Document:

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                                                                    Exhibit 10.1

                                     FORM OF

                            INDEMNIFICATION AGREEMENT

            This Indemnification Agreement, is entered into this _____ day of
__________, _____ ("Agreement"), by and between Stratagene Corporation, a
Delaware corporation ("Company"), and ______________ ("Indemnitee").

            WHEREAS, highly competent persons are becoming more reluctant to
serve corporations as directors or in other capacities unless they are provided
with adequate protection through insurance or adequate indemnification against
risks of claims and actions against them arising out of their service to and
activities on behalf of the corporation;

            WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons;

            WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the inability to attract and retain such persons is detrimental
to the best interests of the Company's stockholders and that the Company should
act to assure such persons that there will be increased certainty of such
protection in the future;

            WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons as provided herein so
that they will serve or continue to serve the Company free from undue concern
that they will not be so indemnified; and

            WHEREAS, Indemnitee is willing to serve, continue to serve and to
take on additional service for or on behalf of the Company on the condition that
he or she be so indemnified.

            NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

            Section 1. Services by Indemnitee. Indemnitee agrees to serve as an
officer or director of the Company. Indemnitee may at any time and for any
reason resign from such position (subject to any other contractual obligation or
any obligation imposed by operation of law). The Company shall have no
obligation under this Agreement to continue Indemnitee in any position with the
Company.

            Section 2. Indemnification -- General. The Company shall indemnify,
and pay Expenses (as hereinafter defined) to Indemnitee, as provided in this
Agreement and to the fullest extent required by applicable law in effect on the
date hereof and to such greater extent as applicable law may thereafter from
time to time require.

            Section 3. Proceedings Other Than Proceedings by or in the Right of
the Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3
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if, by reason of his or her Corporate Status (as hereinafter defined), he or she
is, or is threatened to be made, a party to any threatened, pending or completed
Proceeding (as hereinafter defined), other than a Proceeding by or in the right
of the Company in which indemnification is not permitted as a matter of law.
Pursuant to this Section 3, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or her or on his or her behalf in connection with
such Proceeding or any claim, issue or matter therein, if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal
Proceeding, did not knowingly behave in an unlawful manner.

            Section 4. Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4
if, by reason of his or her Corporate Status, he or she is, or is threatened to
be made, a party to any threatened, pending or completed Proceeding brought by
or in the right of the Company to procure a judgment in its favor. Pursuant to
this Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or her or on his or her behalf in connection with
such Proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company. Notwithstanding the foregoing, no indemnification against such Expenses
shall be made in respect of any claim, issue or matter in such Proceeding as to
which Indemnitee shall have been adjudged to be liable to the Company.

            Section 5. Indemnification for Expenses of a Party Who is Wholly or
Partly Successful. To the extent that Indemnitee is, by reason of his or her
Corporate Status, a party to and is successful, on the merits or otherwise, in
any Proceeding, he or she shall be indemnified against all Expenses actually and
reasonably incurred by him or her or on his or her behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.

            Section 6. Indemnification for Expenses of a Witness. To the extent
that Indemnitee is, by reason of his or her Corporate Status, a witness in any
Proceeding, he or she shall be indemnified against all Expenses actually and
reasonably incurred by him or her or on his or her behalf in connection
therewith.

            Section 7. Notification and Defense of Claims. Not later than thirty
(30) days after receipt by Indemnitee of notice of the commencement of any
action, suit or proceeding, Indemnitee will, if a claim in respect thereof is to
be made against the Company under this Agreement, notify the Company in writing
of the commencement thereof; but the omission to so notify the Company will not
relieve the Company from any liability which it may have to Indemnitee otherwise
than under this Agreement. With respect to any such action, suit or proceeding
as to which Indemnitee notifies the Company of the commencement thereof:

            (a) the Company will be entitled to participate therein at its own
expense;

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            (b) except as otherwise provided below, to the extent that it may
wish, the Company jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than as
otherwise provided below. Indemnitee shall have the right to employ its counsel
in such action, suit or proceeding but all Expenses incurred shall be at the
expense of Indemnitee unless: (i) the employment of counsel by Indemnitee has
been authorized in writing by the Chief Executive Officer of the Company or his
designee; (ii) the Company and its counsel shall each have determined in their
reasonable discretion that there is a meaningful conflict of interest between
the Company and Indemnitee in the conduct of the defense of such action and the
Company does not retain an independent second counsel to represent Indemnitee;
or (iii) the Company shall have refused to employ counsel to assume the defense
of such action within thirty (30) days after proper notice has been received, in
each of which cases the fees and expenses of Indemnitee's separate counsel shall
be at the expense of the Company only until the Company elects to assume or
resume the defense of Indemnitee. The Company shall not be obligated to pay for
the reasonable fees and expenses of more than one separate counsel to represent
Indemnitee and all other indemnitees; and

            (c) the Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall be permitted to settle
any action except that it shall not settle any action or claim in any manner
which would impose any penalty or limitation or provide any admission of
liability on Indemnitee without Indemnitee's written consent. Neither the
Company nor Indemnitee will unreasonably withhold its consent to any proposed
settlement.

            Section 8. Payment and Repayment of Expenses

            (a) In the event that Indemnitee employs his or her own counsel
pursuant to Section 7(b)(i) through (iii) above, the Company shall pay
Indemnitee, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable third-party Expenses (including attorneys' fees )
incurred in investigating or defending any such action, suit or proceeding
within thirty (30) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such payment from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the third-party Expenses incurred by
Indemnitee in detail and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses paid by the
Company if it shall ultimately be determined that Indemnitee is not entitled to
be indemnified against such Expenses. Notwithstanding anything to the contrary
in this Agreement, the Company shall not be required to pay such expenses to
Indemnitee in connection with any action, suit or proceeding brought by the
Company and approved by a majority of the Board of Directors which alleges
willful misappropriation of corporate assets by Indemnitee or any other willful
and deliberate breach in bad faith of Indemnitee's duty to the Company or its
stockholders. Indemnitee hereby agrees to assign to the Company all claims and
other rights to take legal action, and hereby grants to the Company a
power-of-attorney to proceed, against any provider of services for which the
Company has paid or is obligated to pay related Expenses hereunder.

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            (b) Indemnitee agrees that Indemnitee will reimburse the Company for
all reasonable expenses paid by the Company in defending any action, suit or
proceeding against Indemnitee in the event and only to the extent it shall be
ultimately determined by a final judicial decision (from which there is no right
of appeal) that Indemnitee is not entitled, under applicable law, the Company's
Bylaws, this Agreement or otherwise, to be indemnified by the Company for such
expenses.

            Section 9. Remedies of Indemnitee; Effect of Certain Proceedings

            (a) In the event that (i) payment of Expenses is not timely made
pursuant to Section 8 of this Agreement or (ii) payment of indemnification is
not made pursuant to Sections 3, 4, 5 or 6 of this Agreement within thirty (30)
days after receipt by the Company of a written request therefor, Indemnitee
shall be entitled to an adjudication in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction, of his or her
entitlement to such indemnification of Expenses. Indemnitee shall commence such
proceeding seeking an adjudication within 180 days following the date on which
Indemnitee first has the right to commence such proceeding pursuant to this
Section 9(a). The Company shall not oppose Indemnitee's right to seek any such
adjudication.

