Document:

Amendment No. 1 to Agreement

 Exhibit 10.1 
  
 AMENDMENT NO. 1 TO 
  
 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION 
  
 This AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered into as of October 18, 2004 among ViroLogic, Inc., a Delaware
corporation (“Parent”), Apollo Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub I”), Apollo Merger Subsidiary, LLC, a Delaware limited liability company and a wholly
owned subsidiary of Parent (“Merger Sub II”) and ACLARA BioSciences, Inc., a Delaware corporation (the “Company”). 
  
 RECITALS 
  
 A. The parties hereto entered into an Agreement and Plan of Merger and Reorganization dated as of May 28, 2004 (the “Merger Agreement”),
pursuant to which the parties have agreed to effect (1) a merger of Merger Sub I with and into the Company (“Merger I”) in accordance with the Delaware General Corporation Law, and (2) immediately following the effectiveness of
Merger I, a merger of the Company with and into Merger Sub II in accordance with the Delaware Limited Liability Company Act (“Merger II,” and together with Merger I, the “Transaction”). Upon consummation of the
Transaction, the Company will cease to exist. 
  
 B. The parties
hereto wish to amend the Merger Agreement for the limited purposes set forth herein. 
  
 C. Certain capitalized terms used in this Amendment No. 1 to the Agreement and Plan of Merger and Reorganization (the “Amendment”) shall have the meaning given them in the Merger Agreement, unless the
context requires otherwise. 
  
 D. Concurrently with the execution
of this Amendment and as a condition and inducement to Parent’s and the Company’s willingness to enter into this Amendment, certain stockholders of the Company are entering into voting agreements in substantially the form attached hereto
as Exhibit B and registration rights agreements in substantially the form attached hereto as Exhibit C. 
  
 NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 
  
 ARTICLE I 
 AMENDMENT OF MERGER AGREEMENT 
  
 1.1 Amendment of Contingent Value Rights Agreement. The Contingent
Value Rights Agreement, in the form attached as Exhibit A to the Merger Agreement, is hereby deleted in its entirety and replaced with the form of amended and restated Contingent Value Rights Agreement attached hereto as Exhibit A.

 1.2 Amendment of Definition of End Date. Section 7.1(b) of the Merger Agreement is hereby deleted
in its entirety and replaced with the following: 
  
 “by either the Company or Parent if Merger I shall not have been consummated by January 31, 2005 (the “End Date”); provided, however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose action or failure to act has been a principal cause of the failure of Merger I to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;” 
  
 1.3 Amendment of Continuity Percentage. The first paragraph of Section
6.1(g) of the Merger Agreement, paragraph 16 of Exhibit E to the Merger Agreement and paragraph 12 of Exhibit F to the Merger Agreement are each hereby amended by deleting “50%” and replacing it with “45%”. 
  
 1.4 Amendment of Definition of Total Merger Consideration. Section
6.1(g)(ii) of the Merger Agreement, paragraph 16(b) of Exhibit E to the Merger Agreement and paragraph 12(b) of Exhibit F to the Merger Agreement are each hereby deleted in their entirety and replaced with the following: 
  
 “‘Total Merger Consideration’ means
the sum of (1) the Continuity Value of the Parent Common Stock to be received by holders of outstanding Company Common Stock in the aggregate as of the Effective Time of Merger I, (2) $0.88 multiplied by the number of Contingent Value Rights to be
received by holders of outstanding Company Common Stock as of the effective time of Merger I, (3) the amount of cash to be paid by Parent to Company stockholders perfecting dissenters’ rights or appraisal rights, and (4) the amount of cash to
be paid by Parent in lieu of fractional shares of Company Common Stock.” 
  
 ARTICLE II 
 ADDITIONAL PROVISIONS 
  
 2.1 Entire Agreement and Modification. Without limiting any of the provisions of Section 8.5 of the Merger Agreement,
the Merger Agreement, as amended by this Amendment, and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein or in the Merger Agreement, constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, it being understood that the Confidentiality Agreement shall
continue in full force and effect until the Closing and shall survive any termination of the Merger Agreement, as amended. 
  
