Document:

<PAGE>
                                                                     EXHIBIT 4.2
                                                                  Execution Copy

                            DATED                2002

                           ARGONAUT TECHNOLOGIES, INC.

                                  IN FAVOUR OF

                         WILLIAM COLIN JONES AND OTHERS

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

        POUND STERLING 7,650,000 LOAN NOTE INSTRUMENT CREATING PRINCIPAL
                        AMOUNT GUARANTEED LOAN NOTES 2004
                                  GUARANTEED BY
                                BARCLAYS BANK PLC

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

                      PAUL, HASTINGS, JANOFSKY & WALKER LLP
                              19TH FLOOR, TOWER 42
                               25 OLD BROAD STREET
                                 LONDON EC2N 1HQ
                               TELE: 020 7562 4038
                               FAX: 020 7628 4444
                              REF: LDN/31769 -- LB2

<PAGE>

THIS INSTRUMENT is made the           day of February 2002 by ARGONAUT
TECHNOLOGIES, INC. (a Delaware Corporation) of 1101 Chess Drive, Foster City,
California 94404 (the "COMPANY") and by BARCLAYS BANK PLC (registered number
1026167) whose registered office is at 54 Lombard Street, London EC3P 3AH (the
"GUARANTOR")

RECITALS:

A.      The Company has by resolution of its board of directors passed on 18
        December 2001 created up to Pound Sterling7,650,000 of Guaranteed Loan
        Notes 2004 constituted in the following manner.

B.      The Guarantor has agreed, at the request of the Company, to guarantee
        the payment of principal and interest in respect of such loan notes on
        the terms and subject to the limitations set out herein.

NOW THIS DEED WITNESSES as follows:

1.      DEFINITIONS AND INTERPRETATION

        In this Instrument (which includes the schedules) the following
        definitions shall apply unless the context requires otherwise:

        "BUSINESS DAY" means any day (except Saturdays and Sundays) when
        clearing banks are open for business in England and Wales;

        the "CERTIFICATES" means the certificates in respect of Notes;

        the "CONDITIONS" means the conditions referred to in Clause 2 and set
        out in Schedule 2;

        "DEFAULT INTEREST" means interest at the rate of 12 per cent per annum;

        the "DIRECTORS" means the board of directors of the Company from time to
        time, or a duly authorised committee of the board;

        "GUARANTEE" means the guarantee conditions set out in Schedule 3 as
        varied, supplemented or replaced from time to time in accordance with
        such conditions;

        "INTEREST DATE" and "INTEREST PERIOD" are as defined in Condition 3.1;

        "INSTRUMENT" means this instrument and the Schedules hereto;

        the "NOTES" means the principal amount of Guaranteed Loan Notes 2004 of
        the Company constituted by this Instrument, and references to any Notes
        as "outstanding" mean that they are in issue, unredeemed and
        uncancelled;

        the "NOTEHOLDERS" means the several persons from time to time entered in
        the Register as the holders of the Notes, and any references to a
        holder's Notes mean Notes in respect of which he is so registered;

        "REDEMPTION NOTICE" means a notice substantially in the form set out in
        Schedule 1;

<PAGE>

        "REDEMPTION DATE" means 30 April 2004 or, if the Term is extended
        pursuant to Condition 1.3, 30 April 2006; and

        "TERM" means the period from the date of issue of the Notes until the
        Redemption Date.

        References to persons shall include natural persons, bodies corporate,
        unincorporated associations, partnerships and other entities; references
        to the singular shall include the plural, and vice versa; and references
        to clauses and schedules are (unless expressly stated otherwise) to
        clauses of, and schedules to, this Instrument.

        Headings are for convenience only and are not to affect interpretation.

2.      CONSTITUTION OF THE NOTES

2.1     The principal amount of the Notes constituted by this Instrument is
        limited to Pound Sterling7,650,000. The Notes may be issued in
        denominations of any amount and shall be transferable in whole or (in
        amounts and integral multiples of Pound Sterling50,000) in part, as
        provided in the Conditions.

2.2     This Instrument shall operate for the benefit of all Noteholders, each
        of whom may sue for the performance or observance of its provisions in
        his own right so far as his holding of Notes is concerned, and for all
        persons claiming through or under them. The Company shall comply with
        the terms of the Notes and the Conditions and the Notes shall be held
        subject to the Conditions. The Conditions and schedules shall be deemed
        to be incorporated in this Instrument and shall be binding on the
        Company and the Noteholders and all persons claiming through or under
        them.

2.3     Until such time as the Notes are redeemed or repurchased in accordance
        with the provisions of this Instrument, the Company will pay to the
        Noteholders interest (less any applicable taxes) on the principal amount
        of the Notes outstanding at such rate, at such intervals and in such
        manner as is provided in the Conditions.

2.4     The Notes may be issued whenever, to whomever, and on whatever terms and
        conditions the Directors please. When issued and while they are
        outstanding, the Notes shall rank pari passu equally and rateably
        without discrimination or preference and as a guaranteed, but otherwise
        unsecured, obligation of the Company.

3.      CERTIFICATES

        The Certificates shall be executed by the Company and shall be in the
        form or substantially the form set out in Schedule 1. Each shall refer
        to this Instrument and bear a denoting number and have the Conditions
        endorsed on it or attached to it, together with a form of Redemption
        Notice in the form (or substantially in the form) set out in that
        schedule.

4.      AMENDMENTS

4.1     Subject to Clause 4.2, the Company may from time to time (by deed
        expressed to be supplemental to this Instrument) amend any provisions of
        this Instrument (including the Conditions) if the amendment is
        previously either sanctioned by a resolution of Noteholders representing
        not less than three-fourths of the principal amount

                                      -2-
<PAGE>

        outstanding under the Notes or considered, in the opinion of a merchant
        bank or stockbroker appointed for the purpose by the Company, not to be
        prejudicial to the holders of outstanding Notes and to be of a formal,
        minor or technical nature or to be necessary to correct a manifest
        error.

4.2     No modification to this Instrument and no modification, abrogation or
        compromise of the rights of the Noteholders which would have the effect
        of increasing the liability of the Company and/or the Guarantor in
        respect of the Notes, or which would be prejudicial to the rights of the
        Guarantor against, or to the security interests granted to the Guarantor
        by, the Company, shall be made without the written consent of the
        Guarantor having first been given to the Company.

4.3     The Company will at all times allow any holder of outstanding Notes to
        inspect a copy of this Instrument during normal business hours on
        reasonable notice and (provided the Company's reasonable expenses in
        doing so are paid) will on request supply any Noteholder as soon as
        reasonably practicable with a copy of this Instrument.

5.      THIRD PARTY RIGHTS

        Nothing in this Instrument is intended to confer on any person any right
        to enforce any term of this Instrument which that person would not have
        but for the Contracts (Rights of Third Parties) Act 1999.

