Document:

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                                                                   Exhibit 10.7

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                             STOCKHOLDERS' AGREEMENT

                                  By and Among

                       International Microcircuits, Inc.,

                           The Continuing Stockholders
                         as defined herein and set forth
                          on the signature pages hereto

                                       and

                       The Investors as defined herein and
                     set forth on the signature pages hereto

                          Dated as of December 16 1997

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                                TABLE OF CONTENTS

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ARTICLE I                  DEFINITIONS............................................................................1
         Section 1.1       Construction of Terms..................................................................1
         Section 1.2       Terms Not Defined......................................................................1
         Section 1.3       Number of Shares of Stock..............................................................1
         Section 1.4       Defined Terms..........................................................................1

ARTICLE II                 REPRESENTATIONS AND WARRANTIES.     ...................................................3
         Section 2.1       Representations and Warranties of Each Investor........................................3
         Section 2.2       Representations and Warranties of the Continuing Stockholders..........................4
         Section 2.3       Representations and Warranties of the Company..........................................4

ARTICLE III                RESTRICTIONS ON TRANSFER: RIGHT OF LAST REFUSAL;
                           DRAG-ALONG AND TAG-ALONG PROVISIONS....................................................5
         Section 3.1       Restrictions on Transfer...............................................................5
         Section 3.2       Right of Last Refusal..................................................................5
         Section 3.3       Drag-Along Obligations.................................................................7
         Section 3.4       Tag-Along Rights.......................................................................8
         Section 3.5       Contemporaneous Transfers..............................................................8
         Section 3.6       Assignment.............................................................................8
         Section 3.7       Prohibited Transfers...................................................................8

ARTICLE IV                 RIGHTS TO PURCHASE.      ..............................................................9
         Section 4.1       Right to Participate in Certain Sales of Additional Securities.........................9
         Section 4.2       Assignment of Rights..................................................................10

ARTICLE V                  REGISTRATION RIGHTS.                ..................................................10
         Section 5.1       Piggyback Registration Rights.........................................................10
         Section 5.2       Demand Registration Rights............................................................11
         Section 5.3       Form S-3..............................................................................12
         Section 5.4       Registrable Shares....................................................................13
         Section 5.5       Further Obligations of the Company....................................................13
         Section 5.6       Indemnifications; Contribution........................................................15
         Section 5.8       Market Stand-Off......................................................................17
         Section 5.9       Transfer of Registration Rights.......................................................17

ARTICLE VI                 MISCELLANEOUS PROVISIONS.           ..................................................17
         Section 6.1       Survival of Representations and Covenants.............................................17
         Section 6.2       Legend on Securities..................................................................18
         Section 6.3       Amendment and Waiver..................................................................18
         Section 6.4       Notices...............................................................................18
         Section 6.5       Headings..............................................................................19
         Section 6.6       Counterparts..........................................................................19
         Section 6.7       Dispute Resolution....................................................................19
         Section 6.8       Remedies; Severability................................................................19

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                                           TABLE OF CONTENTS
                                               (continued)

         Section 6.9       Entire Agreement......................................................................20
         Section 6.10      Adjustments...........................................................................20
         Section 6.11      Law Governing.........................................................................20
         Section 6.12      Successors and Assigns................................................................20

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Exhibit A         Form of Joinder Agreement

Exhibit B         Amended and Restated Articles of Incorporation

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                             STOCKHOLDERS' AGREEMENT

         This Stockholders' Agreement is made as of this 16 day of December,
1997 by and among International Microcircuits, Inc., a California corporation
(the "Company'), the holders of shares of the Common Stock without par value
per share (the "Common Stock"), of the Company identified on the signature
pages hereto (collectively the `Continuing Stockholders," and individually a
"Continuing Stockholder") and the entities and persons listed under the
heading "Investors" on the signature pages hereto (the "Investors"), and any
other stockholder or option holder who from time to time becomes party to
this Agreement by execution of a Joinder Agreement in substantially the form
attached hereto as EXHIBIT A (a "Joinder Agreement").

                                   WITNESSETH

         WHEREAS, the Continuing Stockholders own shares of the Company's
outstanding Common Stock; and

         WHEREAS, reference is made to the Stock Purchase Agreement, dated as
of the date hereof, by and between the Company and the Investors (the
"Investment Agreement"), pursuant to which the Investors have purchased or
will purchase shares of the Company's Convertible Participating Preferred
Stock without par value per share (the "Convertible Preferred Stock," and
together with all other classes of preferred stock of the Company, the
"Preferred Stock").

         NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:

ARTICLE I              DEFINITIONS

         SECTION 1.1     CONSTRUCTION OF TERMS. As used herein, the
masculine, feminine or neuter gender, and the singular or plural number,
shall be deemed to be or to include the other genders or number, as the case
may be, whenever the context so indicates or requires.

         SECTION 1.2     TERMS NOT DEFINED.  Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the
Investment Agreement.

         SECTION 1.3     NUMBER OF SHARES OF STOCK. Whenever any provision of
this Agreement calls for any calculation based on a number of shares of
capital stock held by a Continuing Stockholder or an Investor, the number of
shares deemed to be held by that Continuing Stockholder or Investor shall be
the total number of shares of Common Stock, then owned by a Continuing
Stockholder or Investor, plus the total number of shares of Common Stock
issuable upon conversion of any Preferred Stock or other convertible
securities (whether debt or equity) or exercise of any vested options,
warrants, subscription or other rights to acquire any shares of the capital
stock of the Company then owned by the Continuing Stockholders or the
Investors.

         SECTION 1.4     DEFINED TERMS.  The following capitalized terms, as
used in this Agreement, shall have the meanings set forth below.

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         An "Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with the first mentioned Person. A Person shall be
deemed to control another Person if such first Person possesses directly or
indirectly the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means the Common Stock without par value per share,
of the Company, as the context requires, and any other common equity
securities now or hereafter issued by the Company (but not including the
Preferred Stock), and any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend or stock split or in
exchange for or upon conversion of such shares or otherwise in connection
with a combination of shares, recapitalization, merger, consolidation or
other corporate reorganization).

         "Conversion Price" shall have the meaning ascribed to such term in
the Company's Amended and Restated Articles of Incorporation.

         "Convertible Preferred Stock" means the Convertible Participating
Preferred Stock, without par value per share, of the Company.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.

         "Independent Third Party" means any person who, immediately prior to
the contemplated transaction, does not own in excess of 10% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by
or under common control with any such 10% owner of the Company's Common Stock
and who is not the spouse or descendent (by birth or adoption) of any such
10% owner of the Company's Common Stock.

         "Offer Notice" has the meaning specified in Section 3.2(a)

         "Offeror" has the meaning specified in Section 3.2.

         "Permitted Transferee" has the meaning specified in Section 3. 1.

         "Person" means an individual, a corporation, an association, a
partnership, an estate, a trust, and any other entity or organization,
governmental or otherwise.

         "Preferred Stock: means the Convertible Participating Preferred
Stock and the Redeemable Preferred Stock and any other class of preferred
stock, each issued or to be issued in accordance with and subject to the
terms of the Amended and Restated Articles of Incorporation of the Company
substantially in the form attached hereto as EXHIBIT B (as the same may
hereafter be amended, the "Charter"), together with any other shares issued
or issuable with respect thereto (whether by way of a stock dividend or stock
split or in exchange for or in replacement or of such shares or otherwise in
connection with a combination of shares, recapitalization, merger,
consolidation or other corporate reorganization).

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         "Qualified Public Offering" means the first underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Common Stock to the public in which the
proceeds received by the Company, net of underwriting discounts and
commissions, equal or exceed $20 million, at a price per share not less than
$13.22 (as appropriately adjusted for any stock split, combination,
reorganization, stock dividend or similar event).

         "Redeemable Preferred Stock means the Company's Redeemable Preferred
Stock, without par value per share, issued by the Company.

         "Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.

         "Shares" means the shares of Common Stock, Preferred Stock and any
other equity securities now or hereafter issued by the Company, together with
any options thereon and any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend, stock split or in
exchange for or upon conversion of such shares or otherwise in connection
with a combination of shares, recapitalization, merger, consolidation or
other corporate reorganization).

         "Transaction Offer" has the meaning specified in Section 3.2.

         "Transfer" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security or of any
rights. "Transferred" means the accomplishment of a Transfer, and
"Transferee" means the recipient of a Transfer.

         "Transferring Stockholder" has the meaning specified in Section 3.2.

ARTICLE II             REPRESENTATIONS AND WARRANTIES.

         SECTION 2.1     REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR.
Each of the Investors, individually and not jointly, hereby represents,
warrants and covenants to the Company and to the Continuing Stockholders as
follows: (a) such Investor has full authority and power under its charter and
by-laws to enter into this Agreement; (b) this Agreement constitutes the
valid and binding obligation of such Investor enforceable against it in
accordance with its terms except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and (ii) general principles of
equity that restrict the availability of equitable remedies (provided,
however, that the limitations described in this clause (ii) should not
prevent the practical realization of the benefits intended by this
Agreement); and (c) the execution, delivery and performance by such Investor
of this Agreement: (i) does not and will not violate any laws, rules or
regulations of the United States or any state or other jurisdiction
applicable to such Investor, or require such Investor to obtain any approval,
consent or waiver of, or to make any filing with, any Person that has not
been obtained or made; and (ii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under or give rise to a
right of termination of any material indenture or loan or credit agreement or
any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration

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award to which such Investor is a party or by which the property of such
Investor is bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or encumbrance on
any of the assets or properties of such Investor.

