciation Rights, the cancellation of any
outstanding Options and/or any Stock Appreciation Rights under the Plan and the
grant in substitution therefor of new Options and/or Stock Appreciation Rights
under the Plan covering the same or different numbers of shares of stock.

11. Covenants of the Company

        (a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.

        (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act of 1933, as amended (the "Securities Act") either the Plan,
any Stock Award or any stock issued or issuable pursuant to any such Stock
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to, issue and sell
stock upon exercise of such Stock Awards unless and until such authority is
obtained.

12. Use of Proceeds from Stock

        (a) Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

13. Miscellaneous

        (a) Neither an Employee, Director or Consultant nor any person to whom a
Stock Award is transferred under subsection 6(f), 8(b), or 9(b) shall be deemed
to be the holder of, or to have any of the rights of a holder with respect to,
any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

        (b) Throughout the term of any Stock Award, the Company shall deliver to
the holder of such Stock Award, not later than one hundred twenty (120) days
after the close of each of the Company's fiscal years during the term of such
Stock Award, a balance sheet and an income statement. This Section shall not
apply when issuance is limited to key employees whose duties in connection with
the Company assure them access to equivalent information.

        (c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant or
other holder of Stock Awards any right to continue in the employ of the Company
or any Affiliate (or to continue acting as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment of
any Employee with or without cause, to remove any Director as provided in the
Company's Bylaws and the provisions of the General Corporation Law of the State
of Delaware or to terminate the relationship of any Consultant in accordance
with the terms of that

<PAGE>

Consultant's agreement with the Company or Affiliate to which such Consultant is
providing services.

        (d) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred pursuant to subsection 6(g),
7(b) or 8(b), as a condition of exercising or acquiring stock under any Stock
Award, to give written assurances satisfactory to the Company, if any, that are
necessary to ensure compliance with federal securities laws. These requirements,
and any assurances given pursuant to such requirements, shall be inoperative if
(i) the issuance of the shares upon the exercise or acquisition of stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws.

        (e) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (i) tendering a cash payment; (ii) authorizing the Company to withhold
shares from the shares of the Common Stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(iii) delivering to the Company owned and unencumbered shares of the Common
Stock.

14. Adjustments upon changes in stock

        (a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding Stock
Awards. (The conversion of any convertible securities of the Company shall not
be treated as a "transaction not involving the receipt of consideration by the
Company".)

        (b) In the event of: (i) a merger or consolidation in which the Company
is not the surviving corporation or (ii) a reverse merger in which the Company
is the surviving corporation but the shares of the Company's Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then to the extent not prohibited by applicable law: (A) any
surviving corporation or an Affiliate of such surviving corporation shall assume
any Stock Awards outstanding under the Plan or shall substitute similar Stock
Awards for those outstanding under the Plan, or (B) such Stock Awards shall
continue in full force and effect. In the event any surviving corporation and
its Affiliates refuse to assume such Stock Awards, or to substitute similar
Stock Awards for those outstanding under the Plan, then such Stock Awards shall
terminate if not exercised prior to such event.

        (c) In the event of a dissolution or liquidation of the Company, any
Stock Awards outstanding under the Plan shall terminate if not exercised prior
to such event.

<PAGE>

15. Amendment of the plan and stock awards

        (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan. Unless sooner terminated, the Plan shall
terminate on November 20, 2006, which shall be within ten (10) years from the
date the Plan is adopted by the Board or approved by the stockholders of the
Company, whichever is earlier. No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

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

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

16. Effective Date of Plan

        The Plan shall become effective as determined by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board,
and, if required, an appropriate permit has been issued by the Commissioner of
Corporations of the State of California.

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