Document:

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                                                                    EXHIBIT 10.4

                            INDEMNIFICATION AGREEMENT
                            -------------------------

     This Indemnification Agreement (the "Agreement") is made as of _______ ___,
                                          ---------
2002 by and between IMPAC Medical Systems, Inc., a Delaware corporation (the
"Company"), and __________ (the "Indemnitee").
 -------                         ----------

                                    RECITALS
                                    --------

     The Company and Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers and key employees, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance. The Company and Indemnitee further recognize the
substantial increase in corporate litigation in general, subjecting directors,
officers and key employees to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.
Indemnitee does not regard the current protection available as adequate under
the present circumstances, and Indemnitee and agents of the Company may not be
willing to continue to serve as agents of the Company without additional
protection. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, and to indemnify its directors,
officers and key employees so as to provide them with the maximum protection
permitted by law.

                                    AGREEMENT
                                    ---------

     In consideration of the mutual promises made in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the Company and Indemnitee hereby agree as follows:

     1.   Indemnification.
          ---------------

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

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

          (b)  Proceedings By or in the Right of the Company. The Company shall
               ---------------------------------------------
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld), in each case to
the extent actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such action or suit if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company and its stockholders, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudicated by court order or judgment
to be liable to the Company in the performance of Indemnitee's duty to the
Company and its stockholders unless and only to the extent that the court in
which such action or proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.

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

     2.   No Employment Rights. Nothing contained in this Agreement is intended
          --------------------
to create in Indemnitee any right to continued employment.

     3.   Expenses; Indemnification Procedure.
          -----------------------------------

          (a)  Advancement of Expenses. The Company shall advance all expenses
               -----------------------
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referred to in
Section l(a) or Section 1(b) hereof (including amounts actually paid in
settlement of any such action, suit or proceeding). Indemnitee hereby undertakes
to repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby.

          (b)  Notice/Cooperation by Indemnitee. Indemnitee shall, as a
               --------------------------------
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in

                                      -2-

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writing as soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company and
shall be given in accordance with the provisions of Section 12(d) below. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.

          (c)  Procedure. Any indemnification and advances provided for in
               ---------
Section 1 and this Section 3 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within thirty (30) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.

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

          (e)  Selection of Counsel. In the event the Company shall be obligated
               --------------------
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees

                                      -3-

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of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that (i) Indemnitee shall have the right to employ counsel
in any such proceeding at Indemnitee's expense; and (ii) if (A) the employment
of counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.

         4.   Additional Indemnification Rights; Nonexclusivity.
              -------------------------------------------------

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

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

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

         6.   Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
              ---------------------
that in certain instances, Federal law or public policy may override applicable
state law and prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise. For example, the Company and Indemnitee
acknowledge that the Securities and Exchange Commission (the "SEC") has taken
                                                              ---
the position that indemnification is not permissible for liabilities arising
under certain federal securities laws, and federal legislation prohibits

                                       -4-

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indemnification for certain ERISA violations. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the SEC to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

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

         8. Severability. Nothing in this Agreement is intended to require or
            ------------
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

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

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

            (b) Lack of Good Faith. To indemnify Indemnitee for any expenses
                ------------------
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this

                                       -5-

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Agreement, if a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such proceeding was not made in good
faith or was frivolous;

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

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

     10.    Construction of Certain Phrases.
            -------------------------------

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

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

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

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Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that each of Indemnitee's material
defenses to such action were made in bad faith or were frivolous.

     12.  Miscellaneous.
          -------------

          (a)  Governing Law. This Agreement and all acts and transactions
               -------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflict of law.

          (b)  Entire Agreement; Enforcement of Rights. This Agreement sets
               ---------------------------------------
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

          (c)  Construction. This Agreement is the result of negotiations
               ------------
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

          (d)  Notices. Any notice, demand or request required or permitted to
               -------
be given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally or sent by fax or 48 hours after being sent by
nationally-recognized courier or deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified
at such party's address or fax number as set forth below or as subsequently
modified by written notice.

          (e)  Counterparts. This Agreement may be executed in two or more
               ------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

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

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

                            [Signature Page Follows]

                                       -7-

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     The parties hereto have executed this Agreement as of the day and year set
forth on the first page of this Agreement.

                                        IMPAC Medical Systems, Inc.