         SECTION 2.2     REPRESENTATIONS AND WARRANTIES OF THE CONTINUING
STOCKHOLDERS. Each of the Continuing Stockholders, individually and not
jointly, hereby represents, warrants and covenants to the Company and to the
Investors as follows: (a) such Continuing Stockholder has full authority,
power and capacity to enter into this Agreement; (b) this Agreement
constitutes the valid and binding obligation of such Continuing Stockholder
enforceable against him in accordance with its terms except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting enforcement of creditors' rights; and (ii)
general principles of equity that restrict the availability of equitable
remedies (provided, however, that the limitations described in this clause
(ii) should not prevent the practical realization of the benefits intended by
this Agreement); and (c) the execution, delivery and performance by such
Continuing Stockholder of this Agreement: (i) does not and will not violate
any laws, rules or regulations of the United States or any state or other
jurisdiction applicable to such Continuing Stockholder, or require such
Continuing Stockholder to obtain any approval, consent or waiver of, or to
make any filing with, any Person that has not been obtained or made; and (ii)
does not and will not result in a breach of, constitute a default under,
accelerate any obligation under or give rise to a right of termination of any
material indenture or loan or credit agreement or any other material
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Continuing Stockholder is a party or by which
the property of such Continuing Stockholder is bound or affected, or result
in the creation or imposition of any mortgage, pledge, lien, security
interest or other charge or encumbrance on any of the assets or properties of
such Continuing Stockholder.

         SECTION 2.3     REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents, warrants and covenants to the Continuing
Stockholders and to the Investors as follows: (a) the Company has full
corporate authority and power to enter into this Agreement; (b) this
Agreement constitutes the valid and binding obligation of the Company
enforceable against it in accordance with its terms except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting enforcement of creditors' rights and (ii)
general principles of equity that restrict the availability of equitable
remedies (provided, however, that the limitations described in this clause
(ii) should not prevent the practical realization of the benefits intended by
this Agreement); and (c) the execution, delivery and performance by the
Company of this Agreement: (i) does not and will not violate any laws, rules
or regulations of the United States or any state or other jurisdiction
applicable to the Company, or require the Company to obtain any approval,
consent or waiver of, or to make any filing with, any Person that has not
been obtained or made; and (ii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under or give rise to a
right of termination of any material indenture or loan or credit agreement or
any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which the Company is a party or by
which the property of the Company is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the assets or properties of the Company.

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ARTICLE III            RESTRICTIONS ON TRANSFER: RIGHT OF LAST REFUSAL;
                       DRAG-ALONG AND TAG-ALONG PROVISIONS

         The following provisions of this Article III shall terminate
immediately upon, and shall not apply with respect to, the closing of a
Qualified Public Offering.

         SECTION 3.1     RESTRICTIONS ON TRANSFER. The Common Stock may not
be transferred by any Continuing Stockholder at any time on or prior to
December 31, 1997. From and after December 31, 1997, each Continuing
Stockholder agrees that it or he will not, without the prior written consent
of two-thirds-in-interest of the Investors, Transfer all or any portion of
the Shares now owned or hereafter acquired by it or him, except in connection
with, and strictly in compliance with the conditions of, any of the following:

                  (a)    Transfers effected pursuant to Sections 3.2, 3.3 and
3.4, in each case made in accordance with the procedures set forth therein;

                  (b)    Transfers by any Continuing Stockholder to his
spouse or children, to a trust of which he is the settlor and a trustee for
the benefit of his spouse or children, or to an irrevocable trust or family
limited partnership, PROVIDED that any such trust does not require or permit
distribution of such Shares during the term of this Agreement, and PROVIDED
FURTHER that the Transferee shall have entered into an enforceable Joinder
Agreement providing that all Shares so Transferred shall continue to be
subject to all provisions of this Agreement as if such Shares were still held
by such Continuing Stockholder, except that no further Transfer shall
thereafter be permitted hereunder except in compliance with Sections 3.2, 3.3
and 3.4; and

                  (c)    Transfers upon the death of any Continuing
Stockholder to his heirs, executors or administrators or to a trust under his
will or Transfers between such Continuing Stockholder and his guardian or
conservator, PROVIDED that the Transferee shall have entered into an
enforceable Joinder Agreement providing that all Shares so Transferred shall
continue to be subject to all provisions of this Agreement as if such Shares
were still held by the Continuing Stockholder, except that no further
Transfer shall thereafter be permitted hereunder except in compliance with
Sections 3.2, 3.3 and 3.4.

         Any permitted Transferee described in the preceding clauses (b) or
(c) shall be referred to herein as a "Permitted Transferee." Notwithstanding
anything to the contrary in this Agreement or any failure to execute a
Joinder Agreement as contemplated hereby, Permitted Transferees shall take
any Shares so Transferred subject to all provisions of this Agreement as if
such Shares were still held by the Transferring Continuing Stockholder,
whether or not they so agree with the transferor and/or the Company. Without
limitation of the foregoing, in connection with any otherwise permitted
transfer of shares of capital stock that are restricted shares and are
subject to any stock restriction agreement, any transferee of any such shares
shall agree in writing to be bound by the terms of any such stock restriction
or similar agreement, including, without limitation, any repurchase or
similar right contained therein.

         SECTION 3.2     RIGHT OF LAST REFUSAL. In the event that any of the
Continuing Stockholders, including any of their Permitted Transferees,
receives a bona fide offer to purchase all or any portion of the Shares held
by such person (a "Transaction Offer") from an Independent

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Third Party (the "Offeror"), such Continuing Stockholder or Permitted
Transferee (a "Transferring Stockholder") may Transfer such Shares pursuant
to and in accordance with the following provisions of this Section 3.2:

                  (a)    Such Transferring Stockholder shall cause the
Transaction Offer and all of the terms thereof to be reduced to writing and
shall notify each Investor of his wish to accept the Transaction Offer and
otherwise comply with the provisions of this Section 3.2 (such notice, the
"Offer Notice"). The Transferring Stockholder's Offer Notice shall constitute
an irrevocable offer to sell such shares to the Investor on the basis
described below at a purchase price equal to the price contained in, and on
the same terms and conditions of, the Transaction Offer (except to the extent
the provisions of this Section 3.2 apply). The notice shall be accompanied by
a true copy of the Transaction Offer (which shall identify the Offeror and
all relevant information in connection therewith).

                  (b)    Subject to the provisions of Section 3.2(c) below,
each Investor shall have the right (the "Right of Last Refusal") to offer to
purchase up to that number of Shares covered by the Transaction Offer as
shall be equal to the product obtained by multiplying (i) the total number of
Shares subject to the Transaction Offer by (ii) a fraction, the numerator of
which is the total number of shares of Common Stock owned by such Investor on
the date of the Offer Notice on an as converted basis (including for this
purpose any shares of Common Stock that may be received upon conversion of
any Preferred Stock), and the denominator of which is the total number of
Shares of Common Stock, then held by all Investors on the date of the Offer
Notice on an as converted basis as provided above, subject to increase as
hereinafter provided. The number of Shares that each Investor is entitled to
purchase under this Section 3.2 shall be referred to as its "Pro Rata
Fraction". Each Investor shall have the right to transfer its right to any
Pro Rata Fraction or part thereof with respect to any proposed Transaction
Offer to any transferee. In the event an Investor does not wish to purchase
or to transfer its right to purchase its Pro Rata Fraction, then any
Investors who so elect shall have the right to offer to purchase, on a pro
rata basis with any other Investors who so elect, any Pro Rata Fraction not
purchased by an Investor or its transferee. Each Investor shall have the
right to accept the Transaction Offer by giving notice of such acceptance to
the Transferring Stockholder as provided in Section 6.4 within fifteen (15)
days after receipt of the Offer Notice, which notice shall indicate the
maximum number of Shares subject thereto which the Investor and its
transferee(s) are willing to purchase in the event fewer than all Investors
elect to purchase their Pro Rata Fractions; provided that the Investors as a
group may not exercise the Right of Last Refusal with respect to fewer than
all of the Shares which are subject to the Transaction Offer. In the event
that the price set forth in the Offer Notice is stated in consideration other
than cash or cash equivalents, the Board of Directors of the Company with the
agreement of the TA Associates, Inc. as representative of the Investors may
determine the fair market value of such consideration, reasonably and in good
faith, and shall deliver written notice (the "FMV Notice") to the
Transferring Stockholder of such determination not more than fifteen (15)
days after receipt of the Transaction Offer. If the Transferring Stockholder
does not object to such determination within five (5) days of receipt of the
FMV Notice, the Investors may exercise. their Right of Last Refusal by
payment of such fair market value in cash or cash equivalents. In the event
that the Transferring Stockholder objects to the fair market value determined
by TA Associates, the Transferring Stockholder and TA Associates shall
negotiate in good faith for a period of ten (10) days to determine a mutually
acceptable fair market value for such consideration. If after such ten days,
TA Associates and

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the Transferring Stockholder have not reached agreement as to the fair market
value of such consideration, the matter shall be referred to a
nationally-recognized accounting firm (the "Accountants") for final
determination of the fair market value of such consideration (the
"Accountants Determination"), and the Accountants shall make the Accountant
Determination not more than fifteen (15) days after receipt of such matter.
The Accountant's Determination shall be binding on the Investors and the
Transferring Stockholder and shall not be subject to dispute or review. For a
period of fifteen (15) days following delivery of the Accountant's
Determination, the Investors may exercise their Right of Last Refusal by
payment in cash or cash equivalents of the fair market value so determined.
The Transferring Stockholder shall notify the Investors promptly following
any lapse of the Right of Last Refusal without acceptance thereof or any
rejection of the Right of Last Refusal.

