Document:

<PAGE>
                                                                     EXHIBIT 4.1

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (A) AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR (B) AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR (C) FULL COMPLIANCE WITH THE
PROVISIONS OF RULE 144 UNDER THE ACT.

--------------------------------------------------------------------------------

Date of Issuance: January 8, 1998                       Number of Shares:  6,000
                                                        (subject to adjustment)

                              CONNETICS CORPORATION
                          COMMON STOCK PURCHASE WARRANT

      Connetics Corporation (the "Company"), for value received, hereby
certifies that Gerard Klauer Mattison & Co., Inc., or its registered assigns
(the "Registered Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company, at any time after the date hereof and on or before
the Expiration Date (as defined in Section 5 below), up to 6,000 fully paid and
nonassessable shares of the Common Stock of the Company, at an exercise price of
$6.00 per share (the "Warrant Exercise Price"). The shares purchasable upon
exercise of this Warrant and the Warrant Exercise Price shall be adjusted from
time to time pursuant to the provisions of this Warrant and are hereinafter
referred to as the "Warrant Stock" and the "Purchase Price," respectively.

      This Warrant is originally issued to Gerard Klauer Mattison & Co., Inc.
("GKM") as partial compensation for the services rendered to the Company by GKM
in connection with a public offering of the Company's Common Stock (the
"Offering") pursuant to that certain letter agreement between the Company and
GKM dated November 24, 1997. The effective date of the Offering, December 15,
1997, is referred to herein as the "Effective Date".

      1.    EXERCISE.

            (a)   MANNER OF EXERCISE. This Warrant may be exercised by the
Registered Holder, in whole or in part, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit A duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney, at the principal
office of the Company, or at such other office or agency as the Company may
designate, accompanied by the payment to the Company of the Purchase Price in
full, by cash, check or wire transfer.

            (b)   EFFECTIVE TIME OF EXERCISE. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the day on which this Warrant shall have been surrendered to the Company as
provided in Section 1(a) above. At such time, the person or persons in whose
name or names any certificates for Warrant Stock shall be

<PAGE>

issuable upon such exercise as provided in Section 1(d) below shall be deemed to
have become the holder or holders of record of the Warrant Stock represented by
such certificates.

            (c)   DELIVERY TO HOLDER. As soon as practicable after the exercise
of this Warrant in whole or in part, and in any event within ten (10) days
thereafter, the Company at its expense will cause to be issued in the name of,
and delivered to, the Registered Holder, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct:

                  (i)   a certificate or certificates for the number of shares
of Warrant Stock to which such Registered Holder shall be entitled, and

                  (ii)  in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of shares of Warrant Stock equal (without
giving effect to any adjustment therein) to the number of such shares called for
on the face of this Warrant minus the number of such shares purchased by the
Registered Holder upon such exercise as provided in Section 1(a) above.

      2.    ADJUSTMENTS.

            (a)   STOCK SPLITS AND DIVIDENDS. If outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Common Stock, the Purchase
Price in effect immediately prior to such subdivision or at the record date of
such dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this
Warrant immediately prior to such adjustment, multiplied by the Purchase Price
in effect immediately prior to such adjustment, by (ii) the Purchase Price in
effect immediately after such adjustment.

            (b)   RECLASSIFICATION, ETC. In case of any reclassification or
change of the outstanding securities of the Company or of any reorganization of
the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
holder of this Warrant, upon the exercise hereof at any time after the
consummation of such reclassification, change, reorganization or conveyance,
shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise hereof prior to such consummation, the
stock or other securities or property to which such holder would have been
entitled upon such consummation if such holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
Section 2(a); and in each such case, the terms of this Section 2 shall be
applicable to the shares of stock or other securities properly receivable upon
the exercise of this Warrant after such consummation.

                                     - 2 -
<PAGE>

            (c)   ADJUSTMENT CERTIFICATE. When any adjustment is required to be
made in the Purchase Price, the Company shall promptly mail to the Registered
Holder a certificate setting forth the Purchase Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
certificate shall also set forth the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable following
the occurrence of any of the events specified in Section 2(a) or 2(b) above.