6.      GOVERNING LAW AND JURISDICTION

6.1     This Instrument and the Notes shall be governed by and construed in
        accordance with the laws of England.

6.2     Any dispute which may arise out of or in connection with this Instrument
        shall be referred and finally resolved by arbitration under the rules of
        the London Court of International Arbitration (the "LCIA RULES") which
        are deemed to be incorporated by reference to this clause. The
        procedural law governing any arbitration arising hereunder (insofar as
        not governed by the LCIA Rules) shall be English law. Article 69 of the
        Arbitration Act 1996 shall not apply to any arbitration proceeding
        conducted in relation to this Deed. The place of the arbitration shall
        be London.

IN WITNESS of which the Company and the Guarantor have executed this instrument
as a deed and have delivered it upon dating it.

                                      -3-
<PAGE>

                                   SCHEDULE 1

                              LOAN NOTE CERTIFICATE

                   ARGONAUT TECHNOLOGIES, INC. (THE "COMPANY")

                            (a Delaware Corporation)

      Pound Sterling 7,650,000 Principal Amount Guaranteed Loan Notes 2004
                                 (the "Notes")

Subject to the Conditions endorsed hereon (the "Conditions") the Notes were
issued pursuant to the charter and by-laws of the Company and created by a
resolution of the Board of Directors passed on 18 December 2001

THIS IS TO CERTIFY that the under mentioned person is the registered holder of
this Note which Note is subject to the Conditions.

CERTIFICATE NO.                  NAME AND ADDRESS             AMOUNT OF NOTE
                                 OF NOTEHOLDER                (POUND STERLING)

EXECUTED as a Deed and delivered            )
by the Company acting by:                   )      .............................
                                            )      Director
                                            )
                                            )
                                            )      .............................
                                            )      Director/Secretary

NOTES:         1.     This Note must be surrendered before it may be
                      transferred. The Noteholder may transfer all or part of
                      this Note and then only subject to and in accordance with
                      Condition 6.

               2.     This Note has not been and will not be registered under
                      the US Securities Act of 1933, as amended, or under any US
                      state securities laws and is issued in reliance upon US
                      federal and state exemptions for transactions not
                      involving any public offering.

                                      -4-
<PAGE>

                                REDEMPTION NOTICE

NOTICE OF EXERCISE OF REDEMPTION RIGHTS

To:     The directors of Argonaut Technologies, Inc.

I/We, the registered holder(s) of the Notes represented by this Certificate,
give notice of my/our desire to exercise my/our right to require repayment by
the Company of the whole/Pound Sterling* of the principal amount of such Notes
in accordance with the Conditions, together with accrued interest (less any
applicable taxes), on [ date ].

I/We authorise the despatch of a cheque payable in my/our favour in respect of
the principal moneys and interest due to me/us and

(in the case of a redemption of part of the principal moneys represented by this
Certificate) either this Certificate duly endorsed with a memorandum of the
amount and date of the redemption or a fresh Certificate in my/our name(s) for
the balance of the principal moneys not repayable on this occasion to:

(Name)
          ----------------------------

(Address)
          ----------------------------

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

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

Signature(s) of Noteholder(s)

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

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

In the case of joint holdings all Noteholders must sign. In the case of a
corporation this form must either be under the common seal or under the hand of
some officer or attorney of the corporation duly authorised in that behalf.

Dated this      day of            200[ ]

Delete or complete as appropriate. If this space is left blank the notice will
be treated as a request for repayment of the whole of the principal amount of
Notes represented by this Certificate.

                                      -5-
<PAGE>

                                   SCHEDULE 2

                                 THE CONDITIONS

1.1     Unless previously redeemed under Condition 1.2 the Notes will be repaid
        at par on the Redemption Date together with all interest accrued thereon
        and then unpaid.

1.2     Notwithstanding any other provisions of this Note, each Noteholder will
        be entitled to demand immediate redemption of his outstanding Notes at
        par together with accrued but unpaid interest (less any applicable
        taxes) on them in any of the following events:

        1.2.1  the Company fails to pay when due any principal payable on
               repayment of any of his Notes, or fails to pay within 14 days
               after the due date for payment any interest payable on any of his
               Notes; or

        1.2.2  the Company is in default for more than 21 days (after
               notification to the Company of any such default has been received
               from any Noteholder) in the performance or observance of or
               compliance with any of its other undertakings contained in this
               Note and such default is materially prejudicial to the interest
               of Noteholders generally; or

        1.2.3  an order is made or an effective resolution is passed for the
               winding-up of the Company (other than a solvent winding-up for
               the purposes of amalgamation or reconstruction), or the Company
               stops or threatens to stop payment of its debts, or the Company
               ceases or threatens to cease to carry on its business; or

        1.2.4  an administrator of the Company is appointed; or

        1.2.5  a receiver or similar official is appointed in respect of the
               whole or a substantial part of the undertaking and assets of the
               Company; or

        1.2.6  any distress or execution (or other similar process) is levied
               upon or enforced against all or a substantial part of the assets
               or property of the Company and is not fully paid out or
               discharged within 90 days; or

        1.2.7  the Company (i) files, or consents, by answer or otherwise, to
               the filing against the Company of a petition for relief or
               reorganization or arrangement or any other petition in bankruptcy
               or insolvency under the laws of any jurisdiction, (ii) makes an
               assignment for the benefit of creditors, (iii) consents to the
               appointment of a custodian, receiver, trustee or other officer
               with similar powers for it or him, or for any substantial part of
               its property or (iv) is adjudicated insolvent; or

        1.2.8  if any governmental body of competent jurisdiction enters an
               order appointing, without consent of the Company, a custodian,
               receiver, trustee or other officer with similar powers with
               respect to the Company, or with respect to any substantial part
               of its property, or if an order for relief relating to the
               Company is entered in any case or proceeding for liquidation or
               reorganization or otherwise to take advantage of any bankruptcy
               or insolvency law of any jurisdiction, or ordering the
               dissolution, winding-up or liquidation of the Company, or if any
               petition for any such relief is filed against Company and such
               petition is not dismissed or stayed within 60 days.

                                      -6-
<PAGE>

        Provided that a Redemption Notice specifying the event is received by
        the Company while the event is continuing.

1.3     Each Noteholder shall be entitled at any time or times after 31 October
        2002 to require redemption of such amount of Loan Notes as are then held
        by such Noteholder together with accrued but unpaid interest (less any
        applicable taxes) by serving upon the Company a Redemption Notice
        specifying the amount of Loan Notes to be redeemed at least 20 days
        prior to the date on which redemption is required to be made.

1.4     The Company shall, upon the written request of all or any of the
        Noteholders, extend the term of the Note or Notes held by the
        Noteholders making such request for a period of twenty-four months to 30
        April 2006, on the terms in these Conditions, subject to paragraph 6(c)
        of the Guarantee, and save that during the extended term of the Notes
        (if any) there shall be deducted from the Interest on the Notes all
        bank, legal and/or other third party costs, fees or expenses suffered or
        incurred by the Company in respect of the Notes during the extended term
        including, without limitation, the fees and costs of the Guarantor in
        consideration for providing the Guarantee.