         Upon the expiration of thirty (30) days following later to occur of
(i) receipt of the Offer Notice by all Investors and (ii) delivery of the
Accountant's Determination to the Transferring Stockholder and to TA
Associates, as representation of the Investors, the number of Shares to be
purchased by each Investor and transferee shall be determined as follows: (x)
there shall first be allocated to each Investor and transferee electing to
purchase a number of Shares equal to the lesser of (A) the number of Shares
as to which such Investor accepted the Transaction Offer or (B) such
Investor's Pro Rata Fraction, and (y) the balance, if any, not allocated
under clause (x) above, shall be allocated to those Investors and transferees
who accepted the Transaction Offer as to a number of Shares which exceeded
their respective Pro Rata Fractions, in each case on a pro rata basis in
proportion to the amount of such excess. The closing for any purchase of
Shares by the Investors and their transferees hereunder shall take place
within thirty (30) days after the later to occur of (i) the first thirty (30)
day period following the Investors' receipt of the Offer Notice-and (ii)
delivery of the Accountant's Determination to the Transferring Stockholder
and to TA Associates, as representation of the Investors at the place and on
the date specified by two-thirds-in-interest of the Investors.

                  (c)    In the event that the Investors do not elect to
exercise the Right of Last Refusal with respect to all of the Shares proposed
to be sold, the Investors shall not be entitled to purchase any such Shares
and the Transferring Stockholder may sell all such Shares proposed to be sold
to the Offeror on the terms and conditions set forth in the Offer Notice. If
the Transferring Stockholder's transfer to an Offeror is not consummated in
accordance with the terms of the Transaction Offer on or before the day which
is ninety (90) days after the expiration of the Right of Last Refusal, the
Transaction Offer shall be deemed to lapse, and any Transfers of Shares
pursuant to such Transaction Offer shall be deemed to be in violation of the
provisions of this Agreement unless the Investors are once again afforded the
Right of Last Refusal provided for herein with respect to such Transaction
Offer.

         SECTION 3.3     DRAG-ALONG OBLIGATIONS.

                  (a)    In the event that two-thirds-in-interest of the
Investors determine to sell or otherwise dispose of all or substantially all
of the assets of the Company or all or substantially all of the capital stock
of the Company owned by the Investors to any non-Affiliate(s) of the Company
or any of the Investors, or to cause the Company to merge with or into or
consolidate with any non-Affiliate(s) of the Company or any of the Investors
(in each case, the "Buyer") in a bona fide negotiated transaction (a "Sale'),
each of the Continuing Stockholders, including any

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of their respective Permitted Transferees (collectively, the "Non-Investor
Stockholders'), shall be obligated to and shall upon the written request of
two-thirds-in-interest of the Investors: (i) sell, transfer and deliver, or
cause to be sold, transferred and delivered, to the Buyer, his Shares
(including for this purpose all of such Non-Investor Stockholder's Shares
that presently or as a result of any such transaction may be acquired upon
the exercise of options (following the payment of the exercise price
therefor)) on substantially the same terms applicable to the Investors (with
appropriate adjustments to reflect the conversion of convertible securities,
the redemption of redeemable securities and the exercise of exercisable
securities as well as the relative preferences and priorities of the
Preferred Stock); and (ii) execute and deliver such instruments of conveyance
and transfer and take such other action, including voting such Shares in
favor of any Sale proposed by the Investors and executing any purchase
agreements, merger agreements, indemnity agreements, escrow agreements or
related documents, as the Investors or the Buyer may reasonably require in
order to carry out the terms and provisions of this Section 3.3.

                  (b)    Not less than thirty (30) days prior to the date
proposed for the closing of any Sale, the Investors shall give written notice
to each Non-Investor Stockholder, setting forth in reasonable detail the name
or names of the Buyer, the terms and conditions of the Sale, including the
purchase price, and the proposed closing date.

         SECTION 3.4     TAG-ALONG RIGHTS. In the event that the Investors
enter into an agreement (an "Agreement") with one or more third parties (each
a "Third Party") (other than another Investor or any affiliate of any
Investor) pursuant to which such Third Parties shall purchase all or
substantially all of the shares of the Preferred Stock, Common Stock or other
equity securities then held by the Investors, such Agreement shall include,
as a condition precedent to the Investors' obligations thereunder, provisions
requiring such Third Parties to acquire not less than 558,570 shares of
Common Stock then held by certain Non-Investor Stockholders identified on
SCHEDULE 3.4 attached hereto on terms and conditions substantially similar to
those set forth in the Agreement. Not less than thirty (30) days prior to the
date proposed for the closing of any such transaction, the Investors shall
give written notice to each such Non-Investor Stockholder, setting forth in
reasonable detail the name or names of the Buyer, the terms and conditions of
the proposed transaction, including the purchase price, and the proposed
closing date.

         SECTION 3.5     CONTEMPORANEOUS TRANSFERS. If two or more Continuing
Stockholders (or their Permitted Transferees) propose concurrent Transfers
which are subject to this Article III, then the relevant provisions of
Section 3.2 shall apply separately to each such proposed Transfer.

         SECTION 3.6     ASSIGNMENT. Each Investor shall have the right to
assign its rights under this Article III in connection with any transaction
or series of related transactions involving the transfer of shares of capital
stock of the Company to a transferee or two or more transferees that are
Affiliates of each other or to any fund managed by or associated with
TA Associates, Inc. (each, a "TA Fund"), and upon any such transfer, any such
transferee or TA Fund thereupon shall be deemed an "Investor" in connection
with its ownership of the Shares Transferred for purposes of this Article III.

         SECTION 3.7     PROHIBITED TRANSFERS. If any Transfer is made or
attempted contrary to the provisions of this Agreement, such purported
Transfer shall be void AB INITIO; the Company and

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the other parties hereto shall have, in addition to any other legal or
equitable remedies which they may have, the right to enforce the provisions
of this Agreement by actions for specific performance (to the extent
permitted by law); and the Company shall have the right to refuse to
recognize any Transferee as one of its stockholders for any purpose. Without
limitation to the foregoing, each of the Investors and Continuing
Stockholders further agrees that the provisions of Section 6.8 shall apply in
the event of any violation or threatened violation of this Agreement.

ARTICLE IV             RIGHTS TO PURCHASE.

         Notwithstanding anything herein to the contrary, the following
provisions of this Article IV shall terminate immediately prior to the
closing of a Qualified Public Offering and shall not apply with respect to
any Qualified Public Offering.

         SECTION 4.1     RIGHT TO PARTICIPATE IN CERTAIN SALES OF ADDITIONAL
SECURITIES. The Company agrees that it will not sell or issue any shares of
capital stock of the Company, or other securities convertible into or
exchangeable for capital stock of the Company, or options, warrants or rights
carrying any rights to purchase capital stock of the Company unless the
Company first submits a written offer to the Investors (including their
Permitted Transferees) (collectively, the "Offerees') identifying the terms
of the proposed sale (including price, number or aggregate principal amount
of securities and all other material terms), and offers to each Investor
(including each Permitted Transferee) the opportunity to purchase its Pro
Rata Allotment (as hereinafter defined) of the securities (subject to
increase for over-allotment if some Investors do not fully exercise their
rights) on terms and conditions, including price, not less favorable than
those on which the Company proposes to sell such securities to a third party
or parties. Each Offeree's "Pro Rata Allotment" of such securities shall be
based on the ratio which the shares of Common Stock (including shares of
Common Stock issuable upon conversion of Preferred Stock) then owned by it
bears to all of the then issued and outstanding shares of Common Stock
(including shares of Common Stock issuable upon conversion of Preferred Stock
calculated in each case on a fully-diluted basis giving effect to the
conversion of convertible securities and assuming the exercise of all
outstanding vested options, in each case as of the date of such written
offer. The Company's offer pursuant to this Section 4. 1 shall remain open
and irrevocable for a period of 30 days, and the recipients of such offer
shall elect to purchase by giving written notice thereof to the Company
within such 30-day period, including therein the maximum number of shares or
other securities which the Offeree would purchase if other Offerees do not
elect to purchase, with the rights of electing Offerees to purchase such
additional shares to be based upon the relative holdings of Common Stock
(including shares of Common Stock issuable upon conversion of Preferred
Stock) of the electing Offerees in the case of over-subscription. Any
securities so offered which are not purchased pursuant to such offer may be
sold by the Company but only on the terms and conditions set forth in the
initial offer, at any time within 120 days following the termination of the
above-referenced 30-day period but may not be sold to any other person or on
terms and conditions, including price, that are more favorable to the
purchaser than those set forth in such offer or after such 120-day period
without renewed compliance with this Section 4. 1.