      3.    TRANSFERS.

            (a)   UNREGISTERED SECURITY. This Warrant and the Warrant Stock have
not been registered under the Securities Act, and the Registered Holder may not
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement under the Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, satisfactory to the Company, that such
registration and qualification are not required or (iii) full compliance with
the provisions of Rule 144 of the Act. Each certificate or other instrument for
Warrant Stock issued upon the exercise of this Warrant shall bear a legend
substantially to the foregoing effect.

            (b)   FURTHER RESTRICTIONS. In addition to the other restrictions on
transfers set forth herein, this Warrant and the Warrant Stock shall not be
sold, transferred, assigned, pledged or hypothecated by any person, except by
operation of law or by reason of reorganization of the Company, for a period of
one year following the Effective Date (the "Restricted Period"). However, this
Warrant and the Warrant Stock may be transferred to the bona fide officers or
partners of GKM, and this Warrant may be so transferred, converted or exercised,
if the Warrant and the Warrant Stock remain subject to the restrictions
specified in this subsection for the remainder of the Restricted Period.

            (c)   TRANSFERABILITY. Subject to the provisions of Sections 3(a)
and 3(b) hereof, this Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of the Warrant with a properly executed
assignment (in the form of Exhibit B hereto) at the principal office of the
Company.

            (d)   WARRANT REGISTER. The Company will maintain a register
containing the names and addresses of the Registered Holders of this Warrant.
Until any transfer of this Warrant is made in the warrant register, the Company
may treat the Registered Holder of this Warrant as the absolute owner hereof for
all purposes; provided, however, that if this Warrant is properly assigned in
blank, the Company may (but shall not be required to) treat the bearer hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary. Any Registered Holder may change such Registered Holder's address as
shown on the warrant register by written notice to the Company requesting such
change.

      4.    NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but

                                     - 3 -
<PAGE>

will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.

      5.    TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate upon the earlier to occur of the following (the
"Expiration Date"): (i) the date which is five (5) years from the Effective Date
or (ii) the closing of the Company's sale of all or substantially all of its
assets or the acquisition of the Company by another entity by means of merger or
other transaction as a result of which shareholders of the Company immediately
prior to such acquisition possess a minority of the voting power of the
acquiring entity immediately following such acquisition.

      6.    NOTICES OF CERTAIN TRANSACTIONS. In the event:

            (a)   that the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right, to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right, or

            (b)   of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company, or

            (c)   of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,

then, and in each such case, the Company will mail by overnight courier or cause
to be mailed by overnight courier to the Registered Holder of this Warrant a
notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (ii) the
effective date on which such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such other stock or securities at the time deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up) are to be determined. Such notice shall be mailed by
overnight courier at least twenty (20) days prior to the record date or
effective date for the event specified in such notice.

      7.    RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.

                                     - 4 -
<PAGE>

      8.    EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 3
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.

      9.    REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.

      10.   NOTICES. Any notice required or permitted by this Warrant shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by overnight courier (a) if to the Registered Holder, to the
address of the Registered Holder most recently furnished in writing to the
Company and (b) if to the Company, to the address set forth below or
subsequently modified by written notice to the Registered Holder. In the event
that any date provided for in this Warrant falls on a Saturday, Sunday or legal
holiday, such date shall be deemed extended to the next business day.

      11.   NO RIGHTS AS SHAREHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a shareholder of the Company.

      12.   NO FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined by the closing price on the
Nasdaq Stock Market or in good faith by the Company's Board of Directors.

      13.   AMENDMENT OR WAIVER. Any term of this Warrant may be amended or
waived upon written consent of the Company and the Registered Holder.