1.5     Upon receipt by the Company of a Redemption Notice the Company shall by
        notice to the Noteholder fix a time and place in England for payment of
        this Note (or, subject to this Condition 1.5, that part to be redeemed)
        to be no later than 14 days, from the date of receipt of that notice,
        and for delivery to the Company of this Note. At the time and place so
        fixed the Noteholder shall deliver to the Company this Note (or an
        indemnity in form and substance reasonably satisfactory to the Company
        if this Note has been lost or destroyed) in order that the same may be
        cancelled and upon such delivery and against a receipt for the principal
        monies and all interest payable but unpaid in respect of this Note (or
        the part to be redeemed) calculated down to the date of redemption, the
        Company shall pay to the Noteholder such principal monies and interest
        provided that if this Note is to be redeemed in part, a fresh Note for
        the balance of this Note not redeemed on that occasion shall be issued
        immediately, free of charge, to the Noteholder delivering this Note to
        the Company.

2.      This note, once redeemed by the Company, shall be cancelled and the
        Company shall not be at liberty to keep the same alive for the purposes
        of re-issue or to re-issue the same.

3.      INTEREST AND RELATED DEDUCTIONS

3.1     Until the Redemption Date, the Company shall pay to the Noteholder
        interest on the principal monies outstanding on the Note on 31 January,
        30 April, 31 July and 31 October in each year (each an "INTEREST DATE")
        in respect of each successive three month period ending on an Interest
        Date (each an "INTEREST PERIOD"), the first such interest payment
        becoming due on 30 April 2002 in respect of the period from the date
        hereof to 30 April 2002.

                                      -7-
<PAGE>

3.2     Interest on the Notes shall be calculated and shall accrue on a daily
        basis from the date of issue and on the basis of a 365/366 day year and
        will be payable for the twelve month period commencing on the date of
        this Instrument at 3.9 per cent per annum and subsequently at the rate
        equal to the published base rate of Barclays Bank PLC on the Interest
        Date immediately prior to the commencement of the relevant Interest
        Period, less the fees and costs charged by the Guarantor in
        consideration for guaranteeing the Notes. Any interest or other amount
        otherwise payable on a day which is not a Business Day, and any part of
        the Note otherwise redeemable on any day which is not a Business Day
        shall be paid on the immediately preceding Business Day and such day
        shall be deemed the Interest Date or the Redemption Date in respect
        thereof for all purposes.

3.3     Interest due on the Notes on any Interest Date shall be payable to those
        Noteholders registered on the register of Noteholders referred to in
        Condition 5.1 on the Business Day immediately preceding that Interest
        Date.

3.4     If the Company shall fail to make any payment of interest within seven
        Business Days following the relevant Interest Date, Default Interest
        shall accrue on the amount of interest which remains unpaid until the
        date on which such interest is paid to the Noteholders.

4.      REDEMPTION

        The Company may at its option repay a Noteholder, who has served his
        notice of redemption, in US Dollars instead of Pounds Sterling, in which
        case:-

4.1     The rate of exchange between the US Dollar and Pounds Sterling for the
        purposes of calculating the amount of repayment shall be the spot rate
        obtained by the Company from Barclays Bank PLC (being the rate at which
        Pounds Sterling may be sold and US Dollars bought) on the twentieth
        Business Day prior to the date of repayment (the "RATE OF EXCHANGE");

4.2     The redemption value shall be the US Dollar equivalent of one Pound
        Sterling per Pound Sterling1 Nominal of Stock converted at the Rate of
        Exchange less any reasonable fees or bank charges associated with the
        conversion (the "REDEMPTION VALUE");

        PROVIDED THAT

        (i)    in no circumstances whatsoever shall the Redemption Value
               converted as set out in (ii) below be less than the 99.5 per cent
               of the Sterling nominal value of the Loan Stock to be repaid; and

        (ii)   for the purposes of this proviso the Redemption Value shall be
               converted into Pounds Sterling at the London closing rate of
               exchange on the date of redemption.

4.3     Where the Company has elected to redeem a Noteholder's Loan Notes in US
        Dollars in accordance with this Condition 4, it shall forthwith upon the
        amount becoming available certify the Rate of Exchange to that
        Noteholder.

                                      -8-
<PAGE>

5.      REGISTER OF NOTES

5.1     A register of the Notes will be kept by the Company and there shall be
        entered in such register:-

        5.1.1  the names and addresses of the holders for the time being of the
               Notes;

        5.1.2  the amount of the Notes held by each registered holder;

        5.1.3  the date on which the name of each such registered holder is
               entered in the register in respect of the Notes standing to his
               name; and

        5.1.4  the serial number of each Note issued.

        Any change of the name or address of any Noteholder shall forthwith be
        notified in writing, by registered post, to the Company and the register
        shall be altered accordingly upon receipt of such notice by the Company.

5.2     Except as required by law the Company will recognise the person named in
        the Register as the holder of any Notes as the absolute owner thereof
        and shall not be bound to take notice or see to the execution of any
        trust whether express, implied or constructive to which any Notes may be
        subject and a receipt duly given in accordance with these Conditions for
        any monies payable in respect of any Notes shall be a good discharge to
        the Company notwithstanding any notice it may have whether express or
        otherwise of the right, title, interest or claim of any other person to
        or in such Notes or monies and the Noteholder shall indemnify and hold
        harmless the Company from and against any loss, liability, damage,
        claim, cost or expense arising out of the Company's observance of this
        Condition 5.2.

5.3     The Guarantor shall, upon giving reasonable notice to the Company, be
        entitled within normal working hours to inspect the register of Notes
        held by the Company.

6.      TRANSFER OF NOTES

6.1     Each Noteholder will be entitled to transfer, in whole, the Notes held
        by him (a transfer of part being in an amount or an integral multiple of
        Pound Sterling50,000) by an instrument in writing in the usual common
        form under hand of the transferring Noteholder only, subject to the
        prior written consent of the Company which consent shall not be withheld
        or delayed provided that each such transferee shall have first executed
        and delivered to the Company an Investment Representation Agreement
        substantially in the form attached hereto as Schedule 5 and such other
        transfer documents as the Company shall reasonably request. Upon
        delivery of such instrument and this Note to the Company, the Company
        shall issue a new Note to the transferee and in relation to a transfer
        of part, a balance certificate to the transferor subject, in each case,
        to the payment by such transferring Noteholder of all reasonable costs
        and expenses incurred by the Company in completing and registering such
        transfer.

6.2     The Guarantee will continue to apply to any notes transferred pursuant
        to Condition 6.1 and to any new note issued to a transferor as a result
        of any partial transfer.

                                      -9-
<PAGE>

6.3     Notwithstanding the minimum amount of Pound Sterling50,000 for
        part-transfers set out in Condition 6.1 above, each Noteholder shall, no
        more than once in each calendar year, be entitled to make one transfer
        of Notes having a principal value of less than Pound Sterling50,000
        provided that (i) the amount of such Loan Notes transferred shall be no
        less than Pound Sterling10,000; and (ii) this Condition 6 shall
        otherwise apply in all respects to such transfers.