 2.2 Counterparts. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 

 2.3 Headings. The Section headings contained in this Amendment are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this Amendment. 
  
 2.4 Severability. In the event that any provision of this Amendment or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Amendment will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Amendment with a valid and enforceable provision that will achieve, to the greatest extent possible, the economic, business and other purposes of such void or unenforceable provision. 
  
 [THE REMAINDER OF
THIS PAGE INTENTIONALLY LEFT BLANK.] 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized
respective officers as of the date first written above. 
  

			
	 VIROLOGIC, INC.

		
	 By:
	 	 /s/ William D. Young

	 Name:
	 	 William D. Young

	 Title:
	 	 Chief Executive Officer

	
	 ACLARA BIOSCIENCES, INC.

		
	 By:
	 	 /s/ Thomas G. Klopack

	 Name:
	 	 Thomas G. Klopack

	 Title:
	 	 Chief Executive Officer

	
	 APOLLO ACQUISITION SUB, INC.

		
	 By:
	 	 /s/ William D. Young

	 Name:
	 	 William D. Young

	 Title:
	 	 President

	
	 APOLLO MERGER SUBSIDIARY, LLC

		
	 By:
	 	 /s/ William D. Young

	 Name:
	 	 William D. Young

	 Title:
	 	 President and CEO

  

 SIGNATURE PAGE TO 
 AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF
MERGER AND REORGANIZATIONEXHIBIT
4.3

DANTZ
DEVELOPMENT CORPORATION

AMENDED
AND RESTATED 1997 EQUITY INCENTIVE PLAN

Adopted
on March 25, 1997

Approved By Shareholders on March 28, 1997

Amended by the Board on April 1, 1998

Approved by the Shareholders on April 1, 1998

Amended by the Board on June 1, 1998

Approved by the Shareholders on June 1, 1998

Amended by the Board on March 8, 2001

Approved by the Shareholders on March 13, 2001

Amended and Restated by the Board on October 24, 2001

Termination Date:  March 25, 2007

1.       PURPOSES.

          (a)      Eligible Stock
Award Recipients.  The
persons eligible to receive Stock Awards are the Employees, Directors and
Consultants of the Company and its Affiliates.

          (b)      Available Stock
Awards.  The purpose of the
Plan is to provide a means by which eligible recipients of Stock Awards may be
given an opportunity to benefit from increases in value of the Common Stock
through the granting of the following Stock Awards:  (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) stock bonuses and (iv) rights to acquire restricted stock.

          (c)      General
Purpose.  The Company, by
means of the Plan, seeks to retain the services of the group of persons
eligible to receive Stock Awards, to secure and retain the services of new
members of this group and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.

2.       DEFINITIONS.

          (a)     “Affiliate” means
any parent corporation or subsidiary corporation of the Company, 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 of one or more members of the Board appointed by the Board in
accordance with subsection 3(c).

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          (e)     “Common Stock” means
the common stock of the Company.

          (f)     “Company” means Dantz Development Corporation, a California
Corporation.

          (g)     “Consultant” means
any person, including an advisor, (i) engaged by the Company or an Affiliate to
render consulting or advisory services and who is compensated for such services
or (ii) who is a member of the Board of Directors of an Affiliate.  However, the term “Consultant” shall not
include either Directors who are not compensated by the Company for their
services as Directors or Directors who are merely paid a director’s fee by the
Company for their services as Directors.

          (h)     “Continuous
Service” means that the Participant’s service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated.  The
Participant’s Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders service to
the Company or an Affiliate as an Employee, Consultant or Director or a change
in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participant’s Continuous
Service.  For example, a change in
status from an Employee of the Company to a Consultant of an Affiliate or a Director
will not constitute an interruption of Continuous Service.  The Board or the chief executive officer of
the Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of absence
approved by that party, including sick leave, military leave or any other
personal leave.

          (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 of Directors of the Company.

          (k)     “Disability” means (i) before the Listing Date, the inability of a person,
in the opinion of a qualified physician acceptable to the Company, to perform
the major duties of that person’s position with the Company or an Affiliate of
the Company because of the sickness or injury of the person and (ii) after the
Listing Date, the permanent and total disability of a person within the meaning
of Section 22(e)(3) of the Code.