      14.   HEADINGS. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.

                                     - 5 -
<PAGE>

      15.   GOVERNING LAW. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.

                                          CONNETICS CORPORATION

                                          By:  /s/ John L. Higgins
                                             ___________________________________

                                          Title:  Chief Financial Officer
                                                ________________________________

                                          Address:  3400 West Bayshore Road
                                                    Palo Alto, California 94303

                                     - 6 -
<PAGE>

                                    EXHIBIT A

                                  PURCHASE FORM

To: Connetics Corporation                               Dated:

      The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby irrevocably elects to purchase _______ shares of the Common
Stock covered by such Warrant and herewith makes payments by wire transfer to an
account designated by the Company or delivery of cash or check payable to the
Company in the amount of the Purchase Price; representing the full purchase
price for such shares at the price per share provided for in such Warrant.

      The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.

                                          Signature:____________________________

                                          Address:______________________________

<PAGE>

                                    EXHIBIT B

                                 ASSIGNMENT FORM

      FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant with respect to the number of shares of Common Stock covered
thereby set forth below, unto:

      NAME OF ASSIGNEE               ADDRESS                       NO. OF SHARES

Dated:________________________________    Signature:____________________________

                                                    ____________________________

                                          Witness:______________________________<PAGE>
                                                                   EXHIBIT 10.10

                                  SYBASE, INC.
                            1992 DIRECTOR OPTION PLAN
                          (as amended February 3, 1999)

1.      Purposes of the Plan. The purposes of this 1992 Director Option Plan are
to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

        All options granted hereunder shall be "non-statutory stock options."

2.      Definitions. As used herein, the following definitions shall apply:

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

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

        (c)     "Common Stock" means the Common Stock of the Company.

        (d)     "Company" means Sybase, Inc., a Delaware corporation.

        (e)     "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.

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

        (g)     "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

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

        (i)     "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 National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the date of grant, as reported in
the Wall Street Journal or such other source as the Board deems reliable;

                (ii)    If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or 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 bid

                                      -1-

<PAGE>
and 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 Board deems reliable, or;

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

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

        (k)     "Optioned Stock" means the Common Stock subject to an Option.

        (1)     "Optionee" means an Outside Director who receives an Option.

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

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

        (o)     "Plan" means this 1992 Director Option Plan.

        (p)     "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.

        (q)     "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

3.      Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 700,000 Shares (the "Pool") of Common Stock. The Shares may be
authorized but unissued, or reacquired Common Stock.

        If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which are subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.

4.      Administration of and Grants of Options under the Plan.

        (a)     Administrator. Except as otherwise required herein, the Plan
shall be administered by the Board.

        (b)     Procedure for Grants. The provisions set forth in this Section
4(b) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. All grants of Options to Outside Directors
under this Plan shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:

                (i)     No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of Shares
to be covered by Options granted to Outside Directors, the exercise price
thereof or the timing of the grant of such Options.

                (ii)    Each new Outside Director who first becomes a Director
after March 26, 1996 (excluding each Outside Director who, at the time he or she
first becomes a Director, holds unvested

                                      -2-

<PAGE>
options to purchase Shares or securities convertible into or exchangeable for
Shares as a result of such Outside Director's service as a director of an
affiliate of the Corporation), shall be automatically granted an Option to
purchase 20,000 Shares upon the date on which such person first becomes a
Director, whether through the election by the stockholders of the Company or
appointment by the Board to fill a vacancy. In addition, on the first trading
day of February in each calendar year beginning with 2000, each Outside Director
serving on that date as an Outside Director who has served as an Outside
Director for at least five months shall be automatically granted an Option to
purchase 16,000 Shares.

                (iii)   The terms of each Option granted hereunder shall be as
follows:

                        (A)     the term of the Option shall be ten (10) years.

                        (B)     except as set forth in Section 8 hereof, the
Option shall be exercisable only while the Outside Director remains a Director.

                        (C)     the Option shall become exercisable in
installments cumulatively with respect to 1/48th of the Optioned Stock one month
after the date of grant and as to an additional 1/48th of the Optioned Stock
each month thereafter, so that one hundred percent (100%) of the Optioned Stock
shall be exercisable four years after the date of grant; provided, however, that
in no event shall any Option be exercisable prior to obtaining stockholder
approval of the Plan.