7.      THE COMPANY'S POWERS

        Without prejudice to all other powers, however arising, of the Company,
        nothing in this Instrument shall prevent the Company from:

7.1     exercising its borrowing powers in any way, including by incurring any
        indebtedness ranking pari passu with or in priority to the Notes, or by
        creating and issuing further unsecured loan notes either so as to be
        identical in all respects and form a single series with the Notes or
        upon such terms as to interest, redemption and otherwise as its
        Directors shall think fit; or

7.2     disposing of, granting security over or dealing in any other way with
        any of its business and assets in whole or in part, or changing the
        nature of its business in any way; or

7.3     procuring or permitting any of its subsidiaries to exercise its
        borrowing powers in any way, or to dispose of, grant security over or
        deal in any other way with any of its business or assets in whole or in
        part, or to change the nature of its business in any way.

8.      SUCCESSORS

        Any person becoming entitled to this Note in consequence of the death or
        bankruptcy of any holder of this Note shall (upon producing evidence
        reasonably satisfactory to the Company, that he sustains the character
        in respect of which he proposes to act under this provision or of his
        title and delivering up this Note or an indemnity, in form and substance
        reasonably satisfactory to the Company, if this Note has been lost or
        destroyed) be entitled to a new Note in his name as the holder, or,
        subject to Condition 6, may transfer this Note.

                                      -10-
<PAGE>

                                   SCHEDULE 3

                                    GUARANTEE

1.      The Guarantor hereby guarantees the due and punctual payment by the
        Company to the Noteholders of the principal amount payable on any of the
        Notes registered in their respective names and the interest payable
        thereon on the terms and subject to the limitations set out in this
        Guarantee.

2.      If any principal amount payable on any of the Notes is not paid in full
        by the Company on the date fixed for redemption thereof or such earlier
        date as such Note shall become repayable or redeemable, or accrued
        interest is not paid in full by the Company on an Interest Date, in each
        case in accordance with the provisions of the Instrument, the Guarantor
        shall (subject to the provisions of the Guarantee) pay to the relevant
        Noteholder within 21 days after the receipt by the Guarantor of a demand
        complying with the requirements of this guarantee, the amount of
        principal and/or interest then payable but unpaid on such Note.

3.      Every demand under this Guarantee shall be made to the Guarantor in the
        manner set out in paragraph 11 and shall:-

        (a)    be in writing and be accompanied by the certificate(s) relating
               to the Note(s) in respect of which such demand is made;

        (b)    be signed by or on behalf of the relevant Noteholder;

        (c)    have the signature thereon confirmed by the bankers, or, if the
               Guarantor shall have given prior notice to the relevant
               Noteholder, the solicitors, to such Noteholder;

        (d)    state:

               (i)    the full name and registered address of such Noteholder
                      and the amount of principal and/or interest which is
                      claimed and, in the case of a claim for interest, state
                      the principal amount on which interest is claimed and the
                      date from which interest is claim to have accrued and be
                      unpaid;

               (ii)   that none of the Notes in respect of which such demand is
                      made has been cancelled, redeemed or repurchased by the
                      Company;

               (iii)  that the sum demanded is due and payable by the Company,
                      all conditions and demands necessary in connection
                      therewith having been fulfilled and made; and grace period
                      relating thereto has elapsed; and the Company is not
                      contesting the liability in circumstances where the
                      Company is entitled to withhold payment;

               (iv)   that the Company is aware of its liability and has failed
                      to pay the sum demanded;

        (e)    be set out substantially in the form of Schedule 4; and

                                      -11-
<PAGE>

        (f)    give full details of the bank account in the United Kingdom in
               the name of the relevant Noteholder to which the sum so demanded
               is to be paid by the Guarantor.

4.      (a)    Payment of any demand complying with the requirements of this
               Guarantee shall be made by the Guarantor in pounds sterling to
               such bank account in the United Kingdom as the relevant
               Noteholder shall specify pursuant to paragraph 3(f).

        (a)    Upon payment the Guarantor shall enface the certificate(s)
               relating to the relevant Note(s) with a memorandum of payment and
               return the same to the relevant Noteholder by prepaid post to his
               registered address at the risk of such Noteholder.

        (b)    If the Guarantor is so required by law, the Guarantor shall
               deduct tax from any amount payable by it hereunder in respect of
               interest unpaid on the relevant Note(s) and shall deliver to the
               relevant Noteholder in respect of the amount so paid by it a
               certificate as to the gross amount of such payment, the amount of
               tax deducted and the actual amount paid and certifying that the
               Guarantor has paid the amount of tax deducted to the Inland
               Revenue. If the Guarantor is required to make such deduction of
               tax in respect of interest unpaid on the relevant Note(s), the
               Guarantor will not be required to make any additional payment to
               the relevant Noteholder.

5.      (a)    Notwithstanding anything to the contrary herein, it is hereby
               confirmed that this Guarantee constitutes the direct obligation
               of the Guarantor to make payment in accordance with the terms of
               this Guarantee without reference to the Company and without
               examination of the liability of the Company in respect of any
               Note. Any amounts due hereunder will be paid without reference to
               any rights of set off or counter claim that the Company or the
               Guarantor has against the relevant Noteholder or any rights of
               set off which the Guarantor may have against the Company and
               whether or not the Company disputes the truth or accuracy of any
               statement given pursuant to paragraph 3(d) above.

        (a)    The Guarantor may rely on any demand or other document or
               information believed by it to be genuine and correct and to have
               been signed or communicated by the person by whom it purports to
               be signed or communicated and the Guarantor shall not be liable
               for the consequences of such reliance and shall have no
               obligation to verify that the facts or matters stated therein are
               true and correct.

        (b)    Payment by the Guarantor of a claim made in accordance with
               paragraph 4 shall be deemed a valid payment for all purposes of
               this Guarantee and shall discharge the Guarantor from its
               liability hereunder to the extent of such payment and the
               Guarantor shall not be concerned to see to the application of any
               such payment.

        (c)    This Guarantee may be enforced by any Noteholder at any time
               after he has made a demand on the Company for the payment of any
               principal and/or interest due or owing to him on his Note(s)
               without such Noteholder first taking any proceedings against the
               Company.

6.      (a)    The maximum aggregate liability of the Guarantor in respect of
               all claims under this Guarantee shall be limited to:

                                      -12-
<PAGE>

               (i)    Pound Sterling 7,650,000 in the case of all claims in
                      respect of principal on all Notes; and

               (ii)   Pound Sterling 298,350 (less the fees and costs referred
                      to in Condition 3.2) in the case of all claims in respect
                      of interest on all Notes.

               The above maximum amount of this Guarantee in relation to
               principal shall be reduced to the extent of the aggregate
               principal amount of any Notes which have been cancelled, redeemed
               or repurchased by the Company, provided that reasonable details
               of such cancellation, redemption or repurchase (as the case may
               be) have been supplied in writing by the Company to the
               Guarantor.

        (b)    No demand under this Guarantee shall be valid or result in any
               liability on the part of the Guarantor hereunder unless it is
               made, and received by the Guarantor, in accordance with the
               provisions of this Guarantee, on or before the first Business Day
               falling no more than 60 days after the date on which payment of
               the relevant principal and/or interest in respect of which the
               demand is made should have been made to the relevant Noteholder
               by the Company.