         Notwithstanding the foregoing, the right to purchase granted under
this Article IV shall be inapplicable with respect to any issuance or
proposed issuance by the Company of (i) securities issued in connection with
the acquisition of another corporation by the Company,

                                       9

<PAGE>

whether by merger, purchase of all or substantially all of the assets of such
corporation, or otherwise, (ii) up to 994,407 shares (or options to purchase
shares) of Common Stock (subject to adjustment in the event of stock splits,
stock dividends, recapitalizations and like events) issued or granted to
employees, consultants, officers, directors, advisors or independent
contractors of the Company or of any Affiliate of the Company pursuant to the
Company's 1997 Stock Option and Grant Plan, (iii) securities issued as a
result of any stock split, stock dividend, reclassification or reorganization
of the Company's capital stock or (iv) Common Stock issued upon conversion of
the Convertible Preferred Stock in accordance with the terms of the Company's
Amended and Restated Articles of Incorporation.

         SECTION 4.2     ASSIGNMENT OF RIGHTS. Each Investor (including each
Permitted Transferee) shall have to right to assign its rights under this
Article IV in connection with any transaction or series of related
transactions involving the transfer to one or more transferees that are
Affiliates of each other of Shares of capital stock of the Company or to any
TA Fund, and upon any such transfer such transferee or TA Fund shall be
deemed an Offeree for purposes of Sections 4.1 and 4.2 with the rights set
forth in such Sections.

ARTICLE V              REGISTRATION RIGHTS.

         The Company's obligation to register shares of Common Stock under
this Article V shall terminate seven (7) years following the closing by the
Company of its first underwritten public offering pursuant to a registration
statement under the Securities Act (an "IPO") or, with respect to Shares held
by particular Investors or the Continuing Stockholders (including Permitted
Transferees), whenever such shares are no longer Registrable Shares (as
defined below).

         SECTION 5.1     PIGGYBACK REGISTRATION RIGHTS. If at any time or
times after the date hereof, the Company shall determine to register any
shares of its Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock under the Securities Act (whether in
connection with a public offering of securities by the Company (a "primary
offering"), a public offering of securities by stockholders (a "secondary
offering"), or both, but not in connection with a registration effected
solely to implement an employee benefit plan or a transaction to which Rule
145 or any other similar rule of the Commission under the Securities Act is
applicable or a registration effected pursuant to Sections 5.2 or 5.3
hereof), the Company will promptly give written notice thereof to the
Investors and the Continuing Stockholders (including for purpose of this
Section 5. 1 each Permitted Transferee). In connection with any such
registration, if within thirty (30) days after their receipt of such notice
(or 10 days in the case of a proposed registration on Form S-3) any Investor
or Continuing Stockholder requests in writing the inclusion in such
registration of some or all of the Registrable Shares (as hereinafter
defined) owned by such Investor or Continuing Stockholder, or into which any
Shares held by such Investor or Continuing Stockholder are convertible or
exchangeable, the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Shares which such
Investors and Continuing Stockholders so request; PROVIDED, HOWEVER, that in
the case of an underwritten public offering, if the underwriter determines
that a limitation on the number of shares to be underwritten is required,
(i) if such registration is the first registered offering of the Company's
securities to the public, the underwriter may exclude from such registration
and underwriting some or all of the Registrable Shares which would otherwise
be underwritten pursuant to the notice described herein, and (ii) if such
registration is other than the first

                                      10

<PAGE>

registered offering of the sale of the Company's securities to the public,
the underwriter may limit the number of Registrable Shares to be included in
the registration and underwriting to not less than thirty percent (30%) of
the securities included therein (based on aggregate market values). The
Company shall advise all Investors and Continuing Stockholders promptly after
such determination by the underwriter, and the number of Registrable Shares
that may be included in the registration and underwriting shall be allocated
among all Investors and Continuing Stockholders requesting registration in
proportion, as nearly as practicable, to their respective holdings of
Registrable Shares. All expenses of the registration and offering (including
the reasonable fees and expenses of one independent counsel for the Investors
as a group and the Continuing Stockholders as a group, elected by a majority
in interest (based on Registrable Shares proposed to be sold) of the
Investors and Continuing Stockholders proposing to sell), shall be borne by
the Company, except that the Investors and the Continuing Stockholders shall
bear underwriting and selling commissions and transfer taxes attributable to
the sale of their Registrable Shares.

         SECTION 5.2     DEMAND REGISTRATION RIGHTS. If on any two (2)
occasions (which occasions shall in no event be less than six months apart
from each other) after the earlier of (i) two (2) years after the date of
this Agreement or (ii) three (3) months after the closing of the Company's
first public offering pursuant to a registration statement under the
Securities Act, Investors holding a majority in interest of the Registrable
Shares then held by all of the Investors shall notify the Company in writing
that it or they intend to offer or cause to be offered for public sale all or
any portion of its or their Registrable Shares, the Company will notify all
of the Investors and the Continuing Stockholders (including for purposes of
this Section 5.2 all Permitted Transferees) of its receipt of such
notification from such Investors. If within thirty (30) days after their
receipt of such notice, any Investor or Continuing Stockholder requests the
inclusion of some or all of the Registrable Shares owned by such Investor or
Continuing Stockholder in such registration, the Company will use its best
efforts to cause such Registrable Shares so requested (including the
Registrable Shares held by the Investor(s) or Continuing Stockholder(s)
giving the initial notice of intent to register hereunder) to be registered
under the Securities Act in accordance with the terms of this Section 5.2;
PROVIDED, HOWEVER, that unless such registration becomes effective, the
Investors shall be entitled to require an additional registration pursuant to
this Section 5.2; and, PROVIDED FURTHER that if such registration is
underwritten and the underwriter determines that a limitation on the number
of shares to be underwritten is required, the first shares to be excluded
from such registration shall be any shares registered for the benefit of the
Company, and thereafter any shares which the Investors and the Continuing
Stockholders have requested to be registered shall be limited, to the extent
necessary, based upon the respective holdings of Registrable Shares of the
Investors and Continuing Stockholders proposing to sell.

         All expenses of such registrations and offerings (including the
reasonable fees and expenses of one independent counsel for the Investors as
a group, and the Continuing Stockholders as a group, selected in the manner
contemplated by Section 5.1) shall be borne by the Company. The Company may
postpone the filing of any registration statement required hereunder for a
reasonable period of time, not to exceed 90 days during any twelve-month
period, if the Company determines in good faith that such filing would
require the disclosure of a material transaction or other matter and the
Company determines reasonably and in good faith that such disclosure would
have a material adverse effect on the Company or otherwise would

                                      11

<PAGE>

not be in the best interest of the Company. The Company shall not be required
to cause a registration statement requested pursuant to this Section 5.2 to
become effective prior to 90 days following the effective date of a
Registration Statement initiated by the Company, if the request for
registration has been received by the Company subsequent to the giving of
written notice by the Company, made in good faith, to the Investors to the
effect that the Company is commencing to prepare a Company-initiated
Registration Statement (other than a registration effected solely to
implement an employee benefit plan or a transaction to which Rule 145 or any
other similar rule of the Commission under the Securities Act is applicable);
provided, however, that the Company shall use its best efforts to achieve
such effectiveness promptly following such 90-day period if the request
pursuant to this Section 5.2 has been made prior to the expiration of such
90-day period. If so requested by any Investor or Continuing Stockholder in
connection with a registration under this paragraph, the Company shall take
such steps as are required to register the Investors' and the Continuing
Stockholders' Registrable Shares for sale on a delayed or continuous basis
under Rule 415, and also take such steps as are required to keep any
registration effective until all of the Investors' and the Continuing
Stockholders' Registrable Shares registered thereunder are sold.
Notwithstanding the foregoing, the Company shall have no obligation to keep
any registration pursuant to this Section 5.2 effective more than 120 days
after the initial date of effectiveness of such registration.

         SECTION 5.3     FORM S-3. If the Company becomes eligible to use
Form S-3 under the Securities Act or a comparable successor form, (a) the
Company shall use its best efforts to continue to qualify at all times for
registration of its capital stock on Form S-3 or such successor form, and
(b) holders of Registrable Shares anticipated to have an aggregate sale price
(net of underwriting discounts and Commission, if any) in excess of $500,000
shall have the right on one or more occasions to request and have effected
the registration of their Shares on Form S-3 or such successor form (such
requests shall be in writing and shall state the number of Shares to be
disposed of and the intended method of disposition of such Shares by
Investor(s) or Continuing Stockholder(s), including for purposes of this
Section 5.3 all Permitted Transferees). The Company will use its best efforts
to effect promptly the registration of all Shares on Form S-3 or such
successor form to the extent requested by such Investor(s) or Continuing
Stockholder(s). If so requested by such Investor(s) or Continuing
Stockholder(s) in connection with a registration under this Section 5.3, the
Company shall take such steps as are required to register such Investor's or
Continuing Stockholder's Registrable Shares for sale on a delayed or
continuous basis under Rule 415, and to keep such registration effective
until all of such Investor's or Continuing Stockholder's Registrable Shares
registered thereunder are sold. Notwithstanding the foregoing, the Company
shall have no obligation to keep any registration effective more than 120
days after the initial date of effectiveness of such registration. All
expenses incurred in connection with a registration requested pursuant to
this Section 5.3 (including the reasonable fees and expenses of one
independent counsel for the Investors as a group and the Continuing
Stockholders as a group, selected in this manner contemplated as of Section
5. 1) shall be borne by the Company. The Company may postpone the filing of
any registration statement required hereunder for a reasonable period of
time, not to exceed 90 days during any twelve month period, if the Company
determines in good faith that such filing would require the disclosure of a
material transaction or other matter and the Company determines reasonably
and in good faith that such disclosure would have a material adverse effect
on the Company or otherwise would not be in the best interest of the Company.
The Company shall not be required to cause a Registration Statement requested
pursuant to this Section 5.3 to become

                                      12

<PAGE>

effective prior to 90 days following the effective date of a Registration
Statement initiated by the Investors pursuant to Section 5.2 or by the
Company, if the request for registration has been received by the Company
subsequent to the giving of written notice by the Company, made in good
faith, to the Investors and the Continuing Stockholders to the effect that
the Company is commencing to prepare a Company-initiated Registration
Statement (other than a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of
the Commission under the Securities Act is applicable); PROVIDED, HOWEVER,
that the Company shall use its best efforts to achieve such effectiveness
promptly following such 90-day period if the request pursuant to this Section
5.3 has been made prior to the expiration of such 90-day period.