            (b) In the event that Indemnitee, pursuant to this Section 9, seeks
a judicial adjudication to enforce his or her rights under, or to recover
damages for breach of, this Agreement, Indemnitee shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any and all
expenses (of the types described in the definition of Expenses in Section 16 of
this Agreement) actually and reasonably incurred by him or her in such judicial
adjudication, but only if he or she prevails therein. If it shall be determined
in said judicial adjudication that Indemnitee is entitled to receive part but
not all of the indemnification of expenses sought, the expenses incurred by
Indemnitee in connection with such judicial adjudication shall be appropriately
prorated.

            (c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
Proceeding, was unlawful.

            Section 10. Non-Exclusivity; Survival of Rights; Insurance;
Subrogation

            (a) The rights of indemnification and to receive payment of Expenses
as provided by this Agreement shall not be deemed exclusive of any other rights
which may be required under applicable law, any agreement, a vote of
stockholders or a resolution of directors, or otherwise.

            (b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company, Indemnitee shall be

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covered by such policy or policies in accordance with its or their terms to the
extent of the coverage available for any such director, officer, employee, agent
or fiduciary under such policy or policies.

            (c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.

            (d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

            (e) The Company may, to the full extent authorized by law, create a
trust fund, grant a security interest and/or use other means (including, without
limitation, letters of credit, surety bonds and other similar arrangements) to
ensure the payment of such amounts as may become necessary or desirable to
effect indemnification provided hereunder.

            Section 11. Duration of Agreement. This Agreement shall continue
until and terminate upon the later of: (a) ten (10) years after the date that
Indemnitee shall have ceased to serve as a director, officer, employee, agent or
fiduciary of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which Indemnitee
served at the request of the Company; or (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted rights of
indemnification of expenses hereunder and of any proceeding commenced by
Indemnitee pursuant to Section 9 of this Agreement relating thereto. This
Agreement shall be binding upon the Company and its successors and assigns and
shall inure to the benefit of Indemnitee and his or her heirs, executors and
administrators.

            Section 12. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.

            Section 13. Exception to Right of Indemnification or Payment of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification of Expenses under this Agreement with
respect to any Proceeding, or any claim therein, brought or made by him or her
against the Company.

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            Section 14. Identical Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall for all purposes be deemed to
be an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

            Section 15. Headings. The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.

            Section 16. Definitions. For purposes of this Agreement:

            (a) "Corporate Status" describes the status of a person who is or
was a director, officer, employee, agent or fiduciary of the Company or of any
other direct or indirect subsidiary of the Company.

            (b) "Effective Date" means ___________ __, _____.

            (c) "Expenses" shall be subject to the provisions of Section 7(b)
above and shall include all reasonable attorneys' fees, court costs, transcript
costs and fees of experts. Reasonable Expenses shall not exceed the average for
fees and expenses in the county in which the Expenses have been incurred.

            (d) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, whether or
not initiated prior to the Effective Date, except a proceeding initiated by an
Indemnitee pursuant to Section 9 of this Agreement to enforce his or her rights
under this Agreement.

            Section 17. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

            Section 18. Notice by Indemnitee. Indemnitee agrees promptly to
notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification of Expenses covered
hereunder.

            Section 19. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

            (a) If to Indemnitee, to: the address of the Indemnitee appearing on
the signature page hereof; and

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            (b) If to the Company, to: Stratagene Corporation, Attention:
General Counsel, 11011 North Torrey Pines Road, San Diego, California 92037;

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

            Section 20. Governing Law. The parties agree that this Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware.

            Section 21. Miscellaneous. Use of the masculine pronoun shall be
deemed to include usage of the feminine pronoun where appropriate.

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            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.

                                       COMPANY:

                                       STRATAGENE CORPORATION

                                       By:
                                          ----------------------------

                                       Name:
                                            --------------------------

                                       Title:
                                             -------------------------

                                       INDEMNITEE:

                                       [                   ]
                                        -------------------

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

                           Address:
                                       ------------------------------

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

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

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

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            SCHEDULE OF OFFICERS AND DIRECTORS WHO WILL ENTER INTO AN
                           INDEMNIFICATION AGREEMENT

1.    Joseph A. Sorge, M.D.
2.    J. David Tholen
3.    Carlton J. Eibl
4.    Robert Manion
5.    John Reed
6.    Nicolas H. Roelofs, Ph.D.
7.    Ronni L. Sherman
8.    John R. Pouk
9.    Reginald P. Jones<PAGE>

                                                                    EXHIBIT 10.2

                                     FORM OF

                         THE YEAR 2000 STOCK OPTION PLAN

                                       OF

                             STRATAGENE CORPORATION

         As Amended and Restated Effective as of _______________, 2004

            Stratagene Corporation, a corporation organized under the laws of
the State of Delaware and formerly known as Stratagene Holding Corporation (the
"Company"), adopted the Year 2000 Stock Option Plan of Stratagene Holding
Corporation, effective as of December 20, 2000 for the benefit of its eligible
Employees, Directors and Consultants. The Plan is hereby amended and restated
effective as of __________________, 2004 and renamed the Year 2000 Stock Option
Plan of Stratagene Corporation. The Plan provides for grants of options to
purchase shares of Common Stock of the Company, and authorizes the issuance of
3,000,000 shares of Common Stock.

            The purposes of the Plan are as follows:

            (1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its executive and other
key Employees and Consultants who have been or will be given responsibility for
the management or administration of the Company's business affairs, by assisting
them to become owners of the Company's Common Stock and thus to benefit directly
from its growth, development and financial success.

            (2) To enable the Company to obtain and retain the services of the
type of executive and other key Employees and Consultants considered essential
to the long-range success of the Company by providing and offering them an
opportunity to become owners of the Company's Common Stock pursuant to options.

                                   ARTICLE 1

                                  DEFINITIONS

              Whenever the following terms are used in this Plan, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.

Section 1.1 - Administrator

              "Administrator" shall have the meaning set forth in Section 6.1.

Section 1.2 - Board

              "Board" shall mean the Board of Directors of the Company.

Section 1.3 - Code

              "Code" shall mean the Internal Revenue Code of 1986, as amended.

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Section 1.4 - Committee

              "Committee" shall mean the Committee of the Board, appointed as
provided in Section 6.1.

Section 1.5 - Common Stock

              "Common Stock" shall mean the Company's Common Stock, par value
$0.0001 per share, or shares of stock or other securities into which such shares
are converted, reclassified or exchanged.

Section 1.6 - Company

              "Company" shall mean Stratagene Corporation, a Delaware
corporation (formerly known as Stratagene Holding Corporation).

Section 1.7 - Consultant

              "Consultant" shall mean any consultant or adviser (other than an
Employee) if:

              (a) the consultant or adviser renders bona fide services to the
Company;

              (b) the services rendered by the consultant or adviser 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 Company's
securities; and

              (c) the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.