        (c)    No demand under this Guarantee shall be valid or result in any
               liability on the part of the Guarantor hereunder unless it is
               made, and received by the Guarantor, in accordance with the
               provisions of this Guarantee, prior to 11.00 a.m. (London time)
               on the first Business Day falling no more than 60 days after the
               Redemption Date. After the Redemption Date, this Guarantee shall
               cease to have effect and the Guarantor shall have no liability
               under it save to the extent of any demand delivered to the
               Guarantor prior to such time which complies with the requirements
               of this Guarantee.

7.      This Guarantee is a continuing Guarantee and shall remain in force
        notwithstanding the liquidation or dissolution of the Company, or the
        appointment of an administrator of the Company or the appointment of a
        receiver of all or any part of the assets of the Company.

8.      (a)    No compounding, indulgence or relief granted by a Noteholder or
               any other matter or thing which but for this provision might
               exonerate the Guarantor shall release or reduce the liability of
               the Guarantor hereunder, provided that the Guarantor shall not be
               bound by any such other matter or thing which would operate
               either to increase its actual or contingent liabilities hereunder
               or extend any due date for any of the Company's obligations under
               the Notes.

        (a)    This Guarantee is irrevocable in respect of the Note(s) held by
               each Noteholder save where a Noteholder gives to the Guarantor a
               specific written release of the Guarantor's liability, in
               relation to the whole or any, part of the Note(s) of such
               Noteholder.

        (b)    All payments to be made by the Guarantor hereunder to a
               Noteholder shall be made in full without set-off or counterclaim'
               and free and clear of and without any deduction whatsoever except
               to the extent required by law. The Guarantor will not be required
               to make any additional payment in the case of deduction required
               by law.

                                      -13-
<PAGE>

9.      The Guarantor shall be at liberty at all times to have recourse to and
        enforce all rights possessed by the Guarantor as surety or otherwise
        against the Company or others.

10.     Any variation of the terms of this Guarantee in relation to any Notes
        shall be considered valid and constituting part of this Guarantee
        provided such variation shall be made in writing and signed by the
        relevant Noteholder or (if such holder is a company) on its behalf by
        an, director or the company secretary of such company, and on behalf of
        the Guarantor.

11.     Where a notice or demand is given by a Noteholder, it may be served by
        leaving it or sending it by recorded delivery post to the Guarantor,
        marked for the attention of the Branch Manager, at Barclays Bank PLC,
        Corporate Banking Centre, PO Box 1015, 3rd Floor, Windsor Court, 3
        Windsor Place, Cardiff CF10 3WP or such other address in the United
        Kingdom as the Company may notify to the Noteholders from time to time,
        at the request of the Guarantor.

12.     (a)    In the event of transmission to the legal personal representative
               or other representative of the estate of any Noteholder on the
               death, bankruptcy or insanity of such Noteholder, such
               representative shall promptly produce evidence, satisfactory to
               the Guarantor, of his authority to act for the Noteholder
               whenever so requested by the Guarantor.

        (b)    Subject to production of the evidence of authority referred to in
               paragraph 12(a), all references in this Guarantee to the
               Noteholder shall be replaced by references to such
               representative.

13.     The person whose name appears on a certificate relating to any Note(s)
        as the holder or, if more than one, the first such person, will be
        regarded by the Guarantor as exclusively entitled to the benefit of the
        relevant Notes and of this Guarantee and the Guarantor shall not be
        bound to recognise any trust or equity affecting the title to the
        relevant Notes. All dealings in connection with and payments under such
        Notes or this Guarantee shall be made with and to such person.

14.     This Guarantee is personal to the Noteholder and is not assignable
        (except with the prior consent of the Guarantor which shall not be
        unreasonably withheld.)

15.     This Guarantee shall be governed by and construed to take effect in all
        respects in accordance with English law.

                                      -14-
<PAGE>

                                   SCHEDULE 4

                                 FORM OF DEMAND

To the Branch Manager
Barclays Bank PLC
[                 ]

                                                            Dated [            ]

                                                            By Recorded Delivery

1.      This demand is sent pursuant to the terms of an Instrument ("the
        Instrument") entered into on [           ] day of [                    ]
        2002 by ARGONAUT TECHNOLOGIES, INC. ("the Company") and BARCLAYS BANK
        PLC ("the Guarantor").

2.      I/We am/are the registered holder of the relevant Notes issued under the
        terms of the Instrument.

        Name                 [                             ]
        Registered Address   [                             ].

3.      I/We enclose [the Certificate(s) relating to] the Note(s) in respect of
        which the demand is made.

4.      I/we claim the following sums:-

               (i)    The amount of principal of [Pound Sterling] and/or

               (ii)   the amount of interest of [Pound Sterling                ]
                      on the principal amount of [Pound Sterling             ]
                      accruing from the [                  ] to the
                      [                    ].

5.      I/We confirm that:-

               (i)    None of the Notes in respect of which such claim is made
                      has been cancelled, redeemed or repurchased by the
                      Company;

               (ii)   The sum demanded is due and payable by the Company and all
                      conditions and demands necessary in connection therewith
                      under the Instrument have been fulfilled and made; any
                      grace period relating thereto has elapsed; and the Company
                      is not contesting liability in circumstances where the
                      Company is entitled to withhold payment;

               (iii)  The Company is aware of its liability and has failed to
                      pay the sum demanded.

6.      Payments under this demand should be made to the registered holder's
        bank account at [          ] Bank Plc of [                  ] to the
        account number [                       ].

7.      Please acknowledge receipt of this demand and the enclosed
        [Certificate(s)/Note(s) on the enclosed copy of the demand.

                                      -15-
<PAGE>

Signed ...........................
By or on behalf of the
Registered Holder

Above Signature confirmed to be
the signature of Mr/Mrs [                  ]
by ..........................................
Noteholders Bankers/Solicitors
Bank/Firm [                                ]
Officer/Partner [                               ]
Date [                        ]

                                      -16-
<PAGE>

                                   SCHEDULE 5

                       INVESTMENT REPRESENTATION AGREEMENT

[Buyer]
[Address]

Ladies and Gentlemen:

               Reference is hereby made to the Sale and Purchase Agreement (the
               "Purchase Agreement") by and among [Buyer], a Delaware
               corporation ("Buyer"), [Rainbow] ("Target"), and the individuals
               and entities listed on Schedule 1 to the Purchase Agreement (each
               a "Seller" and collectively the "Sellers") and the Pound
               Sterling7,650,000 Loan Note Instrument Creating Principal Amount
               Guaranteed Loan Notes 2004 guaranteed by Barclays Bank PLC. In
               connection with the proposed purchase by Buyer from the Sellers
               of all of the outstanding capital stock of Target pursuant to the
               Purchase Agreement (the "Transaction"), the undersigned,
               _______________ (the "Stockholder" or the "Holder") acknowledges,
               represents and warrants to Buyer as follows:

1.      Acquisition Entirely for Own Account. Stockholder represents and
        warrants that Stockholder is acquiring Buyer Common Stock and Loan
        Note(s) (as Buyer Common Stock and Loan Notes are defined in the
        Purchase Agreement) (the "Securities") solely for Stockholder's own
        account for investment and not with a view to sale or distribution of
        the Securities or any portion or component thereof, and Stockholder will
        not sell, offer to sell or otherwise dispose of or distribute the
        Securities or any portion or component thereof in any transaction other
        than a transaction complying with the registration requirements of the
        Securities Act of 1933, as amended (the "Act"), and applicable state
        securities or "Blue Sky" laws, or pursuant to an exemption therefrom.
        Stockholder also represents that the entire legal and beneficial
        interest of the Securities that Stockholder is acquiring is being
        acquired for, and will be held for Stockholder's account only, and
        neither in whole nor in part for any other person or entity.

