Document:

Exhibit 10.28

          FEBRUARY 3, 2003 AMENDMENT TO THE ADOPTION AGREEMENT TO THE
         MICROCHIP TECHNOLOGY INCORPORATED SUPPLEMENTAL RETIREMENT PLAN

1.03 COVERAGE

     (a)  ONLY THOSE EMPLOYEES LISTED IN ATTACHMENT A WILL BE ELIGIBLE TO
          PARTICPATE IN THE PLAN.

     (b)  THE ENTRY DATE(S) SHALL BE (CHECK ONE):

          (1)  [ ] the first day of each Plan Year.

          (2)  [ ] the first day of each Plan Year and the date six months
                   later.

          (3)  [ ] the first day of each Plan Year and the first day of the
                   fourth, seventh, and tenth months.

          (4)  [X] the first day of each month.

1.04 COMPENSATION

     FOR PURPOSES OF DETERMINING CONTRIBUTIONS UNDER THE PLAN, COMPENSATION
     SHALL BE AS DEFINED IN SECTION 2.01(a)(6), BUT EXCLUDING (CHECK THE
     APPROPRIATE BOX(ES)):

     (a)  [X] Overtime Pay.

     (b)  [ ] Bonuses.

     (c)  [X] Commissions.

     (d)  [X] The value of a qualified or a non-qualified stock option granted
              to an Employee by the Employer to the extent such value is
              includable in the Employee's taxable income.

     (e)  [ ] No exclusions.

1.05 CONTRIBUTIONS

     (a)  DEFERRAL CONTRIBUTIONS. THE EMPLOYER SHALL MAKE A DEFERRAL
          CONTRIBUTION IN ACCORDANCE WITH SECTION 4.01 ON BEHALF OF EACH
          PARTICIPANT WHO HAS AN EXECUTED SALARY REDUCTION AGREEMENT IN EFFECT
          WITH THE EMPLOYER FOR THE PLAN YEAR (OR PORTION OF THE PLAN YEAR) IN
          QUESTION, NOT TO EXCEED 50% COMPENSATION FOR THAT PLAN YEAR.

Effective: January 1, 2000
Authorized Signer: Sue Flores
Date: 12/9/99

                                                  Effective date: 3/31/03
                                                  Authorized signer: Linda Croft
                                                  Date: 1/30/03

4/11/94                                3<PAGE>

                                                                   EXHIBIT 10.13

                           2003 EQUITY INCENTIVE PLAN

                                       OF

                          DIGITAL THEATER SYSTEMS, INC.

1.       PURPOSE OF THIS PLAN

         The purpose of this 2003 Equity Incentive Plan is to enhance the
long-term stockholder value of Digital Theater Systems, Inc. by offering
opportunities to eligible individuals to participate in the growth in value of
the equity of Digital Theater Systems, Inc.

2.       DEFINITIONS AND RULES OF INTERPRETATION

         2.1      DEFINITIONS. This Plan uses the following defined terms:

                  (a)      "ADMINISTRATOR" means the Board, the Committee, or
any officer or employee of the Company to whom the Board or the Committee
delegates authority to administer this Plan.

                  (b)      "AFFILIATE" means a "parent" or "subsidiary" (as each
is defined in Section 424 of the Code) of the Company and any other entity that
the Board or Committee designates as an "Affiliate" for purposes of this Plan.

                  (c)      "APPLICABLE LAW" means any and all laws of whatever
jurisdiction, within or without the United States, and the rules of any stock
exchange or quotation system on which Shares are listed or quoted, applicable to
the taking or refraining from taking of any action under this Plan, including
the administration of this Plan and the issuance or transfer of Awards or Award
Shares.

                  (d)      "AWARD" means a Stock Award, SAR, Cash Award, or
Option granted in accordance with the terms of this Plan.

                  (e)      "AWARD AGREEMENT" means the document evidencing the
grant of an Award.

                  (f)      "AWARD SHARES" means Shares covered by an outstanding
Award or purchased under an Award.

                  (g)      "AWARDEE" means: (i) a person to whom an Award has
been granted, including a holder of a Substitute Award, (ii) a person to whom an
Award has been transferred in accordance with all applicable requirements of
Sections 6.5, 7(h), and 17.

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

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                  (i)      "CASH AWARD" means the right to receive cash as
described in Section 8.3.