Section 1.8 - Director

              "Director" shall mean a member of the Board.

Section 1.9 - DRO

              "DRO" shall mean a domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act of 1974, as amended,
or the rules thereunder.

Section 1.10 - Employee

              "Employee" shall mean any employee (as defined in accordance with
the regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any entity which is then a Parent Corporation,
Subsidiary or Non-Corporate Affiliate, whether such employee is so employed at
the time this Plan is adopted or becomes so employed subsequent to the adoption
of this Plan.

Section 1.11 - Exchange Act

              "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

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Section 1.12 - Fair Market Value

              "Fair Market Value" of a share of Common Stock as of a given date
shall be (a) the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on the
trading day previous to such date, or if shares were not traded on the trading
day previous to such date, then on the next preceding date on which a trade
occurred, or (b) if Common Stock is not traded on an exchange but is quoted on
Nasdaq or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by Nasdaq or such successor quotation system,
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
Nasdaq or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.

Section 1.13 - Incentive Option

              "Incentive Option" shall mean an Option which is intended to be an
"incentive stock option" under, and conforms to the applicable provisions of,
Section 422 of the Code, and which is designated as an Incentive Option by the
Administrator.

Section 1.14 - Independent Director

              "Independent Director" shall mean a member of the Board who is not
an Employee of the Company, a Subsidiary or a Non-Corporate Affiliate.

Section 1.15 - Non-Corporate Affiliate

              "Non-Corporate Affiliate" shall mean any partnership or limited
liability company (other than the Company or a Subsidiary) in an unbroken chain
of partnerships, limited liability companies, or corporations beginning with the
Company if each of the partnerships, limited liability companies, or
corporations other than the last partnership, limited liability company, or
corporation in the unbroken chain then owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain or 50% or more of the capital or profits interests in
one of the partnerships or limited liability companies in such chain. For
purposes of the Plan, an employee of any limited liability company that is
disregarded as a separate entity under Section 7701 of the Code shall be treated
as an employee of the partnership, limited liability company or corporation
owning all of the interests in such disregarded entity.

Section 1.16 - Non-Qualified Option

              "Non-Qualified Option" shall mean an Option which is not intended
to meet the requirements of Section 422 of the Code and which is designated as a
Non-Qualified Option by the Administrator.

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Section 1.17 - Option

              "Option" shall mean an option to purchase Common Stock of the
Company granted under the Plan. An "Option," as used herein, may mean an
Incentive Option or Non-Qualified Option; provided, however, that Options
granted to Consultants shall be Non-Qualified Options.

Section 1.18 - Option Agreement

              "Option Agreement" shall mean a written agreement executed by an
authorized officer of the Company and the Optionee which shall contain such
terms and conditions with respect to an Option as the Administrator shall
determine, consistent with the Plan.

Section 1.19 - Optionee

              "Optionee" shall mean an Employee or other individual to whom an
Option is granted under the Plan.

Section 1.20 - Parent Corporation

              "Parent Corporation" shall mean any corporation in an unbroken
chain of corporations ending with the Company if each of the corporations other
than the Company then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

Section 1.21 - Performance Criteria

              "Performance Criteria" shall include the following business
criteria with respect to the Company, any Subsidiary or any Non-Corporate
Affiliate or any division or operating unit: (a) net income, (b) pre-tax income,
(c) operating income, (d) cash flow, (e) earnings per share, (f) return on
equity, (g) return on invested capital or assets, (h) cost reductions or
savings, (i) funds from operations, (j) appreciation in the fair market value of
Common Stock and (k) earnings before any one or more of the following items:
interest, taxes, depreciation or amortization.

Section 1.22 - Plan

              "Plan" shall mean the Year 2000 Stock Option Plan of Stratagene
Corporation, as amended or restated from time to time.

Section 1.23 - Public Trading Date

              "Public Trading Date" shall mean the first date upon which Common
Stock 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.

Section 1.24 - Restricted Stock

              "Restricted Stock" means shares of Common Stock acquired pursuant
to the exercise of an unvested Option in accordance with Section 4.4(d) below.

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Section 1.25 - Rule 16b-3

              "Rule 16b-3" means that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.

Section 1.26 - Secretary

              "Secretary" shall mean the Secretary of the Company.

Section 1.27 - Section 16(b)

              "Section 16(b)" means Section 16(b) of the Exchange Act.

Section 1.28 - Securities Act

              "Securities Act" shall mean the Securities Act of 1933, as
amended.

Section 1.29 - Subsidiary

              "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. Except as otherwise provided herein,
Subsidiary shall include Non-Corporate Affiliates of the Company; provided,
however, that in respect of Incentive Stock Options, Subsidiary shall not
include Non-Corporate Affiliates.

Section 1.30 - Substitute Award

              "Substitute Award" shall mean an Option granted under the Plan
upon the assumption of, or in substitution for, outstanding equity awards
previously granted by a company or other entity in connection with a corporate
transaction, such as a merger, combination, consolidation or acquisition of
property or stock; provided, however, that in no event shall the term
"Substitute Award" be construed to refer to an award made in connection with the
cancellation and repricing of an Option.

Section 1.31 - Termination of Consultancy

              "Termination of Consultancy" shall mean the time when the
engagement of an Optionee as a Consultant to the Company, a Subsidiary or a
Non-Corporate Affiliate is terminated for any reason, with or without cause,
including, but not by way of limitation, by cessation of business, bankruptcy,
contract termination, resignation, discharge or death; but excluding
terminations where there is a simultaneous commencement of a consulting
relationship or employment with the Company, any Subsidiary or any Non-Corporate
Affiliate. The Administrator, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company, any Subsidiary or
any Non-Corporate Affiliate has an absolute and unrestricted right to terminate
a Consultant's service at any

                                       5
<PAGE>

time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.

Section 1.32 - Termination of Employment

              "Termination of Employment" shall mean the time when the
employee-employer relationship between an Optionee and the Company, any
Subsidiary or any Non-Corporate Affiliate is terminated for any reason, with or
without cause, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (a) at
the discretion of the Administrator, any termination where there is a
simultaneous reemployment or continuing employment of an Optionee by the
Company, any Subsidiary or any Non-Corporate Affiliate, (b) at the discretion of
the Administrator, any termination which results in a temporary severance of the
employee-employer relationship, and (c) at the discretion of the Administrator,
any termination which is followed by the simultaneous establishment of a
consulting relationship by the Company, a Subsidiary or a Non-Corporate
Affiliate with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for cause, and
all questions of whether a particular leave of absence constitutes a Termination
of Employment; provided, however, that, with respect to Incentive Options,
unless otherwise determined by the Administrator in its discretion, a leave of
absence, change in status from an employee to an independent contractor or other
change in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status
or other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section. Notwithstanding any other provision of the Plan, the Company, any
Subsidiary or any Non-Corporate Affiliate shall have an absolute and
unrestricted right to terminate an Optionee's service at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in writing.