         SECTION 5.4     REGISTRABLE SHARES. For the purposes of this
Article V, the term "Registrable Shares" shall mean any shares of Common
Stock held by an Investor, Continuing Stockholder or Permitted Transferee or
subject to acquisition by an Investor upon conversion of Preferred Stock,
including any shares issued by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization; provided, however, that if an Investor
owns Preferred Stock that is convertible into Common Stock, the Investor may
exercise its registration rights hereunder by converting the shares to be
sold publicly into Common Stock as of the closing of the relevant offering
and shall not be required to cause such Preferred Stock to be converted to
Common Stock until and unless such Closing occurs, it being understood that
the Company shall at the request of the relevant Investor effect the
reconversion of Common Stock to Preferred Stock if such a conversion occurs
notwithstanding the foregoing and a public offering does not close; and
provided, further, that any Common Stock that is sold in a registered sale
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 thereunder, or that may be sold without restriction as
to volume or otherwise pursuant to Rule 144(k) under the Securities Act (as
confirmed by an unqualified opinion of counsel to the Company), shall not be
deemed Registrable Shares.

         SECTION 5.5     FURTHER OBLIGATIONS OF THE COMPANY. Whenever, under
the provisions of Sections 5.1, 5.2 or 5.3 of this Agreement, the Company is
required to register any Registrable Shares, it agrees that it shall also do
the following:

                  (a)    Use its best efforts to diligently prepare and file
with the Commission a registration statement and such amendments,
post-effective amendments and supplements to said registration statement and
the prospectus used in connection therewith as may be necessary to keep said
registration statement effective as contemplated herein and to comply with
the provisions of the Securities Act with respect to the sale of securities
covered by said registration statement for the period necessary to complete
the proposed public offering as provided herein;

                  (b)    Furnish to each selling Investor or Continuing
Stockholder (including for purposes of this Section 5.4 each Permitted
Transferee) such copies of each preliminary and final prospectus and such
other documents as such Investor or Continuing Stockholder may reasonably
request to facilitate the public offering of its Registrable Shares;

                  (c)    Enter into any reasonable underwriting agreement
required by the proposed underwriter for the selling Investors or Continuing
Stockholders, if any (which

                                      13

<PAGE>

underwriter shall be selected by the selling Investors in connection with any
registration requested pursuant to Section 5.2); provided, however, that no
Continuing Stockholder or Investor shall be required to make any
representations or warranties or provide any indemnification other than with
respect to its title to the Registrable Shares and any written information
provided by it to the Company specifically for use in the Registration
Statement, and if the underwriter requires that representations or warranties
be made and that indemnification be provided, the Company shall make all such
representations and warranties and provide all such indemnities, including,
without limitation, in respect of the Company's business, operations and
financial information and the disclosures relating thereto in the prospectus;

                  (d)    Use its best efforts to register or qualify the
securities covered by said registration statement under the securities or
"blue-sky" laws of such jurisdictions as any selling Investors or Continuing
Stockholders may reasonably request, provided that the Company shall not be
required to register or qualify the securities in any jurisdictions which
require it to qualify to do business or subject itself to general service of
process therein;

                  (e)    Immediately notify each selling Investor or
Continuing Stockholder, at any time when a prospectus relating to his
Registrable Shares is required to be delivered under the Securities Act, of
the happening of any event as a result of which such prospectus contains an
untrue statement of a material fact or omits any material fact necessary to
make the statements therein not misleading, and, at the request of any such
selling Investor or Continuing Stockholder, prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading;

                  (f)    Cause all such Registrable Shares to be listed on or
included in each securities exchange or quotation system on which similar
securities issued by the Company are then listed;

                  (g)    Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally
available to its stockholders, in each case as soon as practicable, but not
later than 30 days after the close of the period covered thereby an earnings
statement of the Company which will satisfy the provisions of Section 11(a)
of the Securities Act;

                  (h)    Cooperate with each Investor and Continuing
Stockholder and each underwriter participating in the disposition of
Registrable Shares and their respective counsel in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc.;

                  (i)    During the period when the prospectus is required to
be delivered under the Securities Act, promptly file all documents required
to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act;

                  (j)    Appoint a transfer agent and registrar for all
Registrable Shares covered by a Registration Statement not later than the
effective date of such Registration Statement;

                                      14

<PAGE>

                  (k)    In connection with an underwritten offering, to the
extent reasonably requested by the managing underwriter for the offering or
the Investors or the Continuing Stockholders, participate in and support
customary efforts to sell the securities in the offering, including, without
limitation, participating in "road shows"; and

                  (l)    Otherwise cooperate with the underwriter or
underwriters, the Commission and other regulatory agencies and take all
actions and execute and deliver or cause to be executed and delivered all
documents necessary to effect the registration of any Registrable Shares
under this Article V.

         SECTION 5.6     INDEMNIFICATIONS; CONTRIBUTION.

                  (a)    Incident to any registration statement referred to
in this Article V, and subject to applicable law, the Company will indemnify
and hold harmless each underwriter, each Investor or Continuing Stockholder
(including for purposes of this Article V each Permitted Transferee) who
offers or sells any such Registrable Shares in connection with such
registration statement (including its partners (including partners of
partners and stockholders of any such partners), and directors, officers,
employees and agents of any of them (a "Selling Stockholder'), and each
person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934 (the
"Exchange Act") (a "Controlling Person"), from and against any and all
losses, claims, damages, expenses and liabilities, joint or several
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), as the same are incurred to which they, or any of them,
may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or are
based on (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement (including any related
preliminary or definitive prospectus, or any amendment or supplement to such
registration statement or prospectus), (ii) any omission or alleged omission
to state in such document a material fact required to be stated in it or
necessary to make the statements in it not misleading, or (iii) any violation
by the Company of the Securities Act, any state securities or "blue sky" laws
or any rule or regulation thereunder in connection with such registration;
provided, however, that the Company will not be liable to the extent that
such loss, claim, damage, expense or liability arises from and is based on an
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished in writing to the
Company by such underwriter, Selling Stockholder or Controlling Person
expressly for use in such registration statement. With respect to such untrue
statement or omission or alleged untrue statement or omission in the
information furnished in writing to the Company by such Selling Stockholder
expressly for use in such registration statement, such Selling Stockholder
will indemnify and hold harmless each underwriter, the Company (including its
directors, officers, employees and agents), and each other Selling
Stockholder (including its partners (including partners of partners and
stockholders of such partners) and directors, officers, employees and agents
of any of them), and each person who controls any of them within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages, expenses and liabilities,
joint or several, to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise to

                                      15

<PAGE>

the same extent provided in the immediately preceding sentence. In no event,
however, shall the liability of a Selling Stockholder for indemnification
under this Section 5.6(a) in its capacity as such exceed the lesser of
(i) that proportion of the total of such losses, claims, damages or
liabilities indemnified against equal to the proportion of the total
securities sold under such registration statement which is being sold by such
Selling Stockholder or (ii) the proceeds received by such Selling Stockholder
from its sale of Registrable Shares under such registration statement.

                  (b)    If the indemnification provided for in
Section 5.6(a) above for any reason is held by a court of competent
jurisdiction to be unavailable to an indemnified party in respect of any
losses, claims, damages, expenses or liabilities referred to therein, then
each indemnifying party under this Section 5.6, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages,
expenses or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company, the other Selling Stockholders
and the underwriters from the offering of the Registrable Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the other Selling Stockholders and the underwriters in connection
with the statements or omissions which resulted in such losses, claims,
damages, expenses or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Selling
Stockholders and the underwriters shall be deemed to be in the same
respective proportions that the net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders and
the underwriting discount received by the underwriters, in each case as set
forth in the table on the cover page of the applicable prospectus, bear to
the aggregate public offering price of the Registrable Shares. The relative
fault of the Company, the Selling Stockholders and the underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, the
Selling Stockholders or the underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

         The Company, the Selling Stockholders, and the underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 5.6(b) were determined by pro rata or per capita allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. In no
event, however, shall a Selling Stockholder be required to contribute any
amount under this Section 5.6(b) in excess of the lesser of (i) that
proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total Registrable Shares
sold under such registration statement which are being sold by such Selling
Stockholder or (ii) the proceeds received by such Selling Stockholder from
its sale of Registrable Shares under such registration statement. No person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation.