                                        By:    _________________________________
                                        Name:  _________________________________
                                        Title: _________________________________

                                        Address: 100 West Evelyn Avenue
                                                 Mountain View, CA 94041

                                        Fax Number: (650) 623-8911

AGREED TO AND ACCEPTED:

[Indemnitee Name]

_______________________________
(Signature)

Address: ______________________
         ______________________

Fax Number: ___________________

                                      -8-<PAGE>

                                                                    Exhibit 10.5

                          IMPAC MEDICAL SYSTEMS, INC.
                             1993 STOCK OPTION PLAN

                           EFFECTIVE NOVEMBER 1, 1993

1.  Purpose and Types of Options. This 1993 Stock Option Plan (the "Plan") is
    ----------------------------                                    ----
intended to increase the incentives of, and encourage stock ownership by,
employees and consultants (including members of the Company's Board of Directors
who are not employees of the Company) providing services to Impac Medical
Systems, Inc., a California corporation (the "Company"), or to corporations
                                              -------
which are or become subsidiary corporations of the Company. The term
"subsidiary corporations" as used in this Plan shall have the meaning specified
in Section 4.2 hereof. The Plan is intended to provide such employees and
consultants with a proprietary interest (or to increase their proprietary
interest) in the Company, and to encourage them to continue their employment or
engagement by the Company or its subsidiaries. Options granted pursuant to the
Plan, at the discretion of the Company's Board of Directors ("Board"), may be
                                                              -----
either incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Internal Revenue Code"), or options that do
                                   ---------------------
not so qualify as incentive stock options and which are referred to herein as
non-qualified stock options.

2.  Stock. The capital stock subject to the Plan shall be shares of the
    -----
Company's authorized but unissued Common Stock ("Common Stock"). The maximum
                                                 ------------
aggregate number of shares of Common Stock reserved for issuance under the Plan
(after taking into account the five-for-one stock split approved by the
Company's Board in October 1993) is Six Hundred Thirty Thousand (630,000),
subject to adjustments pursuant to Section 8 hereof. In the event that any
outstanding option under the Plan shall expire by its terms or is otherwise
terminated for any reason (or if shares of Common Stock of the Company which are
issued upon exercise of an option granted hereunder are subsequently reacquired
by the Company pursuant to contractual rights of the Company under the
particular stock option agreement), the shares of the Common Stock allocated to
the unexercised portion of such option (or the shares so reacquired by the
Company pursuant to the terms of the stock option agreement) shall again become
available to be made subject to options granted under the Plan. Notwithstanding
any other provision of this Plan, the aggregate number of shares of Common Stock
subject to outstanding options

                                       1

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granted under this Plan at any given time, plus the aggregate number of shares
which have been issued upon exercise of all options granted under this Plan and
which remain outstanding, shall never be permitted to exceed the maximum number
of shares specified above in this Section 2 (subject to adjustments under
Section 8).

3. Administration. The Plan shall be administered by the Board. Any action by
   --------------
the Board with respect to the administration of the Plan shall be taken by the
vote of a majority of a quorum of its members present at a duly held meeting or
without a meeting by unanimous written consent of all directors. The
interpretation and construction by the Board of any provision of this Plan, or
of any option granted pursuant hereto, shall be final, binding and conclusive.
No member of the Board shall be liable to the Company or to any subsidiary or
parent corporation, or to the holder of any option granted hereunder for any
action, inaction, determination or interpretation made in good faith with
respect to the Plan or any transaction hereunder. Notwithstanding the foregoing,
the Board shall have the authority to delegate some or all of its duties to
administer this Plan and to exercise its powers hereunder to a committee
("Committee") appointed by the Board. For purposes of this Plan, all references
  ---------
herein to "Board" shall be deemed to also refer to any such Committee. Any
Committee charged with administration of the Plan shall have all the powers and
protections provided to the Board under this Plan until the Board shall revoke
or restrict such powers or protections. More specifically, the Board, subject to
compliance with the remaining provisions of this Plan, shall have the following
powers and authority (which listing is provided by way of example and is not
intended to be comprehensive or limiting to the extent of powers not included):

     3.1 Selection of Optionees. To determine the persons providing services to
         ----------------------
the Company to whom, and the time or times at which, options to purchase Common
Stock of the Company shall be granted;

     3.2 Number of Option Shares. To determine the number of shares of Common
         -----------------------
Stock to be subject to options granted to each such person;

     3.3 Exercise Price. To determine the price to be paid for the shares of
         --------------
Common Stock upon the exercise of each option;

     3.4 Term and Exercise Schedule. To determine the term and the exercise
         --------------------------
schedule of each option;

                                       2

<PAGE>

    3.5 Other Terms of Options. To determine the terms and conditions of each
        ----------------------
stock option agreement (which need not be identical) entered into between the
Company and any person to whom the Board determines to grant an option;

    3.6 Interpretation of Plan. To interpret the Plan and to prescribe, amend
        ----------------------
and rescind rules and regulations relating to the Plan;

    3.7 Amendment of Options. With the consent of the holder thereof, to modify
        --------------------
or amend any option granted under the Plan; and

    3.8 General Authority. To take such actions and make such determinations
        -----------------
deemed necessary or advisable by the Board for the administration of the Plan,
subject to complying with the Plan and with applicable legal requirements.