          (l)     “Employee” means any person employed by the Company or an
Affiliate.  Mere service as a Director
or payment of a director’s fee by the Company or an Affiliate shall not be
sufficient to constitute “employment” by the Company or an Affiliate.

          (m)   “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.

2

          (n)     “Fair Market
Value” means, as of any date, the value of the
Common Stock determined as follows:

                    (i)      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 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.

                    (ii)     In the
absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.

                    (iii)    Prior to the
Listing Date, the value of the Common Stock shall be determined in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations.

          (o)     “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. 

          (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 a subsidiary, does not receive compensation (directly or
indirectly) from the Company or its parent or a 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
director” 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 (i)
before the Listing Date, any person designated by the Company as an officer and
(ii) on and after the Listing Date, 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. 

          (t)     “Option” means an
Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan. 

3

          (u)     “Option Agreement” means
a written agreement between the Company and an Optionholder 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)     “Optionholder” 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 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)     “Participant” means a
person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Stock Award. 

          (y)     “Plan” means this Dantz
Development Corporation Restated Equity Incentive Plan. 

          (z)     “Rule 16b-3” means Rule
16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in
effect from time to time. 

          (aa)  “Securities Act” means
the Securities Act of 1933, as amended. 

          (bb)  “Stock Award” means any
right granted under the Plan, including an Option, a stock bonus and a right to
acquire restricted stock. 

          (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)   “Ten Percent Shareholder”
means a person who 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. 

3.       ADMINISTRATION. 

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

4

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

                    (i)     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; what
type or combination of types of Stock Award shall be granted; 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 Common Stock pursuant to a
Stock Award; and the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person. 

                    (ii)     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. 

                    (iii)     To
amend the Plan or a Stock Award as provided in Section 12. 

                    (iv)     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)     Delegation
to Committee. 

                    (i)     General.  The Board may delegate administration of the
Plan to a Committee or Committees of one (1) or more members of the Board, and
the term “Committee” shall apply to any person or persons to whom such
authority has been delegated.  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 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
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. 

                    (ii)     Committee
Composition when Common Stock is Publicly Traded.  At such time as the Common Stock is publicly
traded, in the discretion of the Board, a Committee may consist solely of two
or more Outside Directors, in accordance with Section 162(m) of the Code,
and/or solely of two or more Non-Employee Directors, in accordance with Rule
16b-3.  Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) 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 (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act. 

5

          (d)     Effect
of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons. 

4.       SHARES
SUBJECT TO THE PLAN. 

          (a)     Share
Reserve.  Subject to
the provisions of Section 11 relating to adjustments upon changes in Common
Stock, the Common Stock that may be issued pursuant to Stock Awards shall not
exceed in the aggregate 7,770,000 shares of Common Stock. 

          (b)     Reversion
of Shares to the Share Reserve.  If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, the
shares of Common Stock not acquired under such Stock Award shall revert to and
again become available for issuance under the Plan. 

          (c)     Source
of Shares.  The shares
of Common Stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise. 

          (d)     Share
Reserve Limitation. 
Prior to the Listing Date and to the extent then required by Section
260.140.45 of Title 10 of the California Code of Regulations, the total number
of shares of Common Stock issuable upon exercise of all outstanding Options and
the total number of shares of Common Stock provided for under any stock bonus
or similar plan of the Company shall not exceed the applicable percentage as
calculated in accordance with the conditions and exclusions of Section
260.140.45 of Title 10 of the California Code of Regulations, based on the
shares of Common Stock of the Company that are outstanding at the time the
calculation is
made. 

5.       ELIGIBILITY.

          (a)     Eligibility
for Specific Stock Awards. 
Incentive Stock Options may be granted only to Employees.  Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants. 

          (b)     Ten
Percent Shareholders. 

                    (i)     A
Ten Percent Shareholder shall not be granted an Incentive Stock Option unless
the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock at the date of grant and the Option
is not exercisable after the expiration of five (5) years from the date of
grant.   