                                   ARTICLE 2

                            SHARES SUBJECT TO PLAN

Section 2.1 - Shares Subject to Plan

              (a) The shares of stock subject to Options shall be shares of
Common Stock. The aggregate number of such shares of Common Stock which may be
issued upon exercise of Options shall not exceed 3,000,000. The shares of Common
Stock issuable upon exercise of such Options may be either previously authorized
but unissued shares or treasury shares.

              (b) Notwithstanding the foregoing, if the offer or sale of shares
of stock under the Plan is subject to Section 260.140.45 of Title 10 of the
California Code of Regulations (or other applicable law limiting the offers or
sales of shares of stock under the Plan), the aggregate number of shares of
stock issuable upon the exercise of all outstanding Options (together with
options and similar awards outstanding under any other stock option plan of the
Company) and the total number of shares provided for under any stock bonus or
similar plan of the Company shall not exceed thirty percent (30%) (or such other
higher percentage limitation as may be approved by the stockholders of the
Company pursuant to Section 260.140.45) of the then

                                       6
<PAGE>

outstanding shares of stock, as calculated in accordance with the conditions and
exclusions of Section 260.140.45 (or such other limitation under applicable
law).

              (c) No person shall be granted, in any calendar year, Options to
purchase more than 300,000 shares of Common Stock; provided, however, that the
foregoing limitation shall not apply prior to the Public Trading Date and,
following the Public Trading Date, the foregoing limitation shall not apply
until the earliest of: (i) the first material modification of the Plan
(including any increase in the number of shares reserved for issuance under the
Plan in accordance with Section 2.1); (ii) the issuance of all of the shares of
Common Stock reserved for issuance under the Plan; (iii) the expiration of the
Plan; (iv) the first meeting of stockholders at which Directors of the Company
are to be elected that occurs after the close of the third calendar year
following the calendar year in which the first registration of an equity
security of the Company under Section 12 of the Exchange Act occurred; or (v)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder. The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 7.3. For purposes of this Section 2.1(c), to the extent
required by applicable law, if an Option is canceled in the same fiscal year of
the Company it was granted (other than in connection with a transaction
described in Section 7.3), the canceled Option will be counted against the limit
set forth in this Section 2.1(c). For this purpose, if the exercise price of an
Option is reduced, the transaction shall be treated as a cancellation of the
Option and the grant of a new Option.

Section 2.2 - Unexercised Options; Repurchased Restricted Stock

              If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.1. Furthermore, any
shares subject to Options which are adjusted pursuant to Section 7.3 and become
exercisable with respect to shares of stock of another corporation shall be
considered cancelled and may again be optioned hereunder, subject to the
limitations of Section 2.1. Shares of Common Stock which are delivered by the
Optionee or withheld by the Company upon the exercise of any Option under the
Plan, in payment of the exercise price thereof or tax withholding thereon, may
again be optioned hereunder, subject to the limitations of Section 2.1. If
shares of Restricted Stock are repurchased by the Company at their original
purchase price, the number of such repurchased shares may again be optioned
hereunder, subject to the limitations of Section 2.1. Notwithstanding the
provisions of this Section 2.2, no shares of Common Stock may again be optioned
if such action would cause an Incentive Option to fail to qualify as an
"incentive stock option" under Section 422 of the Code.

                                   ARTICLE 3

                              GRANTING OF OPTIONS

Section 3.1 - Eligibility

              (a) Any executive or key Employee or Consultant selected by the
Administrator pursuant to Section 3.2(a)(i) shall be eligible to be granted an
Option.

                                       7
<PAGE>

              (b) No Incentive Option shall be granted to any person who is not
an Employee, or to any Employee of a Non-Corporate Affiliate.

              (c) Employees of Non-Corporate Affiliates shall only be eligible
to be granted Non-Qualified Options.

              (d) No person may be granted an Incentive Option if such person,
at the time the Incentive Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary (excluding any Non-Corporate Affiliate)
or Parent Corporation (within the meaning of Section 422 of the Code) unless
such Incentive Option conforms to the applicable provisions of Section 422 of
the Code.

Section 3.2 - Granting of Options to Employees and Consultants

              (a) The Administrator shall from time to time, in its absolute
      discretion:

                  (i) Determine which Employees are executive or key Employees
      and select from among the executive or key Employees or Consultants
      (including Employees or Consultants who have previously received Options
      under the Plan) such of them as in the Administrator's opinion should be
      granted Options;

                  (ii) Determine the number of shares to be subject to such
      Options granted to the selected executive or key Employees or Consultants;

                  (iii) Subject to Sections 3.1(b) and 3.1(c), determine whether
      such Options are to be Incentive Options or Non-Qualified Options; and

                  (iv) Determine the terms and conditions of such Options,
      consistent with the Plan; provided, however, that the terms and conditions
      of Options intended to qualify as performance-based compensation as
      described in Section 162(m)(4)(C) of the Code shall include, but not be
      limited to, such terms and conditions as may be necessary to meet the
      applicable provisions of Section 162(m) of the Code.

            (b) Upon the selection of an executive or other key Employee or
      Consultant to be granted an Option, the Administrator shall instruct the
      Secretary to issue such Option and may impose such conditions on the grant
      of such Option as it deems appropriate.

Section 3.3 - Consideration

            In consideration of the granting of an Option under the Plan, the
Optionee shall agree, in the Option Agreement, to remain in the employ of or to
consult for the Company, any Subsidiary or any Non-Corporate Affiliate for a
period of at least one year (or such shorter period as may be fixed in the
Option Agreement or by action of the Administrator following grant of the
Option) after the Option is granted.

                                       8
<PAGE>

Section 3.4 - Options in Lieu of Cash Compensation

              Options may be granted under the Plan to Employees and Consultants
in lieu of cash bonuses which would otherwise be payable to such Employees and
Consultants pursuant to such policies which may be adopted by the Administrator
from time to time.

Section 3.5 - Provisions Applicable to Section 16 Persons

              Notwithstanding any other provision of the Plan, from and
after the Public Trading Date, the Plan, and any Option granted or awarded to
any individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Options granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

                                   ARTICLE 4

                               TERMS OF OPTIONS

Section 4.1 - Option Agreement

              Each Option shall be evidenced by an Option Agreement. Option
Agreements evidencing Incentive Options shall contain such terms and conditions
as may be necessary to meet the applicable provisions of Section 422 of the
Code.

Section 4.2 - Option Price

              The price per share of the shares subject to each Option granted
to Employees, and Consultants shall be set by the Administrator; provided,
however, that such price shall be no less than 85% of the Fair Market Value of a
share of Common Stock on the date such Option is granted, unless otherwise
determined by the Administrator and permitted by applicable state law and:

              (a) in the case of Incentive Options such price shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted (or the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code);

              (b) in the case of Incentive Options granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation thereof (within the meaning of Section 422
of the Code), such price shall not be less than 110% of the Fair Market Value of
a share of Common Stock on the date the Option is granted (or the date the
Option is modified, extended or renewed for purposes of Section 424(h) of the
Code);

              (c) prior to the Public Trading Date, to the extent required by
Section 25102(o) of the California Corporations Code and the regulations
thereunder, in the case of Options granted to an individual then owning more
than 10% of the total combined voting

                                       9
<PAGE>

power of all classes of stock of the Company or any subsidiary or parent
corporation thereof (within the meaning of Section 260.140.41 of Title 10 of the
California Code of Regulations), such price shall not be less than 110% of the
Fair Market Value of a share of Common Stock on the date the Option is granted;
and

              (d) in the case of Options intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
such price shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted.