4.  Eligibility and Award of Options.
    --------------------------------

    4.1 Authority to Grant and Eligibility. The Board shall have full and final
        ----------------------------------
authority, in its discretion and at any time and from time to time during the
term of this Plan, to grant or authorize the granting of options to such
officers, directors and employees of, and consultants retained by, the Company
or its subsidiary corporations as it may select, and to determine the number of
shares of Common Stock to be subject to each option. Any individual who
is eligible to receive a stock option under this Plan shall be eligible to hold
more than one option at any given time, in the discretion of the Board. The
Board shall have full and final authority in its discretion to determine, in the
case of employees (including employees that are officers or directors), whether
such options shall be incentive stock options or non-qualified stock options;
however, no incentive stock option may be granted to any person who is not a
bona fide employee of the Company or of a subsidiary corporation of the Company.
Persons selected by the Board who are prospective employees of, or consultants
to be retained by, the Company or its subsidiaries, including members of the
Board, shall be eligible to receive non-qualified stock options; provided,
however, that in the case of such prospective employment or other engagement,
the exercisability of such options shall be subject in each case to such person
in fact becoming an employee or consultant, as applicable, of the Company or its
subsidiaries.

    4.2 Certain Restrictions Applicable to Stock Options. No stock options shall
        ------------------------------------------------
be granted to any employee who, at the time such option is granted, owns stock
possessing more than ten

                                       3

<PAGE>

percent (10%) of the total combined voting power of all classes of outstanding
capital stock of the Company, or of any parent corporation or subsidiary
corporation of the Company, unless the exercise price (as provided in Section
5.1 hereof) is not less than one hundred ten percent (110%) of the fair market
value of the Common Stock on the date the option is granted and the period
within which the option may be exercised (as provided in Section 5.2 hereof)
does not exceed five (5) years from the date the option is granted (the
provisions of the foregoing sentence shall equally apply to non-qualified
options granted under this Plan). As used in this Plan, the terms "parent
corporation" and "subsidiary corporation" shall have the meanings set forth in
Sections 424 (e) and (f), respectively, of the Internal Revenue Code. For
purposes of this Section 4.2, in determining stock ownership, an employee shall
be considered as owning the voting capital stock owned, directly or indirectly,
by or for his brothers and sisters, spouse, ancestors and lineal descendants.
Voting capital stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately
by or for its shareholders, partners or beneficiaries, as applicable.
Additionally, for purposes of this Section 4.2, outstanding capital stock shall
include all capital stock actually issued and outstanding immediately after the
grant of the option to the employee. Outstanding capital stock shall not include
capital stock authorized for issue under outstanding options held by the
employee or by any other person. Additionally, the aggregate fair market value
(determined as of the date an option is granted) of the Common Stock with
respect to which incentive stock options granted are exercisable for the first
time by an employee during any one calendar year (under this Plan and under all
other incentive stock option plans of the Company and of any parent or
subsidiary corporation) shall not exceed One Hundred Thousand Dollars
($100,000).

       4.3  Grants of Options to Directors. With respect to the participation of
            ------------------------------
of any director in the Plan, his or her selection as a participant and the
number of option shares to be allocated to such director shall be determined
either: (i) by the Board, of which a majority, as well as a majority, of the
directors acting on the matter, shall be "disinterested persons" as hereinafter
defined), or (ii) by, or only in accordance with, the recommendations of the
Committee of three or more persons having full authority to act in the matter,
of which all members shall be "disinterested persons." For the purposes of
this Plan, a director or member of such committee shall be deemed to be a
"disinterested person" only if such person qualifies as "disinterested person"
within the meaning of paragraph (d)(3) of Rule 16b-3 promulgated by the
Securities and Exchange Commission

                                       4

<PAGE>

(or any successor rule). Any director to whom an option is awarded shall be
ineligible to vote upon his or her option.

     4.4  Date of Grant. The date on which an option shall be granted shall be
          -------------
stated in each option agreement and shall be the date of the Board's
authorization of such grant or such later date as may be set by the Board at the
time such grant is authorized.