                    (ii)     Prior
to the Listing Date, a Ten Percent Shareholder shall not be granted a
Nonstatutory Stock Option unless the exercise price of such Option is at least
(i) one hundred ten percent (110%) of the Fair Market Value of the Common Stock
at the date of grant or (ii) such lower percentage of the Fair Market Value of
the Common Stock at the date of grant as is permitted by Section 260.140.41 of
Title 10 of the California Code of Regulations at the time of the grant of the
Option.   

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                    (iii)    Prior
to the Listing Date, a Ten Percent Shareholder shall not be granted a
restricted stock award unless the purchase price of the restricted stock is at
least (i) one hundred percent (100%) of the Fair Market Value of the Common
Stock at the date of grant or (ii) such lower percentage of the Fair Market
Value of the Common Stock at the date of grant as is permitted by Section
260.140.41 of Title 10 of the California Code of Regulations at the time of the
grant of the restricted stock award.   

          (c)     Section
162(m) Limitation. 
Subject to the provisions of Section 11 relating to adjustments upon
changes in the shares of Common Stock, no Employee shall be eligible to be
granted Options covering more than fifty percent (50%) shares of Common Stock
during any calendar year.  This
subsection 5(c) shall not apply prior to the Listing Date and, following the
Listing Date, this subsection 5(c) shall not apply until (i) the earliest
of:  (1) the first material modification
of the Plan (including any increase in the number of shares of Common Stock
reserved for issuance under the Plan in accordance with Section 4); (2) the
issuance of all of the shares of Common Stock reserved for issuance under the
Plan; (3) the expiration of the Plan; or (4) 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. 

          (d)     Consultants.   

                    (i)     Prior
to the Listing Date, a Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, either the offer or the sale of the
Company’s securities to such Consultant is not exempt under Rule 701 of the
Securities Act (“Rule 701”) because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the Company
determines that such grant need not comply with the requirements of Rule 701
and will satisfy another exemption under the Securities Act as well as comply
with the securities laws of all other relevant jurisdictions.   

                    (ii)     From
and after the Listing Date, a Consultant shall not be eligible for the grant of
a Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act (“Form S-8”) is not available to register either the offer
or the sale of the Company’s securities to such Consultant because of the
nature of the services that the Consultant is providing to the Company, or
because the Consultant is not a natural person, or as otherwise provided by the
rules governing the use of Form S-8, unless the Company determines both (i)
that such grant (A) shall be registered in another manner under the Securities
Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of
all other relevant jurisdictions. 

                    (iii)     Rule
701 and Form S-8 generally are available to consultants and advisors only if
(i) they are natural persons; (ii) they provide bona fide services to the
issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer’s parent; and (iii) the  services are not in connection with the offer or sale of
securities in a capital-raising transaction, and do not directly or indirectly
promote or maintain a market for the issuer’s securities. 

7

6.       OPTION
PROVISIONS. 

          Each
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate.  All
Options shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option.  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.  Subject to the provisions of subsection 5(b)
regarding Ten Percent Shareholders, no Option granted prior to the Listing Date
shall be exercisable after the expiration of ten (10) years from the date it
was granted, and no Incentive Stock Option granted on or after the Listing Date
shall be exercisable after the expiration of ten (10) years from the date it
was granted. 

          (b)     Exercise
Price of an Incentive Stock Option.  Subject to the provisions of subsection 5(b) regarding Ten
Percent Shareholders, the exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Incentive
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)     Exercise
Price of a Nonstatutory Stock Option.  Subject to the provisions of subsection 5(b)
regarding Ten Percent Shareholders, the exercise price of each Nonstatutory
Stock Option granted prior to the Listing Date shall be not less than
eighty-five percent (85%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted.  The exercise price of each Nonstatutory Stock Option granted on
or after the Listing Date shall be not less than eighty-five percent (85%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted.  Notwithstanding the
foregoing, 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. 