Section 4.3 - Option Term

              The term of an Option granted to an Employee or Consultant shall
be set by the Administrator in its discretion; provided, however, that, in the
case of Incentive Options, the term shall not be more than ten (10) years from
the date the Incentive Option is granted, or five (5) years from the date the
Incentive Option is granted if the Incentive Option is granted to an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary (excluding Non-Corporate Affiliates) or Parent Corporation thereof
(within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Options, or, if prior to the Public Trading Date, the
requirements of Section 25102(o) of the California Corporations Code and the
regulations thereunder (or other applicable law limiting the offers or sales of
shares of Common Stock under the Plan), the Administrator may extend the term of
any outstanding Option in connection with any Termination of Employment or
Termination of Consultancy of the Optionee, or amend any other term or condition
of such Option relating to such a termination.

Section 4.4 - Commencement of Exercisability

              (a) Subject to the provisions of Sections 4.4(b) and 7.4, Options
shall become exercisable at such times and in such installments (which may be
cumulative) as the Administrator shall provide in the terms of each individual
Option; provided, however, that, prior to the Public Trading Date, to the extent
required by Section 25102(o) of the California Corporations Code and the
regulations thereunder, except with regard to Options granted to officers of the
Company or any Subsidiary or any Non-Corporate Affiliate or Consultants, in no
event shall an Option granted hereunder become vested and exercisable at a rate
of less than twenty percent (20%) per year of the shares of Common Stock subject
thereto over five (5) years from the date the Option is granted, subject to the
continued employment of the Optionee with the Company or the Subsidiaries or
other reasonable conditions established by the Administrator. At any time after
grant of an Option, the Administrator may, in its sole and absolute discretion
and subject to whatever terms and conditions it selects, accelerate the period
during which an Option granted to an Employee or Consultant vests.

              (b) No portion of an Option which is unexercisable at Termination
of Employment or Termination of Consultancy, as the case may be, shall
thereafter become exercisable, except as may be otherwise provided by the
Administrator either in the Option Agreement or by action of the Administrator
following the grant of the Option.

                                       10
<PAGE>

              (c) To the extent that the aggregate Fair Market Value of Common
Stock (and fair market value of other stock) with respect to which "incentive
stock options" (within the meaning of Section 422 of the Code, but without
regard to Section 422(d) of the Code) are exercisable for the first time by an
Optionee during any calendar year (under the Plan and all other incentive stock
option plans of the Company and any Subsidiary or Parent Corporation, within the
meaning of Section 422 of the Code), exceeds $100,000, such options shall be
treated as Non-Qualified Options to the extent required by Section 422 of the
Code. The rule set forth in the preceding sentence shall be applied by taking
options into account in the order in which they were granted. For purposes of
this Section, the Fair Market Value of Common Stock (or fair market value of
other stock) shall be determined as of the time the option with respect to such
Common Stock or other stock is granted.

              (d) The Administrator may provide in the terms of an Option
Agreement that the Optionee may exercise the Option, at any time before the
termination of the Optionee's status as an Employee or Consultant, as
applicable, in whole or in part prior to the full vesting of the Option;
provided, however, that, subject to Section 7.12, shares of Common Stock
acquired upon exercise of an Option which has not fully vested may be subject to
any forfeiture, transfer or other restrictions as the Administrator may
determine in its sole discretion.

Section 4.5 - Expiration of Options

              (a) Except as otherwise provided by the Administrator, no Option
may be exercised to any extent by anyone after the first to occur of the
following events:

                  (i)   The expiration of the term of the Option; or

                  (ii) Except in the case of any Optionee who is disabled
      (within the meaning of Section 22(e)(3) of the Code), the expiration of
      three months from the date of the Optionee's Termination of Consultancy or
      Termination of Employment, as the case may be, for any reason other than
      such Optionee's death unless the Optionee dies within said three-month
      period; or

                  (iii) In the case of an Optionee who is disabled (within the
      meaning of Section 22(e)(3) of the Code), the expiration of one year from
      the date of the Optionee's Termination of Employment or Termination of
      Consultancy, as the case may be, for any reason other than such Optionee's
      death unless the Optionee dies within said one-year period; or

                  (iv)  The expiration of one year from the date of the
      Optionee's death.

              (b) Subject to the provisions of Section 4.5(a), the Administrator
shall provide, in the terms of each individual Option, when such Option expires
and becomes unexercisable; and, without limiting the generality of the
foregoing, the Administrator may provide in the terms of individual Options that
said Options expire immediately upon a Termination of Employment or Termination
of Consultancy, as the case may be, for any reason; provided, however, that,
prior to the Public Trading Date, to the extent required by Section 25102(o) of
the California Corporations Code and Section 260.140.41 of Title 10 of the
California Code of Regulations (or other applicable law), the terms of an Option
shall provide that such Option may be exercised in the event of

                                       11
<PAGE>

Termination of Consultancy or Termination of Employment (other than for cause as
defined by applicable law, the Option Agreement or a contract of employment with
the Optionee), to the extent that such Option is exercisable on the date of such
Termination: (i) for a period of at least six months (or such longer period as
is required by applicable law) from the date of such termination if such
termination was caused by death or disability, and (ii) for a period of at least
30 days (or such longer period as is required by applicable law) from the date
of such termination if such termination was caused by reason other than the
death or disability of the Optionee.

              (c) Except as limited by the requirements of Section 422 of the
Code and regulations and rulings thereunder applicable to Incentive Options, the
Administrator may extend the term of any outstanding Option in connection with
any Termination of Employment or Termination of Consultancy of the Optionee, or
amend any other term or condition of such Option relating to such a termination.

Section 4.6 - Substitute Awards

              Notwithstanding the foregoing provisions of this Article IV to the
contrary, in the case of an Option that is a Substitute Award, the price per
share of the shares subject to such Option may be less than the Fair Market
Value per share on the date of grant, provided, that:

                  (a) the aggregate Fair Market Value (as of the date such
      Substitute Award is granted) of the shares subject to the Substitute
      Award, less the aggregate exercise price thereof, does not exceed;

                  (b) the aggregate fair market value (as of the time
      immediately preceding the transaction giving rise to the Substitute Award,
      such fair market value to be determined by the Administrator) of the
      shares of the predecessor entity that were subject to the grant assumed or
      substituted for by the Company, less the aggregate exercise price of such
      shares.