2.      Information Concerning Buyer. Stockholder represents and warrants that
        Stockholder has been provided with such information concerning Buyer
        that Stockholder deems necessary and appropriate to enable Stockholder
        to evaluate the financial risk inherent in making an investment in the
        Securities. Stockholder further represents and warrants that Stockholder
        has had an opportunity to review Buyer's Annual Report on Form 10-K for
        the year ended December 31, 2000 and Buyer's Quarterly Report on Form
        10-Q for the quarterly period ended September 30, 2001. Stockholder
        further acknowledges that Stockholder has received satisfactory and
        complete information concerning the business and financial condition of
        Buyer in response to all inquiries in respect thereof.

3.      Economic Risk and Suitability. Stockholder represents and warrants as
        follows:

               (i)      Stockholder realizes that Stockholder's purchase of the
                        Securities involves a high degree of risk and will be a
                        highly speculative investment and that Stockholder is
                        able, without impairing Stockholder's financial

                                      -17-
<PAGE>

                        condition, to hold the Securities for an indefinite
                        period of time and to suffer a complete loss of
                        Stockholder's investment.

               (ii)     Stockholder has carefully considered and has had an
                        opportunity to discuss with Stockholder's professional,
                        legal, tax and financial advisors the suitability of an
                        investment in the Securities for the particular legal,
                        tax and financial situation of Stockholder and that
                        Stockholder and/or Stockholder's advisors have
                        determined that the Securities are a suitable investment
                        for Stockholder.

               (iii)    Stockholder, either alone or with his or her purchaser
                        representative(s), has such knowledge and experience in
                        business and financial matters as will enable
                        Stockholder to evaluate the merits and risks of an
                        investment in the Securities and to make an informed
                        investment decision.

               (iv)     If Stockholder is a partnership, trust, corporation or
                        other entity: (1) it was not organized for the purpose
                        of acquiring the Securities (or all of its equity owners
                        are Accredited Investors (as hereafter defined)); (2) it
                        has the power and authority to execute and comply with
                        the terms of this Agreement, and the person executing
                        said documents on its behalf has the necessary power to
                        do so; (3) its principal place of business and principal
                        office are located within the country and state, if
                        applicable, set forth in its address below; and (4) all
                        of its trustees, partners and/or shareholders, whichever
                        the case may be, are bona fide residents of said country
                        and state, if applicable.

               (v)      Except as provided Stockholder understands that neither
                        Buyer nor any of its officers/directors has any
                        obligation to register the Securities under any federal
                        or state securities act or law.

               (vi)     All information that Stockholder has provided concerning
                        himself or herself, his or her financial position and
                        (each of) his/her Stockholder Representative(s), if any,
                        is correct and complete as of the date set forth below,
                        and if there should be any material change in such
                        information, Stockholder will provide such information
                        to Buyer as soon as practicable thereafter.

               (vii)    Stockholder understands that Buyer is relying on the
                        truth and accuracy of the declarations, representations,
                        warranties and agreements made by Stockholder to Buyer
                        herein in transferring the Securities to Stockholder.

               (viii)   Stockholder confirms that Stockholder has received no
                        general solicitation or general advertisement and has
                        attended no seminar or meeting (whose attendees have
                        been invited by any general solicitation or general
                        advertisement) and has received no advertisement,
                        article, notice or other communication published in any
                        newspaper, magazine, or similar media or broadcast or
                        television or radio regarding the offering of the
                        Securities.

                                      -18-
<PAGE>

4.      Restrictions on Transfer; Legends. Stockholder represents and warrants
        that Stockholder understands that:

        (a)    The Securities that Stockholder is acquiring have not been
               registered under the Act, and such securities must be held
               indefinitely unless a transfer of them is subsequently registered
               under the Act or an exemption from such registration is
               available.

        (b)    Stockholder agrees that all certificates representing the Buyer
               Common Stock shall have endorsed thereon a legend in
               substantially the following form:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM."

        (c)    Stockholder agrees that all Loan Notes shall have endorsed
               thereon a legend in substantially the following form:

        "THIS NOTE WAS ORIGINALLY ISSUED ON ____, 200_, AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THIS
NOTE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE Pound Sterling7,650,000
LOAN NOTE INSTRUMENT CREATING PRINCIPAL AMOUNT GUARANTEED LOAN NOTES 2004
GUARANTEED BY BARCLAYS BANK PLC. THE ISSUER OF THIS NOTE WILL FURNISH A COPY OF
THESE PROVISIONS TO THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST."

        Stockholder acknowledges that the legend contained in this Section 4
shall be removed from a certificate in connection with any sale in compliance
with the terms of this Section 4 and pursuant to a Registration Statement, but
shall not be removed in any other circumstance without Buyer's prior written
consent, which consent shall be exercised in Buyer's sole discretion.

        5. Non-U.S. Persons. If Stockholder is a Non-U.S. Person as defined
under Rule 902(k)(2) of the Act, Stockholder shall complete and sign Exhibit A
hereto.

        6. Status of Stockholder. Stockholder represents and warrants that
Stockholder falls within the category (or categories) marked. Categories 1
through 16 set forth categories of "Accredited Investors", as defined in
Securities and Exchange Commission ("SEC") Rule 501. PLEASE INDICATE EACH
CATEGORY THAT YOU, STOCKHOLDER, SATISFY, BY PLACING AN "X" ON THE APPROPRIATE
LINE(S) BELOW.