5.   Terms and Provisions of Option Agreements. Each option granted under
     -----------------------------------------
the Plan shall be evidenced by a stock option agreement between the person to
whom the option is granted and the Company. Each such agreement shall be subject
to the following terms and conditions, and to such other terms and conditions
not inconsistent herewith as the Board may deem appropriate in each case:

     5.1  Exercise Price. The price to be paid for each share of Common Stock
          --------------
upon the exercise of an option shall be determined by the Board at the time the
option is granted; provided however, (that (1) no stock option shall have an
exercise price less than eighty-five percent (85%) of the fair market value of
the Common Stock on the date the option is granted; (2) no incentive stock
option shall have an exercise price less than one hundred percent (100%) of the
fair market value of the Common Stock on the date the option is granted; and (3)
all stock options granted to the ten percent (10%) shareholders shall have the
exercise price set at not less than one hundred ten percent (110%) of fair
market value at the date of the grant, as provided in Section 4.2 hereof. For
all purposes of this Plan, the fair market value of the Common Stock on any
particular date shall be the closing price on the trading day next preceding
that date on the principal securities exchange on which the Company's Common
Stock is listed, or, if such Common Stock is not then listed on any securities
exchange, the fair market value of the Common Stock on such date shall be the
mean of the closing bid and asked prices as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") On the trading
                                                         ------
day next preceding such date. In the event that the Company's Common Stock is
neither listed on a securities exchange nor quoted by NASDAQ, then the Board
shall in good faith determine the fair market value of the Company's Common
Stock on such date, with such determination being based upon past arms - length
sales by the Company of its equity securities and other factors considered
relevant in determining the Company's fair value; provided however, that any
individual form of option agreement may provide for alternative means of
valuation for the purpose of repurchase as fair market value of shares acquired.

                                       5

<PAGE>

          5.2  Term of Options. The period or periods within which an option may
               ---------------
be exercised shall be determined by the Board at the time the option is granted,
but no stock option shall exceed ten (10) years from the date the option is
granted (or five (5) years in the case of any stock option granted to a ten
percent (10%) shareholder as described in Section 4.2 hereof).

          5.3  Exercisability. Stock options granted under this Plan shall be
               --------------
exercisable at such future time or times (or may be fully exercisable upon
grant), whether or not in installments, as shall be determined by the Board and
provided in the form of stock option agreement, subject, however, to the
requirement that all options granted under this Plan shall provide a right to
exercise that accrues at a rate of at least twenty percent (20%) of the number
of shares subject to the option for each year after the date of grant (i.e., at
a rate so as to become fully exercisable at the end of five (5) years).
Likewise, to the extent that options are immediately exercisable and shares
purchased thereunder have vesting schedules such that the Company is entitled to
repurchase at original exercise price a portion of the shares so acquired, all
such option agreements shall provide for the lapsing of such purchase rights at
a rate of at least twenty percent (20%) of the number of shares subject to the
option for each year after the date of grant.

          5.4  Method of Payment for Common Stock Upon Exercise. Except as
               ------------------------------------------------
otherwise provided in the applicable stock option agreement (subject to the
limitations of this Plan), the exercise price for each share of Common Stock
purchased under an option shall be paid in full in cash at the time of purchase
(or by check acceptable to the Board). At the discretion of the Board, the stock
option agreement may provide for (or the Board may permit) the exercise price to
be paid by one or more of the following additional alternative methods: (i) the
surrender of shares of the Company's Common Stock, in proper form for transfer,
owned by the person exercising the option and having a fair market value on the
date of exercise equal to the exercise price, (ii) to the extent permitted under
the applicable provisions of the California Corporations Code, the delivery by
the person exercising the option of a full recourse promissory note executed by
such person, bearing interest at a per annum rate which is not less that the
"test rate" as see by the regulations promulgated under Sections 483 or 1274,
as applicable, of the Internal Revenue Code and as in effect on the date of
exercise, or (iii) any combination of cash, shares of Common Stock or promissory
notes, so long as the sum of the cash so paid, plus the fair market value of the
shares of Common Stock so surrendered and the principal amounts of the
promissory notes so delivered, is equal to the aggregate exercise price. Without