          (d)     Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is
exercised or (ii) at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by
delivery to the Company of other Common Stock, (2) according to a deferred
payment or other similar arrangement with the Optionholder or (3) in any other
form of legal consideration that may be acceptable to the Board.  Unless otherwise specifically provided in
the Option, the purchase price  of
Common Stock acquired pursuant to an Option that is paid by delivery to the
Company of other Common Stock acquired, directly or indirectly from the
Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six (6) months (or such longer or shorter period
of time required to avoid a charge to earnings for financial accounting
purposes).  At any time that the Company
is incorporated in Delaware, payment of the Common Stock’s “par value,” as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment. 

8

          In
the case of any deferred payment arrangement, interest shall be compounded at
least annually and shall be charged at the market rate of interest necessary to
avoid a charge to earnings for financial accounting purposes.   

          (e)     Transferability
of an Incentive Stock Option.  An Incentive Stock 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 Optionholder only by the Optionholder.  Notwithstanding the foregoing, the
Optionholder 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 Optionholder, shall thereafter be entitled to exercise the Option.

          (f)     Transferability
of a Nonstatutory Stock Option. A Nonstatutory Stock Option
granted prior to the Listing Date shall not be transferable except by will or
by the laws of descent and distribution and, to the extent provided in the
Option Agreement, to such further extent as permitted by Section 260.140.41(d)
of Title 10 of the California Code of Regulations at the time of the grant of the
Option, and shall be exercisable during the lifetime of the Optionholder only
by the Optionholder.  A Nonstatutory
Stock Option granted on or after the Listing Date shall be transferable to the
extent provided in the Option Agreement. 
If the Nonstatutory Stock Option does not provide for transferability,
then the Nonstatutory Stock 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 Optionholder only by the Optionholder.  Notwithstanding the foregoing, the
Optionholder 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 Optionholder, shall thereafter be entitled to exercise the Option.

          (g)     Vesting
Generally.  The total
number of shares of Common Stock subject to an Option may, but need not, vest
and therefore become exercisable in periodic installments that may, but need
not, be equal.  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. 
The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which
an Option may be exercised. 

9

          (h)     Minimum
Vesting Prior to the Listing Date.  Notwithstanding the foregoing subsection 6(g), to the extent that
the following restrictions on vesting are required by Section 260.140.41(f) of
Title 10 of the California Code of Regulations at the time of the grant of the
Option, then: 

                    (i)     Options
granted prior to the Listing Date to an Employee who is not an Officer,
Director or Consultant shall provide for vesting of the total number of shares
of Common Stock at a rate of at least twenty percent (20%) per year over five
(5) years from the date the Option was granted, subject to reasonable
conditions such as continued employment; 
and 

                    (ii)     Options
granted prior to the Listing Date to Officers, Directors or Consultants may be
made fully exercisable, subject to reasonable conditions such as continued
employment, at any time or during any period established by the Company. 

          (i)      Termination
of Continuous Service. 
In the event an Optionholder’s Continuous Service terminates (other than
upon the Optionholder’s death or Disability), the Optionholder may exercise his
or her Option (to the extent that the Optionholder was entitled to exercise
such Option 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 Optionholder’s Continuous Service (or such longer or shorter period
specified in the Option Agreement, which period shall not be less than thirty
(30) days for Options granted prior to the Listing Date unless such termination
is for cause), or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.  If, after
termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate. 

          (j)      Extension
of Termination Date. 
An Optionholder’s Option Agreement may also provide that if the exercise
of the Option following the termination of the Optionholder’s Continuous
Service (other than upon the Optionholder’s death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in subsection 6(a) or (ii) the expiration of a period of three
(3) months after the termination of the Optionholder’s Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements. 

          (k)     Disability
of Optionholder.  In
the event that an Optionholder’s Continuous Service terminates as a result of
the Optionholder’s Disability, the Optionholder may exercise his or her Option
(to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination (or such
longer or shorter period specified in the Option Agreement, which period shall
not be less than six (6) months for Options granted prior to the Listing Date)
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement.  If, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate. 