        _____  Category 1.   A bank, as defined in Section 3(a)(2) of the Act,
                             whether acting in its individual or fiduciary
                             capacity; or

        _____  Category 2.   A savings and loan association or other institution
                             as defined in Section 3(a)(5)(A) of the Act,
                             whether acting in its individual or fiduciary
                             capacity; or

        _____  Category 3.   A broker or dealer registered pursuant to Section
                             15 of the Securities Exchange Act of 1934, as
                             amended; or

                                      -19-
<PAGE>

        _____  Category 4.   An insurance company as defined in Section 2(13) of
                             the Act; or

        _____  Category 5.   An investment company registered under the
                             Investment Company Act of 1940; or

        _____  Category 6.   A business development company as defined in
                             Section 2(a)(48) of the Investment Company Act of
                             1940; or

        _____  Category 7.   A small business investment company licensed by the
                             U.S. Small Business Administration under Section
                             301(c) or (d) of the Small Business Investment Act
                             of 1958; or

        _____  Category 8.   A plan established and maintained by a state, its
                             political subdivisions or any agency or
                             instrumentality of a state or its political
                             subdivisions, for the benefit of its employees,
                             with assets in excess of $5 million; or

        _____  Category 9.   An employee benefit plan within the meaning of the
                             Employee Retirement Income Security Act of 1974 in
                             which the investment decision is made by a plan
                             fiduciary, as defined in Section 3(21) of such Act,
                             which is either a bank, savings and loan
                             association, insurance company or registered
                             investment advisor, or an employee benefit plan
                             with total assets in excess of $5 million or, if a
                             self-directed plan, the investment decisions are
                             made solely by persons who are Accredited
                             Investors; or

        _____  Category 10.  A private business development company as defined
                             in Section 202(a)(22) of the Investment Advisers
                             Act of 1940; or

        _____  Category 11.  An organisation described in Section 501(c)(3) of
                             the Internal Revenue Code of 1986, as amended, a
                             corporation, a Massachusetts or similar business
                             trust, or a partnership, not formed for the
                             specific purpose of acquiring the Securities, with
                             total assets in excess of $5 million; or

        _____  Category 12.  A director, executive officer or general partner of
                             Buyer; or

        _____  Category 13.  A natural person whose individual net worth, or
                             joint net worth with that person's spouse, at the
                             time of his/her purchase, exceeds $1 million; or

        _____  Category 14.  A natural person who had individual income in
                             excess of $200,000 in each of the two most recent
                             years or joint income with that person's spouse in
                             excess of $300,000 in each of those years and has a
                             reasonable expectation of reaching the same income
                             level in the current year; or

        _____  Category 15.  A trust, with total assets in excess of $5 million,
                             not formed for the specific purpose of acquiring
                             the Securities, whose purchase is directed by a
                             sophisticated person as described in Rule
                             506(b)(2)(ii) under the Act; or

                                      -20-
<PAGE>

        _____  Category 16.  An entity in which all of the equity owners are
                             Accredited Investors; or

        _____  Category 17.  A natural person who, either alone or with your
                             purchaser representative(s), has such knowledge and
                             experience in financial and business matters that
                             you are capable of evaluating the merits and risks
                             of the prospective investment; or

        _____  Category 18.  None of the above.

        If you checked category 18 above, you acknowledge, by signing below,
that _____________ is Stockholder's purchaser representative as described in
Rule 501(h) under the Act, including in connection with evaluating the merits
and risks of the prospective Transaction.

7.      Residency. The undersigned is a bona fide resident of the state or
        country set forth in the undersigned's address at the end of this
        Investment Representation Statement (the "Agreement").

IN WITNESS WHEREOF, the undersigned have executed this Agreement on this ___ day
of ___________, 2002.

<TABLE>
<S>                                         <C>
-------------------------                   -------------------------
Signature of Stockholder                    Signature of Stockholder

-------------------------                   -------------------------
Printed Name of Stockholder                 Printed Name of Stockholder
</TABLE>

Please sign as name(s) appear hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give title as such. If joint
ownership, both joint tenants or all tenants in common must sign.

<TABLE>
<S>                                         <C>
-------------------------                   -------------------------
Residence Address                           Residence Address

-------------------------                   -------------------------
City, State, Zip Code                       City, State, Zip Code

-------------------------                   -------------------------
Mailing Address                             Mailing Address

-------------------------                   -------------------------
City, State, Zip Code                       City, State, Zip Code

-------------------------                   -------------------------
Country                                     Country

Tax Identification Number                   Tax Identification Number
and/or Social Security Number:              and/or Social Security Number:
-------------------------                   -------------------------

-------------------------                   -------------------------
Purchaser Representative                    Purchaser Representative
</TABLE>

                                      -21-
<PAGE>

This Agreement has been acknowledged and agreed to on ____________, 2002.

[RAINBOW]

By:
   --------------------------
Name:
Title:

                                      -22-
<PAGE>

EXECUTED as a DEED by               )
ARGONAUT TECHNOLOGIES, INC.         )
acting by                           )

EXECUTED as a DEED by               )
BARCLAYS BANK PLC                   )
acting by                           )

                                      -23-<PAGE>
                                                                    EXHIBIT 10.2

                                E.PIPHANY, INC.

                                 1999 STOCK PLAN

                 (AMENDED AND UPDATED AS OF SEPTEMBER 28, 2001)

        1.     Purposes of the Plan. The purposes of this Stock Plan are (i) to
attract and retain the best available personnel for positions of substantial
responsibility, (ii) to provide additional incentive to Employees, Directors and
Consultants, and (iii) to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.

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

               (a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

               (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

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

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

               (e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.

               (f)    "Common Stock" means the common stock of the Company.

               (g)    "Company" means E.piphany, Inc.

               (h)    "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.

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

               (j)    "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.

               (k)    "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers

<PAGE>

between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. For purposes of Incentive Stock Options, no such
leave may exceed ninety days, unless reemployment upon expiration of such leave
is guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, on the 91st day of such
leave any Incentive Stock Option held by the Optionee shall cease to be treated
as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.

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

               (m)    "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                      (i)    If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

                      (ii)   If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or

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

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

               (o)    "Inside Director" means a Director who is an Employee.

               (p)    "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

               (q)    "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.

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

                                      -2-
<PAGE>

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

               (t) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.

               (u) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

               (v)    "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.

               (w)    "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.

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

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

               (z)    "Plan" means this 1999 Stock Plan.

               (aa)   "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.

               (bb)   "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

               (cc)   "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

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

               (ee)   "Service Provider" means an Employee, Director or
Consultant.

               (ff)   "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

               (gg)   "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

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

                                      -3-
<PAGE>

        3.     Stock Subject to the Plan. Subject to the provisions of Section
14 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 9,782,510 Shares, plus an annual increase to be added on
the first day of the Company's fiscal year beginning in 2000 equal to the lesser
of (i) 3,750,000 shares, (ii) 4% of the outstanding shares on such date, or
(iii) a lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock. If an Option or Stock Purchase Right
expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares which
were subject thereto shall become available for future grant or sale under the
Plan (unless the Plan has terminated); provided, however, that Shares that have
actually been issued under the Plan, whether upon exercise of an Option or
Right, shall not be returned to the Plan and shall not become available for
future distribution under the Plan, except that if Shares of Restricted Stock
are repurchased by the Company at their original purchase price, such Shares
shall become available for future grant under the Plan.

        4.     Administration of the Plan.

               (a)    Procedure.

                      (i)    Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.

                      (ii)   Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

                      (iii)  Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

                      (iv)   Other Administration. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.

               (b)    Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:

                      (i)    to determine the Fair Market Value;

                      (ii)   to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;

                      (iii)  to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase Right granted hereunder;

                                      -4-
<PAGE>

                      (iv)   to approve forms of agreement for use under the
Plan;

                      (v)    to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;

                      (vi)   to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value
of the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;

                      (vii)  to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;

                      (viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

                      (ix)   to modify or amend each Option or Stock Purchase
Right (subject to Section 16(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan;

                      (x)    to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;

                      (xi)   to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;

                      (xii)  to make all other determinations deemed necessary
or advisable for administering the Plan.