                                       6

<PAGE>

limiting the generality of the foregoing, the form of option agreement may
provide for (or the Board may otherwise permit, in its discretion) that the
option be exercised through a "net issue" exercise procedure (cash-less
exercise), whereby the optionee may elect to receive shares of the Company's
Common Stock having an aggregate fair market value at the date of exercise equal
to the net value of the portion of the option so exercised as of the exercise
date. For purposes of the foregoing, the net value of any option (or portion
thereof) as of such exercise date, shall be equal to the aggregate fair market
value of the shares subject to the option (or portion thereof being exercised)
less the aggregate exercise price of the option (or portion thereof). In such
event the Company shall issue to the optionee a number of shares of the
Company's Common Stock having a fair market value as of the date of exercise
equal to the net value of the option (or portion thereof being exercised). No
share of Common Stock shall be issued under any option until full payment
therefor has been made in accordance with the terms of the stock option
agreement (and in compliance with the Plan). Any promissory note accepted upon
the exercise of an option from a person who is a consultant retained by the
Company or any subsidiary shall be adequately secured by collateral other than
the shares of the Common Stock acquired upon such exercise, in accordance with
Section 409 of the California Corporations Code. Additionally, if permitted by
the form of stock option agreement, or at the Board's discretion, any such
promissory note may permit the payment of principal and interest accruing
thereunder by surrender of shares of the Company's Common Stock, in proper form
for transfer, and having a fair market value on the date of payment and
surrender equal to the dollar amount to be applied to principal and accrued
interest thereunder.

         5.5 Non-Assignability. No stock option granted under the Plan shall be
             -----------------
assignable or transferable by an optionee except by will or the laws of descent
and distribution and each stock option granted under the Plan shall be
exercisable only by the optionee during his or her lifetime.

         5.6 Termination of Employment Provisions Applicable to Stock Options.
         ---------------------------------------------------------------------
Each stock option agreement shall comply with the following provisions relating
to early termination of the option based upon termination of thee employee's
employment with the Company:

         5.6.1 Death. Upon the death of an employee of the Company, any stock
               -----
option which such employee holds may be exercised, within such period after the
date of death as the Board shall prescribe in the stock option agreement but not
less than six (6) months nor more than twelve (12) months after

                                       7

<PAGE>

death), by the employee's representative or by the person entitled thereto under
the employee's will or the laws of intestate succession. If the option is not so
exercised in accordance with the foregoing, it shall terminate upon the
expiration of such prescribed period.

     5.6.2 Disability. Upon the permanent and total disability of an employee of
           ----------
the Company, any stock option which the employee holds may be exercised by the
employee within such period after the date of termination of employment
resulting from such disability (six (6) months, except in the case of such
disability meeting the requirements of Section 22(e)(3) of the Internal Revenue
Code in which case the period shall be extended to not more than twelve (12)
months, after termination by reason of disability) as the Board shall prescribe
in the stock option agreement. If the option is not so exercised in accordance
with the foregoing, it shall terminate upon the expiration of such prescribed
period, unless the employee dies prior thereto, in which event the provisions of
Section 5.6.1 hereof shall apply.

     5.6.3 Retirement. Upon the retirement of an employee of the Company (on or
           ----------
after the normal retirement age or other date specified in the Company's
retirement program, if any, or as established by the Board), any stock option
may be exercised by such employee within such period after the date of
retirement as the Board shall prescribe in the stock option agreement; provided,
however that such period of exercisability shall not be less than thirty (30)
days nor more than three (3) months. The stock option shall terminate upon the
expiration of such prescribed period (unless the employee dies prior thereto, in
which event the provisions of Section 5.6.1 hereof shall apply and the time
period for exercise shall be determined as if the employee's date of death had
been the date of retirement.

     5.6.4 Transfer to Related Corporation. In the event that an employee of the
           -------------------------------
Company leaves the employ of the Company to become an employee of any parent or
subsidiary corporation of the Company, or if the employee leaves the employ of
any such parent or subsidiary corporation to become an employee of the Company
or of another parent or subsidiary corporation, such employee shall be deemed to
continue as an employee of the Company for all purposes of this Plan, and any
reference to employment by the Company shall be deemed to refer to employment by
any parent or subsidiary of the Company.

     5.6.5 Other Severance. In the event an employee of the Company leaves the
           ---------------
employ of the Company for any reason other than as set forth above in this
Section 5.6, any incentive stock option which such employee holds must be
exercised not later than

                                       8

<PAGE>

three (3) months after the date on which the employee's employment terminates
(or such shorter period as may be prescribed in the option agreement, the
minimum specified period being thirty (30) days). The stock option shall
terminate upon the expiration of such prescribed period.