Section 4.7 - Restrictions on Common Stock

              The Administrator may, in its sole discretion, provide under the
terms of an Option that shares of Common Stock purchased upon exercise of such
Option shall be subject to repurchase from the Optionee by the Company, or shall
be subject to such restrictions as the Administrator shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company and the Subsidiaries, Company performance and individual
performance; provided, however, that, by action taken after the Common Stock is
purchased upon exercise of the Option, the Administrator may, on such terms and
conditions as it may determine to be appropriate, terminate the Company's
repurchase right or remove any or all of the restrictions imposed by the terms
of the Option Agreement; provided, further, that any restrictions shall be
subject to the requirements of Section 7.12 hereof. The Company's right to
repurchase the Common Stock from the Optionee then subject to the right may
provide that immediately upon a Termination of Employment or a Termination of
Consultancy, as applicable, and for such period as the Administrator shall
determine, the Company shall have the right to purchase the Common

                                       12
<PAGE>

Stock at such price per share as is determined by the Administrator and as
provided under the terms of an Option. Shares of Common Stock purchased upon the
exercise of an Option may not be sold, transferred or encumbered until any
repurchase right and any and all restrictions are terminated or expire. The
Secretary of the Company or such other escrow agent as the Administrator may
appoint shall retain physical custody of each certificate representing such
shares of Common Stock until the repurchase right and any and all of the
restrictions imposed under the Option Agreement with respect to the shares
evidenced by such certificate terminate, expire or shall have been removed. In
order to enforce the restrictions imposed upon shares of Common Stock hereunder,
the Administrator shall cause a legend or legends to be placed on certificates
representing all shares of Common Stock that are still subject to any repurchase
right or restrictions under Option Agreements, which legend or legends shall
make appropriate reference to the conditions imposed thereby. If an Optionee
makes an election under Section 83(b) of the Code, or any successor Section
thereto, to be taxed with respect to the Common Stock as of the date of transfer
of the Common Stock rather than as of the date or dates upon which the Optionee
would otherwise be taxable under Section 83(a) of the Code, the Optionee shall
deliver a copy of such election to the Company immediately after filing such
election with the Internal Revenue Service.

Section 4.8 - No Right to Employment

              Nothing in this Plan or in any Option Agreement hereunder shall
confer upon any Optionee any right to continue in the employ of or in a business
relationship with the Company, any Parent Corporation, any Subsidiary or any
Non-Corporate Affiliate or shall interfere with or restrict in any way the
rights of the Company, its Parent Corporations and its Subsidiaries, which are
hereby expressly reserved, to discharge or to terminate the business
relationship with, any Optionee at any time for any reason whatsoever, with or
without cause.

                                   ARTICLE 5

                              EXERCISE OF OPTIONS

Section 5.1 - Person Eligible to Exercise

              During the lifetime of the Optionee, only the Optionee may
exercise an Option (or any portion thereof) granted to the Optionee. After the
death of the Optionee, any exercisable portion of an Option may, prior to the
time when such portion becomes unexercisable under the Plan or the applicable
Option Agreement, be exercised by the Optionee's personal representative or by
any person empowered to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.

Section 5.2 - Partial Exercise

              At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Option Agreement, such Option or portion thereof may
be exercised in whole or in part; provided, however, that the Company shall not
be required to issue fractional shares and the Administrator may, by the terms
of the Option, require any partial exercise to be with respect to a specified
minimum number of shares.

                                       13
<PAGE>

Section 5.3 - Manner of Exercise

              An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Option Agreement:

              (a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that such Option or
portion thereof is exercised, such notice complying with all applicable rules
established by the Administrator.

              (b) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Administrator may, in its discretion (i) allow payment, in whole or
in part, through the delivery of shares of Common Stock which have been owned by
the Optionee for at least six months, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (ii) allow payment, in whole
or in part, through the delivery of property of any kind which constitutes good
and valuable consideration; (iii) allow payment, in whole or in part, through
the delivery of a notice that the Optionee has placed a market sell order with a
broker with respect to shares of Common Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise
price, provided that payment of such proceeds is then made to the Company upon
settlement of such sale; or (iv) allow payment through any combination of the
consideration provided in the foregoing paragraphs (i), (ii) and (iii);
provided, however, that the payment in the manner prescribed in the preceding
paragraphs shall not be permitted to the extent that the Administrator
determines that payment in such manner shall result in an extension or
maintenance of credit, an arrangement for the extension of credit, or a renewal
of an extension of credit in the form of a personal loan to or for any executive
officer of the Company that is prohibited by Section 13(k) of the Exchange Act
or other applicable law.

              (c) The payment to the Company (or other employer corporation) of
the amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; with the consent of the
Administrator, (i) shares of the Company's Common Stock owned by the Optionee
duly endorsed for transfer or (ii) shares of the Company's Common Stock issuable
to the Optionee upon exercise of the Option, valued at Fair Market Value at the
date of Option exercise, may be used to make all or part of such payment;
provided, however, that the number of shares of Common Stock used in order to
satisfy the Optionee's federal and state income and payroll tax liabilities
shall be limited to the number of shares that have a Fair Market Value on the
date of withholding equal to the aggregate amount of such liabilities based on
the minimum statutory withholding rates for federal and state tax income and
payroll tax purposes that are applicable to such supplemental taxable income.

              (d) Such representations and documents as the Administrator, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Administrator may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer orders to transfer agents and registrars.

                                       14
<PAGE>

              (e) Upon the exercise of all or a portion of an unvested Option
pursuant to Section 4.4(d), a restricted stock purchase agreement, an escrow
agreement and such other agreements as are required by the Administrator in
forms determined by the Administrator and signed by the Optionee or other person
then entitled to exercise the Option or such portion of the Option.

              (f) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.

Section 5.4 - Additional Limitations on Exercise of Options

              In addition to any other limitations on the settlement or exercise
of an Option, the Optionee may be required to comply with any timing or other
restrictions with respect to the settlement or exercise of an Option, including
a window-period limitation, as may be imposed in the discretion of the
Administrator relating to compliance with the Exchange Act and the rules and
regulations thereunder and other applicable law.

Section 5.5 - Conditions to Issuance of Stock Certificates

              The shares of stock issuable and deliverable upon the exercise of
an Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the Company.
The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

              (a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed; and

              (b) The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable; and

              (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Administrator shall, in its
absolute discretion, determine to be necessary or advisable; and

              (d) The payment to the Company (or other employer corporation) of
all amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; and

              (e) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience.

                                       15
<PAGE>

Section 5.6 - Rights as Stockholders

              Optionees shall not be, nor have any of the rights or privileges
of, stockholders of the Company in respect of any shares purchasable upon the
exercise of any part of an Option unless and until certificates representing
such shares have been issued by the Company to such Optionees.

Section 5.7 - Notice of Transfer of Common Stock

              The Optionee shall give the Company prompt notice of any
disposition of shares of Common Stock acquired by exercise of an Incentive
Option within (a) two years from the date of granting (including the date the
Option is modified, extended or renewed for purposes of Section 424(h) of the
Code) such Option to such Optionee or (b) one year after the transfer of such
shares to such Optionee.

                                    ARTICLE 6

                                ADMINISTRATION

Section 6.1 - Administration of the Plan

              (a) The Plan shall be administered by the Administrator.