10

          (l)     Death
of Optionholder.  In
the event (i) an Optionholder’s Continuous Service terminates as a result of
the Optionholder’s death or (ii) the Optionholder dies within the period (if
any) specified in the Option Agreement after the termination of the
Optionholder’s Continuous Service for a reason other than death, then the
Option may be exercised (to the extent the Optionholder was entitled to
exercise such Option as of the date of death) by the Optionholder’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
Optionholder’s death pursuant to subsection 6(e) or 6(f), but only within the
period ending on the earlier of (1) the date eighteen (18) months following the
date of death (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than six (6) months for Options
granted prior to the Listing Date) or (2) the expiration of the term of such
Option as set forth in the Option Agreement. 
If, after death, the Option is not exercised within the time specified
herein, the Option shall terminate. 

          (m)     Early
Exercise.  The Option
may, but need not, include a provision whereby the Optionholder may elect at
any time before the Optionholder’s Continuous Service terminates to exercise
the Option as to any part or all of the shares of Common Stock subject to the
Option prior to the full vesting of the Option.  Subject to the “Repurchase Limitation” in subsection 10(h), any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate. 

          (n)     Right
of Repurchase. 
Subject to the “Repurchase Limitation” in subsection 10(h), 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 of Common
Stock acquired by the Optionholder pursuant to the exercise of the Option. 

          (o)     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 Optionholder of the intent to transfer all or any
part of the shares of Common Stock received upon the exercise of the
Option.  Except as expressly provided in
this subsection 6(o), such right of first refusal shall otherwise comply with
any applicable provisions of the Bylaws of the Company. 

7.       PROVISIONS
OF STOCK AWARDS OTHER THAN OPTIONS.

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

                    (i)     Consideration.  A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an
Affiliate for its benefit. 

                    (ii)     Vesting.  Subject to the “Repurchase Limitation” in
subsection 10(h), shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in favor
of the Company in accordance with a vesting schedule to be determined by the
Board. 

11

                    (iii)    Termination
of Participant’s Continuous Service.  Subject to the “Repurchase Limitation” in
subsection 10(h), in the event a Participant’s Continuous Service terminates,
the Company may reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the stock bonus agreement. 

                    (iv)    Transferability.  For a stock bonus award made before the
Listing Date, rights to acquire shares of Common Stock under the stock bonus
agreement shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant.  For a stock
bonus award made on or after the Listing Date, rights to acquire shares of
Common Stock under the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the stock
bonus agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the stock bonus agreement remains subject to the
terms of the stock bonus agreement. 

          (b)     Restricted
Stock Awards.  Each
restricted stock purchase agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but
each 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: 

                    (i)     Purchase
Price.  Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the purchase
price under each restricted stock purchase agreement shall be such amount as
the Board shall determine and designate in such restricted stock purchase
agreement.  For restricted stock awards
made prior to the Listing Date, the purchase price shall not be less than
eighty-five percent (85%) of the Common Stock’s Fair Market Value on the date
such award is made or at the time the purchase is consummated.  For restricted stock awards made on or after
the Listing Date, the purchase price shall not be less than eighty-five percent
(85%) of the Common Stock’s Fair Market Value on the date such award is made or
at the time the purchase is consummated. 

                    (ii)     Consideration.  The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either:  (i) in cash at the time of purchase; (ii) at
the discretion of the Board, according to a deferred payment or other similar
arrangement with the Participant; or (iii) in any other form of legal
consideration that may be acceptable to the Board in its discretion; provided,
however, that at any time that the Company is incorporated in Delaware, then
payment of the Common Stock’s “par value,” as defined in the Delaware General
Corporation Law, shall not be made by deferred payment. 

                    (iii)     Vesting.  Subject to the “Repurchase Limitation” in
subsection 10(h), shares of Common Stock acquired under the restricted stock
purchase agreement may, but need not, be subject to a share repurchase option
in favor of the Company in accordance with a vesting schedule to be determined
by the Board. 

12

                    (iv)     Termination
of Participant’s Continuous Service.  Subject to the “Repurchase Limitation” in
subsection 10(h), in the event a Participant’s Continuous Service terminates,
the Company may repurchase or otherwise reacquire any or all of the shares of
Common Stock held by the Participant which have not vested as of the date of
termination under the terms of the restricted stock purchase agreement. 