                  (c)    The amount paid by an indemnifying party or payable
to an indemnified party as a result of the losses, claims, damages and
liabilities referred to in this Section 5.6 shall

                                      16

<PAGE>

be deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim, payable as the same
are incurred. The indemnification and contribution provided for in this
Section 5.6 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified parties or any officer,
director, employee, agent or controlling person of the indemnified parties.

         SECTION 5.7     RULE 144 REQUIREMENTS. If the Company becomes
subject to the reporting requirements of either Section 13 or 15(d) of the
Exchange Act, the Company will use its best efforts thereafter to file with
the Commission such information as is specified under either of said Sections
for so long as any of the Investors hold any Registrable Shares; and in such
event, the Company shall use its best efforts to take all action as may be
required as a condition to the availability of Rule 144 under the Securities
Act (or any successor or similar exemptive rules hereafter in effect). The
Company shall furnish to any holder of Registrable Shares upon request a
written statement executed by the Company as to the steps it has taken to
comply with the current public information requirement of Rule 144 or such
successor rules.

         SECTION 5.8     MARKET STAND-OFF. Each Investor and Continuing
Stockholder agrees, if requested by the Company and an underwriter of
Registrable Shares of the Company in connection with the Company's initial
public offering, not to sell or otherwise transfer or dispose of any Shares
held by it for such period, not to exceed 180 days following the effective
date of the relevant registration statement filed under the Securities Act in
connection with such initial public offering, as such underwriter shall
specify reasonably and in good faith.

         SECTION 5.9     TRANSFER OF REGISTRATION RIGHTS. The registration
rights and related obligations under this Article V of the Investors and
Continuing Stockholders with respect to their Registrable Securities may be
assigned in connection with any transaction or series of related transactions
involving the transfer of shares of capital stock of the Company to one or
more Permitted Transferee, other than pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144 thereunder
(subject to adjustments for stock splits, stock dividends and the like and
aggregating all contemporaneous transfers), or to any TA Fund, and upon any
such transfer such transferee or TA Fund shall be deemed to be included
within the definition of an "Investor" or a "Continuing Stockholder" as
applicable, for purposes of this Article V with the rights set forth herein.

ARTICLE VI             MISCELLANEOUS PROVISIONS.

         SECTION 6.1     SURVIVAL OF REPRESENTATIONS AND COVENANTS. Each of
the parties hereto agrees that each representation, warranty, covenant and
agreement made by it in this Agreement or in any certificate, instrument or
other document delivered pursuant to this Agreement is material, shall be
deemed to have been relied upon by the other parties and shall remain
operative and in full force and effect after the date hereof regardless of
any investigation. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties hereto and their
respective successors and permitted assigns to the extent contemplated herein.

                                      17

<PAGE>

         SECTION 6.2     LEGEND ON SECURITIES. The Company, the Investors and
the Continuing Stockholders acknowledge and agree that the following legend
shall be typed on each certificate evidencing any of the securities issued
hereunder held at any time by any of the Investors, Continuing Stockholders
or their Permitted Transferees:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE
UNDER SUCH ACT OR (2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT
TO THE PROVISIONS OF A CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF DECEMBER
____, 1997, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A
COMPLETE AND CORRECT COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN
REQUEST AND WITHOUT CHARGE.

         SECTION 6.3     AMENDMENT AND WAIVER. Any party may waive any
provision hereof intended for its benefit in writing. No failure or delay on
the part of any party hereto in exercising any right, power or remedy
hereunder shall operate as a waiver thereof. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may be available to
any party hereto at law or in equity or otherwise. This Agreement may be
amended with the prior written consent of the Company, two-thirds-in-interest
of the Continuing Stockholders (based on the Shares held by the Continuing
Stockholders and their Permitted Transferees as a group) and
two-thirds-in-interest of the Investors (based on the Shares held by the
Investors as a group); PROVIDED, HOWEVER, that any amendment which directly,
materially and adversely affects any right specifically granted to a
particular Investor or Continuing Stockholder in a manner different than
other Investors or Continuing Stockholders shall not be effective unless such
Person has consented to that amendment. All actions by the Company hereunder
shall be taken by or upon the direction of a majority of the members of the
Company's Board of Directors.

         SECTION 6.4     NOTICES. All notices and other communications
provided for herein shall be in writing and shall be deemed to have been duly
given, delivered and received (a) if delivered personally or (b) if sent by
telex or facsimile, registered or certified mail (return receipt requested)
postage prepaid, or by courier guaranteeing next day delivery, in each case
to the party to whom it is directed at the following addresses (or at such
other address for any party as shall be specified by notice given in
accordance with the provisions hereof, provided that notices of a change of
address shall be effective only upon receipt thereof). Notices delivered
personally shall be effective on the day so delivered, notices sent by
registered or certified mail shall be effective three days after mailing,
notices sent by telex shall be effective when answered back, notices sent by
facsimile shall be effective when receipt is acknowledged, and notices sent
by courier guaranteeing next day delivery shall be effective on the earlier
of the second business day after timely delivery to the courier or the day of
actual delivery by the courier:

                                      18

<PAGE>

                  (a)      if to the Company:

                           International Microcircuits, Inc.
                           525 Los Coches St.
                           Milpitas, California 95035
                           Fax:     (408) 934-0823
                           Attention: President

                  (b)      Frank Deverse

                           2189 Slaughterhouse Creek Road
                           P.O. Box 484
                           Glenbrook, NV 89413
                           Fax:     (702) 749-5757

                  (c)      if to the Investors:

                           TA Associates, Inc.
                           435 Tasso Street, Suite 200
                           Palo Alto, CA 94301
                           Fax:     (650) 326-4933

                  (d)      if to the Continuing Stockholders:

                                    To each Continuing Stockholder
                                    at such address as is contained
                                    in the stock records of the Company

         SECTION 6.5     HEADINGS. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.

         SECTION 6.6     COUNTERPARTS. This Agreement may be executed in one
or more counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.

         SECTION 6.7     DISPUTE RESOLUTION. Except with respect to matters
as to which injunctive relief is being sought, any dispute arising out of or
relating to this Agreement that has not been settled within thirty (30) days
by good faith negotiation between the parties to this Agreement shall be
submitted to the American Arbitration Association ("AAA") for final and
binding arbitration pursuant to AAA's Commercial Arbitration Rules. Any such
arbitration shall be conducted in San Francisco, California.

         SECTION 6.8     REMEDIES; SEVERABILITY. Notwithstanding Section 6.7,
it is specifically understood and agreed that any breach of the provisions of
this Agreement by any Person subject hereto will result in irreparable injury
to the other parties hereto, that the remedy at law alone

                                      19

<PAGE>

will be an inadequate remedy for such breach, and that, in addition to any
other legal or equitable remedies which they may have, such other parties may
enforce their respective rights by actions for specific performance (to the
extent permitted by law) and the Company may refuse to recognize any
unauthorized Transferee as one of its stockholders for any purpose,
including, without limitation, for purposes of dividend and voting rights,
until the relevant party or parties have complied with all applicable
provisions of this Agreement.

         In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

         SECTION 6.9     ENTIRE AGREEMENT. This Agreement, together with the
Stock Purchase Agreement and other agreements specifically contemplated
hereby and thereby, is intended by the parties as a final expression of their
agreement and intended to be complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. This Agreement and the Stock Purchase
Agreement and other agreements contemplated hereby and thereby (including the
exhibits hereto and thereto) supersede all prior agreements and
understandings between the parties with respect to such subject matter.

         SECTION 6.10    ADJUSTMENTS. All references to share prices and
amounts herein shall be equitably adjusted to reflect stock splits, stock
dividends, recapitalizations and similar changes affecting the capital stock
of the Company.

         SECTION 6.11    LAW GOVERNING.  This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
California (without giving effect to principles of conflicts of law). Each
party also waives trial by jury in any action relating to this Agreement.

         SECTION 6.12    SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the respective successors and
permitted assigns of the parties hereto as contemplated herein, and any
successor to the Company by way of merger or otherwise shall specifically
agree to be bound by the terms hereof as a condition of such successor. This
Agreement may not be assigned by any Continuing Stockholder or Permitted
Transferee except as contemplated by Article IV without the prior written
consent of two-thirds-in-interest of the Investors, and without such prior
written consent any attempted transfer shall be null and void.

                  [Remainder of Page Intentionally Left Blank]

                                      20

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                    COMPANY:

                                    International Microcircuits, Inc.

                                    s/
                                    ------------------------------------------
                                    By:
                                    Its:<PAGE>

                                                                  Exhibit 10.8

                       INTERNATIONAL MICROCIRCUITS, INC.

                           1997 EQUITY INCENTIVE PLAN

                            ADOPTED NOVEMBER 20,1997

1.       PURPOSES.

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

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

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

                                       1

<PAGE>

2.       DEFINITIONS.

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

         (b)      "BOARD" means the Board of Directors of the Company.

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

         (d)      "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.

         (e)      "COMPANY" means International Microcircuits, Inc., a
California corporation.

         (f)      "Concurrent Stock Appreciation Right" or "Concurrent Right"
means a right granted pursuant to subsection 8(b)(2) of the Plan.

         (g)      "CONSULTANT" means any person, including an advisor, engaged
by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.

         (h)      "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means that the service of an individual to the Company or any Affiliate of the
Company, whether as an Employee, Director or Consultant, is not interrupted or
terminated. The Board, or the chief executive officer of the Company may
determine, in that party's sole discretion, whether Continuous Status as an
Employee, Director or Consultant shall be considered interrupted in the case of:
(i) any leave of absence approved by the Board or the chief executive officer of
the Company, including sick leave, military leave, or any other personal leave;
or (ii) transfers between the Company, Affiliates or their successors.