              (b) Prior to the Public Trading Date, the Administrator shall be
Dr. Joseph A. Sorge. Should Dr. Sorge resign as Administrator or cease to be a
Director, a successor Director shall be elected by majority vote of the Board.
Such Director shall serve until such time as such person ceases to be a
Director. Notwithstanding the foregoing, however, from and after the Public
Trading Date, a Committee of the Board shall administer the Plan and the
Committee shall consist solely of two or more Independent Directors each of whom
is both an "outside director," within the meaning of Section 162(m) of the Code,
and a "non-employee director" within the meaning of Rule 16b-3. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan. Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.

Section 6.2 - Duties and Powers of Administrator

              It shall be the duty of the Administrator to conduct the general
administration of the Plan in accordance with its provisions. The Administrator
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules and to
amend any Option Agreement, provided that the rights or obligations of the
Optionee of the Option that is the subject of any such Option Agreement are not
affected adversely thereby. Any such Option Agreement under the Plan need not be
the same with respect to each Optionee. Any such interpretations and rules with
respect to Incentive Options shall be consistent with the provisions of Section
422 of the Code.

                                       16
<PAGE>

Section 6.3 - Majority Rule

              The Administrator shall act (a) individually, if Dr. Sorge or a
Director who is a successor, is appointed in accordance with Section 6.1(b) is
the Administrator, (b) by a majority of the members of the Committee, if the
Committee is the Administrator, or (c) by a majority of the members of the
Board, if the Board is the Administrator. The Committee or Board may act either
by vote at a meeting or by a memorandum or other written instrument signed by a
majority of the Committee or the Board, as applicable.

Section 6.4 - Compensation; Professional Assistance; Good Faith Actions

              Members of the Administrator shall receive compensation for their
services as members as determined by the Board. All expenses and liabilities
incurred by members of the Administrator in connection with the administration
of the Plan shall be borne by the Company. The Administrator may employ
attorneys, consultants, accountants, appraisers, brokers or other persons. The
Administrator, the Company and its officers and Directors shall be entitled to
rely upon the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Administrator in
good faith shall be final and binding upon all Optionees, the Company and all
other interested persons. No member of the Administrator shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Options, and all members of the Administrator shall
be fully protected by the Company in respect of any such action, determination
or interpretation.

Section 6.5 - Delegation of Authority to Grant Options

              Prior to the Public Trading Date, the Administrator may, but need
not, delegate from time to time some or all of its authority to grant Options
under the Plan to a subcommittee consisting of one or more members of the Board
or of one or more officers of the Company; provided, further, that after the
Public Trading Date, the Administrator may, but need not, delegate from time to
time some or all of its authority to grant awards under the Plan to a committee
consisting of one or more members of the Administrator or of one or more
officers of the Company; provided, however, that after the Public Trading Date,
the Administrator may not delegate its authority to grant awards to individuals
(a) who are subject on the date of the grant to the reporting rules under
Section 16(a) of the Exchange Act, (b) whose compensation may be subject to the
limit on deductible compensation imposed by Section 162(m) of the Code, or (c)
who are officers of the Company who are delegated authority by the Administrator
hereunder. Any delegation hereunder shall be subject to the restrictions and
limits that the Administrator specifies at the time of such delegation of
authority and may be rescinded at any time by the Administrator. At all times,
any subcommittee appointed under this Section 6.5 shall serve in such capacity
at the pleasure of the Administrator.

Section 6.6 - Repricing of Options

              Subject to Section 7.3, the Administrator shall not, without the
approval of the stockholders of the Company, authorize the amendment of any
outstanding Option to reduce its price per share. Furthermore, no Option shall
be canceled and replaced with the grant of an Option having a lesser price per
share without the further approval of stockholders of the Company.

                                       17
<PAGE>

                                    ARTICLE 7

                               OTHER PROVISIONS

Section 7.1 - Options Not Transferable

              No Option or interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 7.1 shall
prevent transfers by will or by the applicable laws of descent and distribution.
In addition, in the case of a Non-Qualified Option, nothing in this Section 7.1
shall, to the extent permitted by applicable law, prevent transfers by
instrument to an inter vivos or testamentary trust in which the options are to
be passed to beneficiaries upon the death of the trustor (settlor), or by gift
to "immediate family" as that term is defined in 17 C.F.R. 240.16a-1(e).

Section 7.2 - Amendment, Suspension or Termination of the Plan

              The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Administrator.
However, without approval of the Company's stockholders given within 12 months
before or after the action by the Administrator, no action of the Administrator
may, except as provided in Section 7.3, increase any limit imposed in Section
2.1 on the maximum number of shares which may be issued on exercise of Options
or amend the Plan in any other manner that would otherwise require approval by
the Company's stockholders as a matter of applicable law, regulation or rule.
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the Optionee of the Option, impair any rights or obligations under
any Option theretofore granted. No Option may be granted during any period of
suspension nor after termination of the Plan, and in no event may any Option be
granted under this Plan after __________________ 2014.

Section 7.3 - Changes in Common Stock or Assets of the Company,
           Acquisition or Liquidation of the Company and Other Corporate Events

              (a) In the event that the Administrator determines that any
dividend or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole and absolute discretion, affects the Common Stock such that an adjustment
is determined by the Administrator to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Option or Restricted Stock,
then the Administrator shall, in such manner as it may deem equitable, adjust
any or all of

                                       18
<PAGE>

                  (i) the number and kind of shares of Common Stock (or other
      securities or property) with respect to which Options may be granted or
      awarded (including, but not limited to, adjustments of the limitations in
      Section 2.1 on the maximum number and kind of shares which may be issued),

                  (ii) the number and kind of shares of Common Stock (or other
      securities or property) subject to outstanding Options or Restricted
      Stock, and

                  (iii) the grant or exercise price with respect to any Option.

Any such adjustment made by the Administrator shall be final and binding upon
the Optionees, the Company and all other interested persons.

              (b) In the event of any transaction or event described in 7.3(a)
or any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Administrator, in its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, either by the terms of the Option
or Restricted Stock or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Optionee's request, is
hereby authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option or Restricted Stock
under the Plan, to facilitate such transactions or events or to give effect to
such changes in laws, regulations or principles:

                  (i) To provide for either the purchase of any such Option or
      Restricted Stock for an amount of cash equal to the amount that could have
      been attained upon the exercise of such Option or realization of the
      Optionee's rights had such Option or Restricted Stock been currently
      exercisable or payable or fully vested or the replacement of such Option
      or Restricted Stock with other rights or property selected by the
      Administrator in its sole discretion;

                  (ii)  To provide that the Option cannot vest, be exercised or
      become payable after such event;

                  (iii) To provide that such Option shall be exercisable as to
      all shares covered thereby, notwithstanding anything to the contrary in
      Section 4.4 or 4.6 or the provisions of such Option;

                  (iv) To provide that such Option or Restricted Stock be
      assumed by the successor or survivor corporation, or a parent or
      subsidiary thereof, or shall be substituted for by similar options, rights
      or awards covering the stock of the successor or survivor corporation, or
      a parent or subsidiary thereof, with appropriate adjustments as to the
      number and kind of shares and prices; and

                  (v) To make adjustments in the number and type of shares of
      Common Stock (or other securities or property) subject to outstanding
      Options, and in the number and kind and conditions of (including the grant
      or exercise price), and the criteria included

                                       19
<PAGE>

      in, outstanding options, rights and awards and options, rights and awards
      which may be granted in the future.