                    (v)     Transferability.  For a restricted stock award made before the
Listing Date, rights to acquire shares of Common Stock under the restricted
stock purchase agreement shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime
of the Participant only by the Participant. 
For a restricted stock award made on or after the Listing Date, rights
to acquire shares of Common Stock under the restricted stock purchase agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the restricted stock purchase agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the
restricted stock purchase agreement remains subject to the terms of the
restricted stock purchase agreement. 

8.       COVENANTS
OF THE COMPANY. 

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

          (b)     Securities
Law Compliance.  The
Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Stock
Awards and to issue and sell shares of Common Stock upon exercise of the Stock
Awards; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Stock Award or any Common 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 Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained. 

9.       USE
OF PROCEEDS FROM STOCK. 

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

10.     MISCELLANEOUS.

          (a)     Acceleration
of Exercisability and Vesting.  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 in accordance with the Plan, 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. 

13

          (b)     Shareholder
Rights.  No
Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to such Stock
Award unless and until such Participant has satisfied all requirements for
exercise of the Stock Award pursuant to its terms. 

          (c)     No
Employment or other Service Rights.  Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the
time the Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate or (iii)
the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be. 

          (d)     Incentive
Stock Option $100,000 Limitation.  To the extent that the aggregate Fair Market Value (determined at
the time of grant) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and its Affiliates) exceeds 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. 

          (e)     Investment
Assurances.  The
Company may require a Participant, as a condition of exercising or acquiring
Common Stock under any Stock Award, (i) to give written assurances satisfactory
to the Company as to the Participant’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 (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the
Stock Award for the Participant’s own account and not with any present
intention of selling or otherwise distributing the Common Stock.  The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the
issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (2) 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 Common Stock. 

14

          (f)     Withholding
Obligations.  To the
extent provided by the terms of a Stock Award Agreement, the Participant may
satisfy any federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under a Stock Award by any of the  following means (in addition to the
Company’s right to withhold from any compensation paid to the Participant by
the Company) or by a combination of such means:  (i) tendering a cash payment; (ii) authorizing the Company to
withhold shares of Common Stock from the shares of Common Stock otherwise
issuable to the Participant as a result of the exercise or acquisition of
Common Stock under the Stock Award, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock. 

          (g)     Information
Obligation.  Prior to
the Listing Date, to the extent required by Section 260.140.46 of Title 10 of
the California Code of Regulations, the Company shall deliver financial
statements to Participants at least annually. 
This subsection 10(g) shall not apply to key Employees whose duties in
connection with the Company assure them access to equivalent information. 

          (h)     Repurchase
Limitation.  The terms
of any repurchase option shall be specified in the Stock Award and may be
either at Fair Market Value at the time of repurchase or at not less than the
original purchase price.  To the extent
required by Section 260.140.41 and Section 260.140.42 of Title 10 of the
California Code of Regulations at the time a Stock Award is made, any repurchase
option contained in a Stock Award granted prior to the Listing Date to a person
who is not an Officer, Director or Consultant shall be upon the terms described
below: 

                    (i)     Fair
Market Value.  If the
repurchase option gives the Company the right to repurchase the shares of
Common Stock upon termination of employment at not less than the Fair Market
Value of the shares of Common Stock to be purchased on the date of termination
of Continuous Service, then (i) the right to repurchase shall be exercised for
cash or cancellation of purchase money indebtedness for the shares of Common
Stock within ninety (90) days of termination of Continuous Service (or in the
case of shares of Common Stock issued upon exercise of Stock Awards after such
date of termination, within ninety (90) days after the date of the exercise) or
such longer period as may be agreed to by the Company and the Participant (for
example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding “qualified small business stock”) and (ii) the right
terminates when the shares of Common Stock become publicly traded. 