               (c)    Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.

                                      -5-
<PAGE>

        5.     Eligibility.  Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.

        6.     Limitations.

               (a)    Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

               (b)    Neither the Plan nor any Option or Stock Purchase Right
shall confer upon an Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.

               (c)    The following limitations shall apply to grants of
Options:

                      (i)    No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than 1,125,000 Shares.

                      (ii)   In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional
1,125,000 Shares which shall not count against the limit set forth in subsection
(i) above.

                      (iii)  The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.

                      (iv)   If an Option is cancelled in the same fiscal year
of the Company in which it was granted (other than in connection with a
transaction described in Section 14), the cancelled Option will be counted
against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.

        7.     Term of Plan. Subject to Section 20 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 16 of the Plan.

        8.     Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option granted
to an Optionee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting
power of

                                      -6-
<PAGE>

all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

        9.     Option Exercise Price and Consideration.

               (a)    Exercise Price.  The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

                      (i)    In the case of an Incentive Stock Option

                             (A)    granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.

                             (B)    granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

                      (ii)   In the case of a Nonstatutory Stock Option the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                      (iii)  Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.

               (b)    Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions that must be satisfied before
the Option may be exercised.

               (c)    Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

                      (i)    cash;

                      (ii)   check;

                      (iii)  promissory note;

                      (iv)   other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and

                                      -7-
<PAGE>

(B) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised;

                      (v)    consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;

                      (vi)   a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;

                      (vii)  any combination of the foregoing methods of
payment; or

                      (viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.

        10.    Exercise of Option.

               (a)    Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.

                      An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.

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

               (b)    Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the

                                      -8-
<PAGE>

Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

               (c)    Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

               (d)    Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

               (e)    Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

        11.    Stock Purchase Rights.

               (a)    Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.

                                      -9-
<PAGE>

               (b)    Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

               (c)    Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.

               (d)    Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

        12.    Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

        13.    Formula Option Grants to Outside Directors.  All grants of
Options to Outside Directors pursuant to this Section shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following
provisions:

             (a)      All Options granted pursuant to this Section shall be
Nonstatutory Stock Options and, except as otherwise provided herein, shall be
subject to the other terms and conditions of the Plan.

             (b)      No person shall have any discretion to select which
Outside Directors shall be granted Options under this Section or to determine
the number of Shares to be covered by such Options.

             (c)      Each person who first becomes an Outside Director
following the effective date of this Plan, as determined in accordance with
Section 7 hereof, shall be automatically granted an Option to purchase 37,500
Shares (the "First Option") on the date on which such person first becomes an
Outside Director, whether through election by the stockholders of the Company or
appointment by the Board to fill a vacancy; provided, however, that an Inside
Director who ceases to be an Inside Director but who remains a Director shall
not receive a First Option.

                                      -10-
<PAGE>

               (d)    Each Outside Director shall be automatically granted an
Option to purchase 18,750 Shares (a "Subsequent Option") on the date of the
annual meeting of the stockholders of the Company, if as of such date, he or she
shall have served on the Board for at least the preceding six (6) months.

               (e)    Notwithstanding the provisions of subsections (c) and (d)
hereof, any exercise of an Option granted before the Company has obtained
stockholder approval of the Plan in accordance with Section 20 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 20 hereof.

               (f)    The terms of each Option granted pursuant to this Section
shall be as follows:

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

                      (ii)   the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the Option.

                      (iii)  the First Option shall be fully vested and
exercisable on the date of grant.

                      (iv)   the Subsequent Option shall be fully vested and
exercisable on the date of grant.

        14.    Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.

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

               (a)    Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to

                                      -11-
<PAGE>

such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option or Stock Purchase Right shall
lapse as to all such Shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

               (b)    Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.

        15.    Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.

        16.    Amendment and Termination of the Plan.

               (a)    Amendment and Termination.  The Board may at any time
amend, alter, suspend or terminate the Plan.

                                      -12-
<PAGE>

               (b)    Shareholder Approval.  The Company shall obtain
shareholder approval of any Plan amendment to the extent necessary and desirable
to comply with Applicable Laws.

               (c)    Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

        17.    Conditions Upon Issuance of Shares.

               (a)    Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.

               (b)    Investment Representations. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.

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

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

        20.    Shareholder Approval. The Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the manner and
to the degree required under Applicable Laws.

                                      -13-
<PAGE>

                                E.PIPHANY, INC.

                                 1999 STOCK PLAN

                             STOCK OPTION AGREEMENT

                 (AMENDED AND UPDATED AS OF SEPTEMBER 28, 2001)

        Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

                                    AGREEMENT

1.  Grant of Option.

        The Plan Administrator of the Company hereby grants to the Optionee
named in this Option Agreement's Notice of Grant (the "Optionee") an option (the
"Option") to purchase the number of Shares, as set forth in the Notice of Grant,
at the exercise price per share set forth in the Notice of Grant (the "Exercise
Price"), subject to the terms and conditions of the Plan, which is incorporated
herein by reference. Subject to Section 15(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall
prevail.

        If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

2.  Exercise of Option.

    (a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

    (b) Method of Exercise. This Option is exercisable by delivery of a written
or electronic notice of exercise (the "Exercise Notice"), which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised (the "Exercised Shares"), and such other
representations and agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice shall be completed by the Optionee
and delivered to the Secretary of the Company, or such other person or entity as
may be designated by the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company, or such other
person or entity as may be designated by the Company, of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

        No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

<PAGE>

3.  Method of Payment.

        Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

                1.    cash; or

                2.    check; or

                3.    consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or

                4.    surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or

                5.    to the extent permitted by the Administrator, delivery of
a properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale proceeds required
to pay the Exercise Price.

4.  Non-Transferability of Option.

        This Option may not be transferred in any manner otherwise than by will
or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

5.  Term of Option.

        This Option may be exercised only within the term set out in the Notice
of Grant, and may be exercised during such term only in accordance with the Plan
and the terms of this Option Agreement.

6.  Tax Consequences.

               Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.

7.  Exercising the Option.

        (a) Nonstatutory Stock Option. The Optionee may incur regular federal
income tax liability upon exercise of a NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to

<PAGE>

honor the exercise and refuse to deliver Shares if such withholding amounts are
not delivered at the time of exercise.

        (b) Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.

        (c)  Disposition of Shares.

               (1) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.

               (2) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.

               (3) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

8.  Entire Agreement; Governing Law.

        The Plan is incorporated herein by reference. The Plan and this Option
Agreement, including its Notice of Grant, constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.

9.  NO GUARANTEE OF CONTINUED SERVICE.

        OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER
AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES
AND AGREES THAT

<PAGE>

THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

        By your signature and the signature of the Company's representative on
the attached Notice of Grant, you and the Company agree that this Option is
granted under and governed by the terms and conditions of the Plan and this
Option Agreement, including its Notice of Grant. Optionee has reviewed the Plan
and this Option Agreement, including its Notice of Grant in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Option Agreement on its Notice of Grant and fully understands all provisions of
the Plan and this Option Agreement, including its Notice of Grant. Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan and
Option Agreement, including its Notice of Grant. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]