         5.6.6 Effect of Termination of Engagement of Non-Employees on
               --------------------------------------------------------
Non-Qualified Stock Options. The Board, in its discretion, shall provide in
-----------------------------
each non-qualified stock option agreement issued to a consultant or non-employee
Director retained by the Company such provisions as the Board deems appropriate
with respect to whether, and if so when, the option (or any portion thereof)
shall be terminated prior to normal expiration (or otherwise affected) upon any
termination of the optionee's engagement as a consultant providing services to
the Company. Any reference in this Plan to services of a consultant to the
Company shall be deemed (for all purposes of this Plan) to mean and include the
existence of a consulting relationship with any parent corporation or subsidiary
corporation of the Company.

         5.6.7 Overridinq Limitation on Time For Exercise. Notwithstanding any
               ------------------------------------------
other provisions of this Plan, no stock option may be exercised after the
expiration of ten (10) years from the date of grant.

         5.7 All options subject to Terms of this Plan. In addition to the
             -----------------------------------------
provisions contained in any option agreement granted under this Plan, each such
stock option agreement shall provide that the same is subject to the terms and
conditions of this Plan and each optionee shall be given a copy of this Plan.
Further, any terms or conditions contained in any such stock option agreement
granted hereunder which are inconsistent in any respect with the provisions of
this Plan shall be disregarded and void, or shall be deemed amended to the
extent necessary to comply with the provisions of this Plan and the intent of
the Board.

         5.8 Other Provisions. Option agreements under the Plan shall contain
             ----------------
such other provisions, including, without limitation: (i) restrictions and
conditions upon the exercise of the option, (ii) rights of first refusal in
favor of the Company or its assignees) applicable to shares of Common Stock
acquired upon exercise of an option which are subsequently proposed to be
transferred by the optionee, (iii) Lock-up agreements (applicable in the event
of the public offering of the Common Stock of the Company) restricting an
optionee from any sales or other transfers of option stock for a designated
period of time following the effective date of a registration statement under
the Securities Act of 1993, (iv) other restrictions on the transferability or
rights to retain shares of the Common Stock

                                       9

<PAGE>

received upon the exercise of the option, including repurchase rights at
original cost based on a vesting schedule, (v) commitments to pay cash bonuses,
make loans or transfer other property to an optionee upon exercise of any
option, and (vi) restrictions required by federal and applicable state
securities laws, all as the Board shall deem necessary or advisable; provided
that no such additional provision shall be inconsistent with any other term or
condition of this Plan and no such additional provision shall cause any
incentive stock option granted hereunder to fail to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code. Without limiting
the generality of the foregoing, the Board may provide in the form of stock
option agreement that, in lieu of an exercise schedule, the option may
immediately be exercisable in full and provide a "vesting scheduled" with
respect to the stock so purchased, giving the Company (or its assignees) the
right to repurchase the shares of Common Stock at cost (or some other specified
amount) to the extent such shares have not become vested upon any termination of
the optionee's employment or other engagement with the Company, which vesting
may depend upon or be related to the attainment of performance goals or other
conditions (such as the passage of stated time periods) pursuant to which the
obligation to resell such shares to the Company shall lapse.

6. Securities Law Requirements. The Board shall require any potential optionee,
   ---------------------------
as a condition of the exercise of an option, to represent and establish to the
satisfaction of the Board that all shares of Common Stock to be acquired upon
the exercise of such option will be acquired for investment and not for resale.
No shares of Common Stock shall be issued upon the exercise of any option unless
and until: (i) the Company and the optionee have satisfied all applicable
requirements under the Securities Act of 1933 and the Securities Exchange Act of
1934, (ii) any applicable listing requirement of any stock exchange on which the
Company's Common Stock is listed has been satisfied, and (iii) all other
applicable provisions of state and federal law have been satisfied. The Board
shall cause such legends to be placed on certificates evidencing shares of
Common Stock issued upon exercise of an option as, in the opinion of the
Company's counsel, may be required by federal and applicable state securities
laws.

7. Withholding Taxes. The exercise of any opinion granted under this Plan shall
   -----------------
be conditioned upon the optionee's payment to the Company of all amounts (in
addition to the exercise price) required to meet federal state or local taxes of
any kind

                                       10

<PAGE>

required by law to be withheld with respect to shares to be issued on exercise
of such option. The Board, in its discretion, may declare cash bonuses to an
optionee to satisfy any such withholding requirements or may incorporate
provisions in the form of stock option agreement (or after grant of the option
may permit, in its discretion) allowing an optionee to satisfy any such
withholding obligations, in whole or in part, by delivery of shares of the
Company's Common Stock already owned (or being purchased under the option) by
the optionee and which are not subject to repurchase, forfeiture, vesting or
other similar requirements or restrictions. The fair market value of any such
shares used to satisfy such withholding obligations shall be determined as of
the date the amount of tax to be withheld is to be determined. The Company shall
have the right to deduct from payments of any kind otherwise due to the optionee
(whether regular salary, commissions, or otherwise) any federal, state or local
taxes of any kind required by law to be withheld with respect to any shares
issued upon exercise of options granted under the Plan.