                  (j)      "CHANGE IN CONTROL" means any transaction or event
that the Board specifies as a Change in Control under Section 10.4.

                  (k)      "CODE" means the Internal Revenue Code of 1986.

                  (l)      "COMMITTEE" means a committee composed of Company
Directors appointed in accordance with the Company's charter documents and
Section 4.

                  (m)      "COMPANY" means Digital Theater Systems, Inc., a
Delaware corporation.

                  (n)      "COMPANY DIRECTOR" means a member of the Board.

                  (o)      "CONSULTANT" means an individual who, or an employee
of any entity that, provides bona fide services to the Company or an Affiliate
not in connection with the offer or sale of securities in a capital-raising
transaction, but who is not an Employee.

                  (p)      "DIRECTOR" means a member of the Board of Directors
of the Company or an Affiliate.

                  (q)      "DIVESTITURE" means any transaction or event that the
Board specifies as a Divestiture under Section 10.5.

                  (r)      "DOMESTIC RELATIONS ORDER" means a "domestic
relations order" as defined in, and otherwise meeting the requirements of,
Section 414(p) of the Code, except that reference to a "plan" in that definition
shall be to this Plan.

                  (s)      "EFFECTIVE DATE" MEANS the first date of the sale by
the Company of shares of its capital stock in an initial public offering
pursuant to a registration statement on Form S-1 filed with the SEC.

                  (t)      "EMPLOYEE" means a regular employee of the Company or
an Affiliate, including an officer or Director, who is treated as an employee in
the personnel records of the Company or an Affiliate, but not individuals who
are classified by the Company or an Affiliate as: (i) leased from or otherwise
employed by a third party, (ii) independent contractors, or (iii) intermittent
or temporary workers. The Company's or an Affiliate's classification of an
individual as an "Employee" (or as not an "Employee") for purposes of this Plan
shall not be altered retroactively even if that classification is changed
retroactively for another purpose as a result of an audit, litigation or
otherwise. An Awardee shall not cease to be an Employee due to transfers between
locations of the Company, or between the Company and an Affiliate, or to any

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successor to the Company or an Affiliate that assumes the Awardee's Options
under Section 10. Neither service as a Director nor receipt of a director's fee
shall be sufficient to make a Director an "Employee."

                  (u)      "EXCHANGE ACT" means the Securities Exchange Act of
1934.

                  (v)      "EXECUTIVE" means, if the Company has any class of
any equity security registered under Section 12 of the Exchange Act, an
individual who is subject to Section 16 of the Exchange Act or who is a "covered
employee" under Section 162(m) of the Code, in either case because of the
individual's relationship with the Company or an Affiliate. If the Company does
not have any class of any equity security registered under Section 12 of the
Exchange Act, "Executive" means any (i) Director, (ii) officer elected or
appointed by the Board, or (iii) beneficial owner of more than 10% of any class
of the Company's equity securities.

                  (w)      "EXPIRATION DATE" means, with respect to an Award,
the date stated in the Award Agreement as the expiration date of the Award or,
if no such date is stated in the Award Agreement, then the last day of the
maximum exercise period for the Award, disregarding the effect of an Awardee's
Termination or any other event that would shorten that period.

                  (x)      "FAIR MARKET VALUE" means the value of Shares as
determined under Section 18.2.

                  (y)      "FUNDAMENTAL TRANSACTION" means any transaction or
event described in Section 10.3.

                  (z)      "GRANT DATE" means the date the Administrator
approves the grant of an Award. However, if the Administrator specifies that an
Award's Grant Date is a future date or the date on which a condition is
satisfied, the Grant Date for such Award is that future date or the date that
the condition is satisfied.

                  (aa)     "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option under Section 422 of the Code and
designated as an Incentive Stock Option in the Award Agreement for that Option.

                  (bb)     "NONSTATUTORY OPTION" means any Option other than an
Incentive Stock Option.

                  (cc)     "NON-EMPLOYEE DIRECTOR" means any person who is a
member of the Board but is not an Employee of the Company or any Affiliate of
the Company and has not been an Employee of the Company or any Affiliate of the
Company at any time during the preceding twelve months. Service as a Director
does not in itself constitute employment for purposes of this definition.