              (c) With respect to Options which are intended to qualify as
performance-based compensation under Section 162(m)(4)(C), no adjustment or
action described in this Section 7.3 or in any other provision of the Plan shall
be authorized to the extent that such adjustment or action would cause such
Option to fail to so qualify under Section 162(m)(4)(C), or any successor
provisions thereto. No adjustment or action described in this Section 7.3 or in
any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the
Administrator determines that the Option is not to comply with such exemptive
conditions. The number of shares of Common Stock subject to any Option shall
always be rounded up to the next whole number.

              (d) Subject to the provisions of the Plan, the Administrator may,
in its discretion, include such further provisions and limitations in any
Option, agreement or certificate, as it may deem equitable and in the best
interests of the Company.

              (e) The existence of the Plan, any Option Agreement or Restricted
Stock purchase agreement and the Options granted hereunder shall not affect or
restrict in any way the right or power of the Company or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

Section 7.4 - Approval of Plan by Stockholders

              This Plan shall be submitted for the approval of the Company's
stockholders within 12 months after the date of the Board's adoption of the
Plan. Options may be granted prior to such stockholder approval; provided,
however, that such Options shall not be exercisable prior to the time when the
Plan is approved by the stockholders; provided, further, that if such approval
has not been obtained at the end of said 12-month period, all Options previously
granted under the Plan shall thereupon be cancelled and become null and void.

Section 7.5 - Effect of Plan upon Other Option and Compensation Plans

              The adoption of this Plan shall not affect any other compensation
or incentive plans in effect for the Company, any Parent Corporation, any
Subsidiary or any Non-Corporate Affiliate. Nothing in this Plan shall be
construed to limit the right of the Company, any Parent Corporation, any
Subsidiary or any Non-Corporate Affiliate (a) to establish any other forms of
incentives or compensation for employees of the Company, any Parent Corporation,
any Subsidiary or any Non-Corporate Affiliate or (b) to grant or assume options
otherwise than under this Plan in connection

                                       20
<PAGE>

with any proper corporate purpose, including, but not by way of limitation, the
grant or assumption of options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, firm or association.

Section 7.6 - Tax Withholding

              The Company shall be entitled to require payment in cash or
deduction from other compensation payable to each Optionee of any sums required
by federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Option. The Administrator may in its
discretion and in satisfaction of the foregoing requirement allow such Optionee
to elect to have the Company withhold shares of Common Stock otherwise issuable
under such Option (or allow the return of shares of Common Stock) having a fair
market value equal to the minimum sums required to be withheld. Notwithstanding
any other provision of the Plan, the number of shares of Common Stock which may
be withheld with respect to the issuance, vesting, exercise or payment of any
Option (or which may be repurchased from the Optionee within six months after
such shares of Common Stock were acquired by the Optionee from the Company) in
order to satisfy the Optionee's federal and state income and payroll tax
liabilities with respect to the issuance, vesting, exercise or payment of the
Option shall be limited to the number of shares which have a Fair Market Value
on the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal and
state income tax and payroll tax purposes that are applicable to such
supplemental taxable income.

Section 7.7 - Forfeiture Provisions

              Pursuant to its general authority to determine the terms and
conditions applicable to Options under the Plan, the Administrator shall have
the right to provide, in the terms of Options made under the Plan, or to require
an Optionee to agree by separate written instrument, that (a) (i) any proceeds,
gains or other economic benefit actually or constructively received by the
Optionee upon any receipt or exercise of the Option, or upon the receipt or
resale of any Common Stock underlying the Option, must be paid to the Company,
and (ii) the Option shall terminate and any unexercised portion of the Option
(whether or not vested) shall be forfeited, if (b)(i) a Termination of
Consultancy or Termination of Employment occurs prior to a specified date, or
within a specified time period following receipt or exercise of the Option, or
(ii) the Optionee at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Administrator
or (iii) the Optionee incurs a Termination of Consultancy or Termination of
Employment for cause.

Section 7.8 - Information to Optionees and Purchasers

              Prior to the Public Trading Date, to the extent required by
Section 25102(o) of the California Corporation Code and Section 260.140.46 of
Title 10 of the California Code of Regulations (or other applicable law), the
Company shall provide to each Optionee of an Option and to each person who
acquires shares of Common Stock pursuant to the Plan, not less frequently than
annually during the period such Optionee holds an Option, and, in the case of an

                                       21
<PAGE>

Optionee or other person who acquires shares of Common Stock pursuant to the
Plan, during the period such Optionee or person owns such shares, copies of the
Company's annual financial statements. Notwithstanding the preceding sentence,
the Company shall not be required to provide such statements to Employees and
Consultants whose duties in connection with the Company assure their access to
equivalent information.

Section 7.9 - Investment Intent

              The Company may require an Optionee or other person purchasing
shares of Common Stock, as a condition of exercising or acquiring Common Stock
under any Option, to give written assurances satisfactory to the Company as to
the Optionee's or other person's knowledge and experience in financial and
business matters and/or to employ a representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters and that such Optionee or person is capable of evaluating, alone or
together with the representative, the merits and risks of exercising the Option;
and to give written assurances satisfactory to the Company stating that the
person is acquiring the stock subject to the Option for such Optionee or
person'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 the issuance of the
shares upon the exercise or acquisition of Common Stock under the applicable
Option has been registered under a then currently effective registration
statement under the Securities Act, or 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.

Section 7.10 - Titles

              Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.

Section 7.11 - Conformity to Securities Laws

              The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and Options shall be
granted and may be exercised, only in such a manner as to conform to such laws,
rules and regulations. To the extent permitted by applicable law, the Plan and
Options granted hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.

Section 7.12 - Compliance with Laws

              Prior to the Public Trading Date, the Plan, the granting and
vesting of Options under the Plan and the issuance and delivery of shares of
Common Stock (and the restrictions thereon) are subject to compliance with all
applicable federal and state laws, rules and regulations

                                       22
<PAGE>

(including but not limited to Section 25102(o) of the California Corporation
Code and Title 10 of the California Code of Regulations, as well as other state
and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. To the extent applicable, any securities delivered under the Plan
shall be subject to such restrictions, and the person acquiring such securities
shall, if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent necessary and
permitted by applicable law, the Plan and Options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.

Section 7.13 - Governing Law

              The Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Delaware
without regard to conflicts of law thereof.

                                   *  *  *  *

              I hereby certify that the foregoing Plan was duly adopted by the
Board on ____________, 2004.

              Executed as of the ____ day of _______________, 2004.

                                          _____________________________________
                                          Secretary

                                   *  *  *  *

              I hereby certify that the foregoing Plan was approved by the
stockholders of the Company on ____________, 2004.

              Executed as of the ____ day of _______________, 2004.

                                          _____________________________________
                                          Secretary

                                       23

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