8.  Adjustments Upon Changes in Capitalization or Merger.
    ----------------------------------------------------

    8.1 Stock Splits and Similar Events. Subject to any required action by the
        -------------------------------
Company's Board and shareholders, the number of shares of Common Stock covered
by outstanding options granted under this Plan and the exercise price thereof
shall be proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares of Common Stock resulting from a subdivision or
combination of such shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such
outstanding shares of Common Stock effected without the receipt of consideration
by the Company; provided, however, that the conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration."

    8.2 Mergers and Acquisitions. Subject to any required action by the
        ------------------------
Company's Board and shareholders, if the Company shall be the surviving
corporation in any merger or consolidation, the options granted under this Plan
shall pertain and apply to the securities to which a holder of the number of
shares subject to the unexercised portion of such options would have been
entitled. A dissolution or liquidation of the Company or a sale of all or
substantially all its business and assets or a merger or consolidation in which
the Company is not the surviving corporation will cause the options granted
hereunder to surviving corporation will cause the options granted hereunder to
terminate unless the agreement of such sale, merger, consolidation or other
accquisition otherwise provides.

                                       11

<PAGE>

          8.3 Board's Determination Final and Binding Upon Optionees. The
              ------------------------------------------------------
foregoing determinations and adjustments in this Section 8 relating to stock
or securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. The Company shall give
notice of any such adjustment or action to each optionee; provided, however,
that any such adjustment or action shall be effective and binding for all
purposes, whether or not such notice is given or received.

          8.4 No Rights Except as Expressly Stated. Except as hereinabove
              ------------------------------------
expressly provided in this Section 8, no additional rights shall accrue to any
optionee by reason of any subdivision or combination of shares of the capital
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or of stock of
another corporation, and any issue by the Company of shares of stock of any
class or of securities convertible into shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of shares subject to options granted hereunder.

          8.5 No Limitations on Company's Discretion. The grant of options under
              --------------------------------------
this Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.

 9.       No Additional Employment Related Rights or Benefits.
          ---------------------------------------------------

          9.1 No Special Employment Rights. Nothing contained in this Plan or in
              ----------------------------
any option granted hereunder shall confer upon any optionee any right with
respect to the continuation of his or her employment or other engagement by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment or consulting agreement to the contrary, at any
time to terminate such employment or consulting or other relationship or to
increase or decrease the compensation of any optionee. Whether an authorized
leave of absence, or absence in military or government service, shall constitute
termination of an optionee's employment or other engagement shall be determined
by the Board.

                                       12

<PAGE>

     9.2   Other Employee Benefits. The amount of any compensation deemed to be
           -----------------------
received by any employee or consultant as a result of the exercise of an option
or the sale of shares received upon such exercise will not constitute
compensation with respect to which any other employment (or other engagement)
related benefits of such optionee are determined, including, without limitation,
benefits under any bonus, pension, profit-sharing, life insurance or salary
continuation plan, except as otherwise specifically determined by the Board or
as expressly provided for in the option agreement. The granting of an option
shall impose no obligation upon the optionee to exercise such option.

10.  Rights as a Stockholder and Access to Information. No optionee and no
     -------------------------------------------------
person claiming under or through any such optionee shall be, or have any of the
rights or privileges of, a shareholder of the Company in respect of any of the
shares issuable upon the exercise of any option granted under this Plan, unless
and until the option is properly and lawfully exercised and a certificate
representing the shares so purchased is duly issued to the optionee or to his or
her estate. No adjustment shall be made for dividends or any other rights if the
record date relating to such dividend or other right is before the date the

optionee became a shareholder (i.e., the date of issue of a stock certificate).
                               ----
It is intended, however, that holders of options granted under this Plan be
provided with such information concerning the Company, including, at a minimum,
receipt of annual financial statements (consisting of a balance sheet and an
income statement), as shall be deemed reasonable and appropriate by the Board of
Directors, subject to the advice of legal counsel, so as to enable option
holders to make informed decisions concerning the exercise of their option and
the purchase of the Company's Common Stock. In that connection, upon written
request to the Secretary of the Company, any optionee shall be entitled to
inspect, at the executive offices of the Company, the financial information made
available to shareholders of the Company pursuant to Sections 1500 et. seq. or
                                                                   --  ---
other applicable provisions of the California Corporations Code. The Company
shall deliver to each optionee during the period for which her or she has one or
more options outstanding, copies of all annual reports and other information
which are provided to all shareholders of the Company, except the Company shall
not be required to deliver such information to key employees whose duties in
connection with the Company assure their access to equivalent information.