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                  (dd)     "OBJECTIVELY DETERMINABLE PERFORMANCE CONDITION"
shall mean a performance condition (i) that is established (A) at the time an
Award is granted or (B) no later than the earlier of (1) 90 days after the
beginning of the period of service to which it relates, or (2) before the elapse
of 25% of the period of service to which it relates, (ii) that is uncertain of
achievement at the time it is established, and (iii) the achievement of which is
determinable by a third party with knowledge of the relevant facts. Examples of
measures that may be used in Objectively Determinable Performance Conditions
include net order dollars, net profit dollars, net profit growth, net revenue
dollars, revenue growth, individual performance, earnings per share, return on
assets, return on equity, and other financial objectives, objective customer
satisfaction indicators and efficiency measures, each with respect to the
Company and/or an Affiliate or individual business unit.

                  (ee)     "OFFICER" means an officer of the Company as defined
in Rule 16a-1 adopted under the Exchange Act.

                  (ff)     "OPTION" means a right to purchase Shares of the
Company granted under this Plan.

                  (gg)     "OPTION PRICE" means the price payable under an
Option for Shares, not including any amount payable in respect of withholding or
other taxes.

                  (hh)     "OPTION SHARES" means Shares covered by an
outstanding Option or purchased under an Option.

                  (ii)     "PLAN" means this 2003 Equity Incentive Plan of
Digital Theater Systems, Inc.

                  (jj)     "PRIOR PLANS" means the Company's 1997 Stock Option
Plan, and the 2002 Stock Option Plan in effect.

                  (kk)     "PURCHASE PRICE" means the price payable under a
Stock Award for Shares, not including any amount payable in respect of
withholding or other taxes.

                  (ll)     "RULE 16b-3" means Rule 16b-3 adopted under Section
16(b) of the Exchange Act.

                  (mm)     "SAR" OR "STOCK APPRECIATION RIGHT" means a right to
receive cash based on a change in the Fair Market Value of a specific number of
Shares pursuant to an Award Agreement, as described in Section 8.1.

                  (nn)     "SECURITIES ACT" means the Securities Act of 1933.

                  (oo)     "SHARE" means a share of the common stock of the
Company or other securities substituted for the common stock under Section 10.

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                  (pp)     "STOCK AWARD" means an offer by the Company to sell
shares subject to certain restrictions pursuant to the Award Agreement as
described in Section 8.2

                  (qq)     "SUBSTITUTE AWARD" means a Substitute Option,
Substitute SAR or Substitute Stock Award granted in accordance with the terms of
this Plan.

                  (rr)     "SUBSTITUTE OPTION" means an Option granted in
substitution for, or upon the conversion of, an option granted by another entity
to purchase equity securities in the granting entity.

                  (ss)     "SUBSTITUTE SAR" means a SAR granted in substitution
for, or upon the conversion of, a stock appreciation right granted by another
entity with respect to equity securities in the granting entity.

                  (tt)     "SUBSTITUTE STOCK AWARD" means a Stock Award granted
in substitution for, or upon the conversion of, a stock award granted by another
entity to purchase equity securities in the granting entity.

                  (uu)     "TERMINATION" means that the Awardee has ceased to
be, with or without any cause or reason, an Employee, Director or Consultant.
However, unless so determined by the Administrator, or otherwise provided in
this Plan, "Termination" shall not include a change in status from an Employee,
Consultant or Director to another such status. An event that causes an Affiliate
to cease being an Affiliate shall be treated as the "Termination" of that
Affiliate's Employees, Directors, and Consultants.

         2.2      RULES OF INTERPRETATION. Any reference to a "Section," without
more, is to a Section of this Plan. Captions and titles are used for convenience
in this Plan and shall not, by themselves, determine the meaning of this Plan.
Except when otherwise indicated by the context, the singular includes the plural
and vice versa. Any reference to a statute is also a reference to the applicable
rules and regulations adopted under that statute. Any reference to a statute,
rule or regulation, or to a section of a statute, rule or regulation, is a
reference to that statute, rule, regulation, or section as amended from time to
time, both before and after the Effective Date and including any successor
provisions.