                                       2

<PAGE>

         (i)      "COVERED EMPLOYEE" means the chief executive officer and the
four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

         (j)      "DIRECTOR" means a member of the Board.

         (k)      "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

         (l)      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (m)      "FAIR MARKET VALUE" means, as of any date, the value of the
common stock of the Company determined as follows and in each case in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations.

                  (1)      If the common stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, 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 exchange or market (or the exchange or market with the greatest
volume of trading in the Company's 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.

                  (2)      In the absence of such markets for the common stock,
the Fair Market Value shall be determined in good faith by the Board.

                                       3

<PAGE>

         (n)      "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

         (o)      "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT"
means a right granted pursuant to subsection 8(b)(3) of the Plan.

         (p)      "LISTING DATE" means the first date upon which any security of
the Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.

         (q)      "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not
a current Employee or Officer of the Company or its parent or subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee" for purposes of Rule 16b-3.

         (r)      "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

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

                                      4

<PAGE>

         (t)      "OPTION" means a stock option granted pursuant to the Plan.

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

         (v)      "OPTIONEE" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

         (w)      "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of the Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time, and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in any
capacity other than as a Director, or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.

         (x)      "PLAN" means this 1997 Equity Incentive Plan.

         (y)      "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect with respect to the Company at the time of
discretion is being exercised regarding the Plan.

         (z)      "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (aa)     "STOCK APPRECIATION RIGHT" means any of the various types of
rights which may be granted under Section 8 of the Plan.

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

                                       5

<PAGE>

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

         (dd)     "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a
right granted pursuant to subsection 8(b)(1) of the Plan.

3.       ADMINISTRATION.

         (a)      The Plan shall be administered by the Board unless and until
the Board delegates administration to a Committee, as provided in subsection
3(c).

         (b)      The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                  (1)      To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; whether a Stock Award will be an Incentive Stock Option,
a Nonstatutory Stock Option, a stock bonus, a right to purchase restricted
stock, a Stock Appreciation Right, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be identical), including
the time or times when a person shall be permitted to receive stock pursuant to
a Stock Award; whether a person shall be permitted to receive stock upon
exercise of an Independent Stock Appreciation Right; and the number of shares
with respect to which a Stock Award shall be granted to each such person.

                  (2)      To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

                                       6

<PAGE>

                  (3)      To amend the Plan or a Stock Award as provided in
Section 14.

                  (4)      Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.

         (c)      The Board may delegate administration of the Plan to a
committee of the Board composed of not fewer than two (2) members (the
"Committee"), all of the members of which Committee may be, in the discretion of
the Board, Non-Employee Directors and/or Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee of two (2) or more Outside
Directors any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or such a subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan. Notwithstanding anything in this
Section 3 to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant Stock
Awards to eligible persons who (1) are not then subject to Section 16 of the
Exchange Act and/or (2) are either (i) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Stock Award, or (ii) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code.

4.       SHARES SUBJECT TO THE PLAN.

         (a)      Subject to the provisions of Section 13 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate One Million Four Hundred
Ninety-One Thousand (1,491,000) shares of the Company's common

                                       7

<PAGE>

stock. If any Stock Award shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the stock not
acquired under such Stock Award shall revert to and again become available
for issuance under the Plan. Shares subject to Stock Appreciation Rights
exercised in accordance with Section 8 of the Plan shall not be available for
subsequent issuance under the Plan.

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

5.       ELIGIBILITY.

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

         (b)      No person shall be eligible for the grant of an Option or an
award to purchase restricted stock if, at the time of grant, such person owns
(or is deemed to own pursuant to Section 424(d) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any of its Affiliates unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of such stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant, or in the case of a
restricted stock purchase award, the purchase price is at least one hundred
percent (100%) of the Fair Market Value of such stock at the date of grant.

         (c)      Subject to the provisions of Section 13 relating to
adjustments upon changes in stock, no person shall be eligible to be granted
Options and Stock Appreciation Rights covering more than Five Hundred Thousand
(500,000) shares of the Company's common stock in any twelve (12) month period.
This subsection 5(c) shall not apply prior to the Listing Date and, following
the Listing Date, shall not apply until (i) the earliest of: (A) the first
material

                                       8

<PAGE>

modification of the Plan (including any increase to the number of shares
reserved for issuance under the Plan in accordance with Section 4; (B) the
issuance of all of the shares of common stock reserved for issuance under the
Plan; (C) the expiration of the Plan; or (D) the first meeting of
shareholders at which directors are to be elected that occurs after the close
of the third calendar year following the calendar year in which occurred the
first registration of an equity security under section 12 of the Exchange
Act; or (ii) such other date required by Section 162(m) of the Code and the
rules and regulations promulgated thereunder.

6.       OPTION PROVISIONS.

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

         (a)      TERM. No Option shall be exercisable after the expiration
of ten (10) years from the date it was granted.

         (b)      PRICE. The exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted; the exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.

         (c)      CONSIDERATION. The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the

                                        9

<PAGE>

time the Option is exercised, or (ii) at the discretion of the Board or the
Committee, at the time of the grant of the Option, (A) by delivery to the
Company of other common stock of the Company, (B) according to a deferred
payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other common stock of the Company)
with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (c) in any other form of legal
consideration that may be acceptable to the Board.

         In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

         (d)      TRANSFERABILITY. An Option shall not be transferable except by
will or by the laws of descent and distribution, and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person.
The person to whom the Option is granted may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionee, shall thereafter be entitled to
exercise the Option.

         (e)      VESTING. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions on
the time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary but in each case will provide

                                      10

<PAGE>

for vesting of at least twenty percent (20%) per year of the total number of
shares subject to the Option. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum number of shares as to
which an Option may be exercised.

         (f)      TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period, which shall
not be less than thirty (30) days, unless such termination is for cause,
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the Optionee
does not exercise his or her Option within the time specified in the Option
Agreement, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.

         An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee, Director, or Consultant (other dm upon the Optionee's death or
disability) would result in liability under Section 16(b) of the Exchange Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day
after the last date on which such exercise would result in such liability under
Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant (other than
upon the Optionee's death or disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the

                                      11

<PAGE>

term of the Option set forth in the first paragraph of this subsection 6(f),
or (ii) the expiration of a period of three (3) months after the termination
of the Optionee's Continuous Status as an Employee, Director or Consultant
during which the exercise of the Option would not be in violation of such
registration requirements.

         (g)      DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it as of the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, at the date of termination, the Optionee
is not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

         (h)      DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option Agreement after the
termination of, the Optionee's Continuous Status as an Employee, Director or
Consultant, the Option may be exercised (to the extent the Optionee was entitled
to exercise the Option as of the date of death) by the Optionee's estate, by a
person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the option upon the Optionee's death
pursuant to subsection 6(d), but only within the period ending on the earlier of
(i) the date eighteen (18) months following the date of death (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or

                                       12

<PAGE>

her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the
Plan. If, after death, the Option is not exercised within the time specified
herein, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.

         (i)      EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee, Director
or Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a repurchase right in favor of the Company, with
the repurchase price to be equal to the original purchase price of the stock, or
to any other restriction the Board determines to be appropriate; PROVIDES
however, that (i) the right to repurchase at the original purchase price shall
lapse at a minimum rate of twenty percent (20%) per year over five (5) years
from the date the Option was granted, and (ii) such right shall be exercisable
only within (A) the ninety (90) day period following the termination of
employment or the relationship as a Director or Consultant, or (B) such longer
period as may be agreed to by the Company and the Optionee (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
(regarding "qualified small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for the
shares. Should the right of repurchase be assigned by the Company, the assignee
shall pay the Company cash equal to the difference between the original purchase
price and the stock's Fair Market Value if the original purchase price is less
than the stock's Fair Market Value.

         (j)      RIGHT OF REPURCHASE. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
repurchase all or any part of the vested shares exercised pursuant to the
Option; PROVIDED, HOWEVER, that (i) such repurchase right shall be exercisable
only within (A) the ninety (90) day period following the termination of
employment or the relationship as a Director or Consultant, or (B) such longer
period as may be agreed to by the Company and the Optionee (for example, for
purposes of satisfying the

                                      13

<PAGE>

requirements of Section 1202(c)(3) of the Code (regarding "qualified small
business stock")), (ii) such repurchase right shall be exercisable for less
than all of the vested shares only with the Optionee's consent, and (iii)
such right shall be exercisable only for cash or cancellation of purchase
money indebtedness for the shares at a repurchase price equal to the greater
of (A) the stock's Fair Market Value at the time of such termination or (B)
the original purchase price paid for such shares by the Optionee. Should the
right of repurchase be assigned by the Company, the assignee shall pay the
Company cash equal to the difference between the original purchase price and
the stock's Fair Market Value if the original purchase price is less than the
stock's Fair Market Value.

         (k)      RIGHT OF FIRST REFUSAL. The Option may, but need not, include
a provision whereby the Company may elect, prior to the Listing Date, to
exercise a right of first refusal following receipt of notice from the Optionee
of the intent to transfer all or any part of the shares exercised pursuant to
the Option.