                                       13

<PAGE>

11. Modification, Extension and Renewal of Options. Subject to the limitations
    ----------------------------------------------
of this Plan, the Board may modify, extend or renew, or accelerate the
exercisability of, outstanding options granted under the Plan. Furthermore, the
Board may, subject to the other provisions of this Plan, upon the cancellation
of previously granted options having higher per share exercise prices, regrant
options at a lower price; provided, however, that no such modification or
cancellation and regrant of an option shall, without the written consent of the
optionee, alter or impair any rights of the optionee under any option previously
granted under the Plan.

12. Use of Proceeds. The proceeds received from the sale of shares of the Common
    ---------------
Stock upon exercise of options granted under the Plan shall be used for general
corporate purposes.

13. Reservation of Shares. The Company, during the term this Plan, will at all
    ---------------------
times reserve and keep available such number of shares of its Common Stock as
shall be sufficient to satisfy the requirements of the Plan and all options
issued hereunder.

14. Term of Plan.
    ------------

    14.1 Effective Dates. The Plan became effective November 1, 1993, but no
         ---------------
stock option granted under the Plan shall become exercisable unless and until
the Plan shall have been approved by the Company's shareholders by the vote of
the holders of a majority of the outstanding shares of the Company present and
entitled to vote at a duly held meeting of the Company's shareholders (or by
consent of the holders of the outstanding shares of the Company entitled to
vote) in accordance with the requirements of the Company's Bylaws and the
California Corporations Code. If such shareholder approval is not obtained
within twelve (12)months after the date of the Board's adoption of the Plan,
any incentive stock options previously granted under the Plan shall terminate
and no further incentive stock options shall be granted. Subject to the
foregoing limitation, options may be granted under the Plan at any time after
the effective date and before the date fixed for termination of the Plan.

    14.2 Termination. Unless sooner terminated in accordance with Section 15,
         -----------
the Plan shall terminate upon the earlier of: (i) the close of business on the
last business day of the calendar month in which the tenth (10th) anniversary of
the date of the Plan's adoption by the

                                       14

<PAGE>

Board occurs, or (ii) the date on which all shares available for issuance under
the Plan shall have been issued pursuant to options granted under the Plan and
none of such shares shall remain subject to contractual repurchase rights of the
Company pursuant to "vesting" or other similar provisions. If the date of
termination is determined under clause (i) above, then any options outstanding
on such date shall continue to have force and effect in accordance with the
provisions of the option agreements evidencing such options.

15. Early Termination and Amendment of the Plan. The Board may from time to time
    -------------------------------------------
suspend or terminate the Plan or revise or amend it; provided, however, that,
without the approval of the Company's shareholders (except as to 15.1 below,
which also requires the consent of the affected optionees) at a duly held
meeting of the Company's shareholders by the vote of a majority of the shares
present and entitled to vote (or by written consent of the holders entitled to
vote) in compliance with the requirements of the Company's Bylaws and the
California Corporations Code, no such action of the Board shall:

    15.1 Modifications of Outstanding Options. Without the consent of each
         ------------------------------------
affected optionee, alter or impair any rights of an optionee under any option
previously granted under the Plan;

    15.2 Increases in Number of Shares Subject to the Plan. Increase the
         -------------------------------------------------
aggregate number of shares of the Common Stock which may be issued upon exercise
of options granted under the Plan (except for adjustments made pursuant to
Section 8 hereof);

    15.3 Changes in Eligibility. Change the designation of employees eligible
         ----------------------
to receive incentive stock options under the Plan;

    15.4 Plan Duration. Extend the termination date beyond that provided in
         -------------
Section 14.2;

    15.5 Changes not Approved by Legal Counsel. Otherwise amend or modify the
         -------------------------------------
Plan (or outstanding options) under circumstances where shareholder approval is
considered necessary in the opinion of legal counsel to the Company; or

    15.6 Changes to this Section. Amend this Section 15 to defeat its purposes.
         -----------------------

                                       15

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