                    (ii)     Original
Purchase Price.  If
the repurchase option gives the Company the right to repurchase the shares of
Common Stock upon termination of Continuous Service at the original purchase
price, then (i) the right to repurchase at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the shares of Common
Stock per year over five (5) years from the date the Stock Award is granted
(without respect to the date the Stock Award was exercised or became
exercisable) and (ii) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares of Common Stock
within  ninety (90) days of termination
of Continuous Service (or in the case of shares of Common Stock issued upon
exercise of Options after such date of termination, within ninety (90) days
after the date of the exercise) or such longer period as may be agreed to by
the Company and the Participant (for example, for purposes of satisfying the
requirements of Section 1202(c)(3) of the Code regarding “qualified small
business stock”). 

15

11.
    ADJUSTMENTS UPON CHANGES IN
STOCK. 

          (a)     Capitalization
Adjustments.  If any
change is made in the Common Stock subject to the Plan, or subject to any Stock
Award, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company), the Plan will be appropriately adjusted in the class(es) and
maximum number of securities subject to the Plan pursuant to subsection 4(a)
and the maximum number of securities subject to award to any person pursuant to
subsection 5(c), and the outstanding Stock Awards will be appropriately
adjusted in the class(es) and number of securities and price per share of
Common Stock subject to such outstanding Stock Awards.  The Board shall make such adjustments, and
its determination shall be final, binding and conclusive.  (The conversion of any convertible
securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company.) 

          (b)     Dissolution
or Liquidation.  In
the event of a dissolution or liquidation of the Company, then all outstanding
Stock Awards shall terminate immediately prior to such event. 

          (c)     Asset
Sale, Merger, Consolidation or Reverse Merger.  In the event of (i) a sale, lease or other
disposition of all or substantially all of the assets of the Company, (ii) a
merger or consolidation in which the Company is not the surviving corporation
or (iii) a reverse merger in which the Company is the surviving corporation but
the shares of 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 (individually, a “Corporate Transaction”), then
any surviving corporation or acquiring corporation shall assume any Stock
Awards outstanding under the Plan or shall substitute similar stock awards
(including an award to acquire the same consideration paid to the shareholders
in the Corporate Transaction) for those outstanding under the Plan.  In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute
similar stock awards for those outstanding under the Plan, then with respect to
Stock Awards held by Participants whose Continuous Service has not terminated,
the vesting of such Stock Awards (and, if applicable, the time during which
such Stock Awards may be exercised) shall be accelerated in full, and the Stock
Awards shall terminate if not exercised (if applicable) at or prior to the
Corporate Transaction.  With respect to
any other Stock Awards outstanding under the Plan, such Stock Awards shall
terminate if not exercised (if applicable) prior to the Corporate Transaction. 

12.
    AMENDMENT OF THE PLAN AND STOCK
AWARDS. 

          (a)     Amendment
of Plan.  The Board at
any time, and from time to time, may amend the Plan.  However, except as provided in Section 11 relating to adjustments
upon changes in Common Stock, no amendment shall be effective unless approved
by the shareholders of the Company to the extent shareholder approval is
necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or
any Nasdaq or securities exchange listing requirements. 

16

          (b)     Shareholder
Approval.  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 thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers. 

          (c)     Contemplated
Amendments.  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)     No
Impairment of Rights. 
Rights 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 Participant and (ii) the Participant consents in writing. 

          (e)     Amendment
of Stock Awards.  The
Board at any time, and from time to time, may amend the terms of any one or
more Stock Awards; provided, however, that the rights under any Stock Award
shall not be impaired by any such amendment unless (i) the Company requests the
consent of the Participant and (ii) the Participant consents in writing. 

13.     TERMINATION
OR SUSPENSION OF THE PLAN. 

          (a)     Plan
Term.  The Board may
suspend or terminate the Plan at any time. 
Unless sooner terminated, the Plan shall terminate on the day before the
tenth (10th) anniversary of 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)     
No Impairment of Rights. 
Suspension or termination of the Plan shall not impair rights and
obligations under any Stock Award granted while the Plan is in effect except
with the written consent of the Participant. 

14.     EFFECTIVE
DATE OF PLAN. 

          The
Plan shall become effective as determined by the Board, but no Stock Award
shall be exercised (or, in the case of a stock bonus, shall be granted) 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. 

15.     CHOICE
OF LAW. 

          The law of
the State of California shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s
conflict of laws rules. 

17

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