         (l)      RE-LOAD OPTIONS. Without in any way limiting the authority of
the Board or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation) to include
as part of any Option Agreement a provision entitling the Optionee to a further
Option (a "Re-Load Option") in the event the Optionee exercises the Option
evidenced by the Option agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms and conditions
of the Option Agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of the exercise
price of such Option; (ii) shall have an expiration date which is the same as
the expiration date of the Option the exercise of which gave rise to such
Re-Load Option; and (iii) shall have an exercise price which is equal to one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option which is granted to a 10%
shareholder (as described in subsection 5(b), shall have an exercise

                                      14

<PAGE>

price which is equal to one hundred ten percent (110%) of the Fair Market
Value of the stock subject to the Re-Load Option on the date of exercise of
the original Option and shall have a term which is no longer than five (5)
years.

         Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the
time of the grant of the original Option; PROVIDED, HOWEVER, that the
designation of any Re-Load Option as an Incentive Stock Option shall be
subject to the one hundred thousand dollar ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subsection 12(e) of
the Plan and in Section 422(d) of the Code. There shall be no Re-Load Options
on a Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under subsection 4(a) and the limits on the
grants of Options under subsection 5(c) and shall be subject to such other
terms and conditions as the Board or Committee may determine which are not
inconsistent with the express provisions of the Plan regarding the terms of
Options.

7.       TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

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

         (a)      PURCHASE PRICE. The purchase price under each restricted stock
purchase Stock Award Agreement shall be such amount as the Board or Committee
shall determine and designate in such agreement, but in no event shall the
purchase price be less than eighty-five percent (85%) of the stock's Fair Market
Value on the date such award is made.

                                       15

<PAGE>

Notwithstanding the foregoing, the Board or the Committee may determine that
eligible participants in the Plan may be awarded stock pursuant to a stock
bonus agreement in consideration for past services actually rendered to the
Company or for its benefit.

         (b)      TRANSFERABILITY. Rights under a stock bonus or restricted
stock purchase agreement shall be transferable by the grantee only upon such
terms and conditions as are set forth in the applicable Stock Award Agreement,
as the Board or the Committee shall determine in its discretion, so long as
stock awarded under such Stock Award Agreement remains subject to the terms of
the agreement.

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

         (d)      VESTING. Shares of stock sold or awarded under the Plan may,
but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee. The applicable agreement shall provide (i) that the right to
repurchase at the original purchase price shall lapse at a minimum rate of
twenty percent (20%) per year over five (5) years from the date the Stock Award
was granted, and (ii) such right shall be exercisable only (A) within the ninety
(90) day period following the termination of employment or the relationship as a
Director or Consultant, or (B) such longer period as may be agreed to by the
Company and the holder of the Stock Award (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code (regarding
"qualified

                                      16

<PAGE>

small business stock")), and (iii) such right shall be exercisable only for
cash or cancellation of purchase money indebtedness for the shares.

         (e)      TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire, subject to the limitations described in subsection 7(d), any or all
of the shares of stock held by that person which have not vested as of the date
of termination under the terms of the stock bonus or restricted stock purchase
agreement between the Company and such person.

8.       STOCK APPRECIATION RIGHTS.

         (a)      The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights under the
Plan to Employees or Directors of or Consultants to, the Company or its
Affiliates. To exercise any outstanding Stock Appreciation Right, the holder
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Award Agreement evidencing such right. Except as
provided in subsection 5(c), no limitation shall exist on the aggregate amount
of cash payments the Company may make under the Plan in connection with the
exercise of a Stock Appreciation Right.

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

                  (1)      TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock
Appreciation Rights will be granted appurtenant to an Option, and shall, except
as specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between the
exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution. The
appreciation distribution payable on the exercised Tandem Right shall be in cash
(or, if so provided, in an equivalent number of shares of

                                     17
<PAGE>

stock based on Fair Market Value on the date of the Option surrender) in an
amount up to the excess of (A) the Fair Market Value (on the date of the
Option surrender) of the number of shares of stock covered by that portion of
the surrendered Option in which the Optionee is vested over (B) the aggregate
exercise price payable for such vested shares.

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

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

                                      18

<PAGE>

date of the grant of the Independent Right) of such number of shares of
Company stock. The appreciation distribution payable on the exercised
Independent Right shall be in cash or, if so provided, in an equivalent
number of shares of stock based on Fair Market Value on the date of the
exercise of the Independent Right.

9.       CANCELLATION AND RE-GRANT OF OPTIONS.

         (a)      The Board or the Committee shall have the authority to effect,
at any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the consent
of the affected holders of Options and/or Stock Appreciation Rights, the
cancellation of any outstanding Options and/or any Stock Appreciation Rights
under the Plan and the grant in substitution therefor of new Options and/or
Stock Appreciation Rights under the Plan covering the same or different numbers
of shares of stock, but having an exercise price per share not less than
eighty-five percent (85%) of the Fair Market Value (one hundred percent (100%)
of the Fair Market Value in the case of an Incentive Stock Option) or, in the
case of a 10% shareholder (as described in subsection 5(b)), not less than one
hundred ten percent (110%) of the Fair Market Value) per share of stock on the
new grant date. Notwithstanding the foregoing, the Board or the Committee may
grant an Option and/or Stock Appreciation Right with an exercise price lower
than that set forth above if such Option and/or Stock Appreciation Right is
granted as part of a transaction to which section 424(a) of the Code applies.

         (b)      Shares subject to an Option or Stock Appreciation Right
canceled under this Section 9 shall continue to be counted against the maximum
award of Options and Stock Appreciation Rights permitted to be granted pursuant
to subsection 5(c) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original and
the substituted Options and Stock

                                      19

<PAGE>

Appreciation Rights shall be counted against the maximum awards of Options
and Stock Appreciation Rights permitted to be granted pursuant to subsection
5(c) of the Plan. The provisions of this subsection 9(b) shall be applicable
only to the extent required by Section 162(m) of the Code.

10.      COVENANTS OF THE COMPANY.

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

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

11.      USE OF PROCEEDS FROM STOCK.

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

12.      MISCELLANEOUS.

         (a)      Subject to any applicable provisions of the California
Corporate Securities Law of 1968 and related regulations relied upon as a
condition of issuing securities pursuant to the Plan, the Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest pursuant to

                                     20

<PAGE>

subsection 6(e), 7(d) or 8(b), notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.

         (b)      Neither an Employee, Director or Consultant nor any person to
whom a Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and until such person
has satisfied ail requirements for exercise of the Stock Award pursuant to its
terms.

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

         (d)      Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant or
other holder of Stock Awards any right to continue in the employ of the Company
or any Affiliate (or to continue acting as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment of
any Employee with or without cause the right of the Company's Board of Directors
and/or the Company's shareholders to remove any Director as provided in the
Company's By-Laws and the provisions of the California Corporations Code, or the
right to terminate the relationship of any Consultant subject to the terms of
such Consultant's agreement with the Company or Affiliate.

         (e)      To the extent that the aggregate Fair Market Value (determined
at the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds

                                       21

<PAGE>

one hundred thousand dollars ($100,000), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.

         (f)      The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred pursuant to
subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring stock
under any Stock Award, (1) to give written assurances satisfactory to the
Company as to such person's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (2) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the Stock Award for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

         (g)      To the extent provided by the terms of a Stock Award Agreement
the person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means or by a combination of
such means: (1) tendering a cash payment; (2) authorizing the

                                      22

<PAGE>

Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise or acquisition of
stock under the Stock Award; or (3) delivering to the Company owned and
unencumbered shares of the common stock of the Company.

13.      ADJUSTMENTS UPON CHANGES IN STOCK.

         (a)      In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, excluding in each case a capital
reorganization in which the sole purpose is to change the state of incorporation
of the Company, then: (i) the remaining vesting period for each outstanding
Stock Award which is not fully vested shall accelerate by the lesser of (A) two
years and (B) the remaining vesting period for such Stock Award; and (ii) on the
date of such event, all outstanding Stock Awards which have been exercised
terminates, unless provision is made in connection with such event for the
assumption by the surviving corporation or acquiring corporation of any
outstanding Stock Award or the substitution of similar stock awards. Upon such
event, each Optionee shall be permitted to exercise for a period of at least ten
(10) days prior to the date of such event all outstanding Stock Awards held by
such Optionee which are then exercisable.

14.      AMENDMENT OF THE PLAN AND STOCK AWARDS.

         (a)      The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 13 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:

                                     23

<PAGE>

                  (1)      Increase the number of shares reserved for Stock
Awards under the Plan;

                  (2)      Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires shareholder
approval in order for the Plan to satisfy the requirements of Section 422 of the
Code); or

                  (3)      Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code or to comply with the requirements of Rule 16b-3.

         (b)      The Board may in its sole discretion submit any other
amendment to the Plan for shareholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m) of
the Code and the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

         (c)      It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible
Employees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options
granted under it into compliance therewith.

         (d)      Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.

         (e)      The Board at any time, and from time to time, may amend the
terms of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award

                                      24

<PAGE>

shall not be impaired by any such amendment unless (i) the Company requests
the consent of the person to whom the Stock Award was granted and (ii) such
person consents in writing.

15.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a)      The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on November 19, 2007, which
shall be within ten (10) years from the date the Plan is adopted by the Board or
approved by the shareholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

         (b)      Rights and obligations under any Stock Award granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the written consent of the person to whom the Stock Award was
granted.

16.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the shareholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.

                                      25

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