                (iv)    In the event that any Option granted tinder the Plan
would cause the number of Shares subject to outstanding Options plus the number
of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through an increase in the number of Shares which may be issued under the
Plan or through cancellation or expiration of Options previously granted
hereunder.

        (c)     Powers of the Board. Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with Section
2(i) of the Plan, the Fair Market Value of the Common Stock; (ii) to interpret
the Plan; (iii) to prescribe, amend and rescind rules and regulations relating
to the Plan; (iv) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option previously granted
hereunder; and (v) to make ail other determinations deemed necessary or
advisable for the administration of the Plan.

        (d)     Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final.

5.      Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

        The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

                                       -3-

<PAGE>
6.      Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company
as described in Section 16 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.

7.      Exercise Price and Consideration.

        (a)     Exercise Price. The per Share exercise price for Optioned Stock
shall be 100% of the Fair Market Value per Share on the date of grant of the
Option.

        (b)     Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board and 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 (6) 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) delivery of a properly executed
exercise notice together with such other documentation as the Company and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, (vi) any combination of the foregoing methods of payment, or
(vii) such other consideration and method of payment for the issuance of Shares
to the extent permitted under applicable law.

8.      Exercise of Option.

        (a)     Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7(b) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 10 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

        (b)     Rule 16b-3. Options granted to Outside Directors must comply
with the applicable provisions of Rule 16b-3 promulgated under the Exchange Act
or any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.

                                      -4-

<PAGE>
        (c)     Termination of Continuous Status as a Director. In the event of
an Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section,
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it as the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

        (d)     Disability of Optionee, in the event Optionee's Continuous
Status as a Director terminates as a result of total and permanent disability
(as defined in Section 22(e)(3) of the Code), the Optionee may exercise his or
her Option, but only within twelve (12) months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option at the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.

        (e)     Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it at the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

9.      Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

10.     Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.

        (a)     Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
Option and the number of Shares which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option.

                                      -5-

<PAGE>
        (b)     Dissolution or Liquidation, in the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action; provided, however, that the Company shall
give each Optionee notice of such dissolution or liquidation at least thirty
(30) days prior to the consummation of such dissolution or liquidation and, upon
receipt of such notice, all options shall become fully exercisable.

        (c)     Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the assets
of the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Sections 4
and 8 hereof for so long as the Optionee serves as a Director or as a director
of the Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or as a director of the Successor Corporation,
as applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or equivalent option shall remain exercisable in accordance with Sections 8(c)
through (e) above.

               If the Successor Corporation does not assume an outstanding
Option or substitute for it an equivalent option, the Option shall become fully
vested and exercisable, including as to Shares for which it would not otherwise
be exercisable. In such event the Board shall notify the Optionee that the
Option shall be fully exercisable for a period of not less than forty-five (45)
days from the date of such notice, and upon the expiration of such period the
Option shall terminate.

               For the purposes of this Section 10(c), an Option shall be
considered assumed if, following the merger or sale of assets, the Option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets was not solely common stock of the Successor
Corporation, the Board may, with the consent of the Successor Corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the Successor Corporation equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

11.     Amendment and Termination of the Plan.

        (a)     Amendment and Termination. Except as set forth in Section 4 or
as further limited by the Rule 16b-3 provisions relating to formula award plans,
the Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent, in addition, to the extent necessary and desirable to comply
with Rule 16b-3 promulgated under the Exchange Act (or any other applicable law
or regulation), the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as is required.

                                      -6-

<PAGE>
        (b)     Effect of Amendment, Etc. Any such amendment, alteration,
suspension or discontinuation of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if this Plan
has not been amended, altered, suspended or discontinued.

12.     Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4(b) hereof. Notice
of the determination shall be given to each Outside Director to whom an Option
is so granted within a reasonable time after the date of such grant.

13.     Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

        As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

        Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

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

15.     Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

16.     Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholder's held subsequent to the first granting of an Option
hereunder. Such shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law.

                                      -7-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]