3.       SHARES SUBJECT TO THIS PLAN; TERM OF THIS PLAN

         3.1      NUMBER OF AWARD SHARES. The Shares issuable under this Plan
shall be authorized but unissued or reacquired Shares, including Shares
repurchased by the Company on the open market. The number of Shares initially
reserved for issuance over the term of this Plan shall not exceed 3,000,000
Shares. Such reserve shall consist of (i) the number of Shares available for
issuance, as of the Effective Date, under the Prior Plans as last approved by
the Company's stockholders, including the Shares subject to outstanding options
under the Prior Plans, plus (ii) those Shares issued under the Prior

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Plans that are forfeited or repurchased by the Company or that are issuable upon
exercise of options granted pursuant to the Prior Plans that expire or become
unexercisable for any reason without having been exercised in full after the
Effective Date, plus (iii) an additional increase of approximately 928,949
Shares to be approved by the Company's stockholders prior to the Effective Date.
The maximum number of Shares shall be cumulatively increased on the first
January 1 after the Effective Date and each January 1 thereafter for 10 years,
by a number of Shares equal to the least of (a) 4% of the number of Shares
issued and outstanding on the immediately preceding December 31, (b) 1,500,000
Shares, and (c) a number of Shares set by the Board. When an Award is granted,
the maximum number of Shares that may be issued under this Plan shall be reduced
by the number of Shares covered by that Award. However, if an Award later
terminates or expires without having been exercised in full, the maximum number
of shares that may be issued under this Plan shall be increased by the number of
Shares that were covered by, but not purchased under, that Award. By contrast,
the repurchase of Shares by the Company shall not increase the maximum number of
Shares that may be issued under this Plan. Notwithstanding anything in this Plan
to the contrary, at no time during the eighteen (18) months following the
Effective Date may the sum of the number of Shares subject to Awards under this
Plan and the number of Shares subject to options under the Prior Plans exceed
15% of the outstanding Shares on a "fully diluted" basis. For the purposes of
this Section 3.1, outstanding Shares on a "fully diluted" basis shall be the
number of Shares that is equal to (x) the number of Shares issued and
outstanding plus (y) all Shares subject to or available for Awards or options
under this Plan and the Prior Plans, respectively, and 50% of the Shares then
issuable upon the exercise of warrants that were outstanding on the Effective
Date of the Plan.

         3.2      SOURCE OF SHARES. Award Shares may be: (a) Shares that have
never been issued, (b) Shares that have been issued but are no longer
outstanding, or (c) Shares that are outstanding and are acquired to discharge
the Company's obligation to deliver Award Shares.

         3.3      TERM OF THIS PLAN

                  (a)      This Plan shall be effective on, and Awards may be
granted under this Plan on and after, the earliest the date on which the Plan
has been both adopted by the Board and approved by the Company's stockholders.

                  (b)      Subject to the provisions of Section 14, Awards may
be granted under this Plan for a period of ten years from the earlier of the
date on which the Board approves this Plan and the date the Company's
stockholders approve this Plan. Accordingly, Awards may not be granted under
this Plan after the earlier of those dates.

4.       ADMINISTRATION

         4.1      GENERAL

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                  (a)      The Board shall have ultimate responsibility for
administering this Plan. The Board may delegate certain of its responsibilities
to a Committee, which shall consist of at least two members of the Board. The
Board or the Committee may further delegate its responsibilities to any Employee
of the Company or any Affiliate. Where this Plan specifies that an action is to
be taken or a determination made by the Board, only the Board may take that
action or make that determination. Where this Plan specifies that an action is
to be taken or a determination made by the Committee, only the Committee may
take that action or make that determination. Where this Plan references the
"Administrator," the action may be taken or determination made by the Board, the
Committee, or other Administrator. However, only the Board or the Committee may
approve grants of Awards to Executives, and an Administrator other than the
Board or the Committee may grant Awards only within guidelines established by
the Board or Committee. Moreover, all actions and determinations by any
Administrator are subject to the provisions of this Plan.

                  (b)      So long as the Company has registered and outstanding
a class of equity securities under Section 12 of the Exchange Act, the Committee
shall consist of Company Directors who are "Non-Employee Directors" as defined
in Rule 16b-3 and, after the expiration of any transition period permitted by
Treasury Regulations Section 1.162-27(h)(3), who are "outside directors" as
defined in Section 162(m) of the Code.

         4.2      AUTHORITY OF THE BOARD OR THE COMMITTEE. Subject to the other
provisions of this Plan, the Board or the Committee shall have the authority to:

                  (a)      grant Awards, including Substitute Awards;

                  (b)      determine the Fair Market Value of Shares;

                  (c)      determine the Option Price and the Purchase Price of
Awards;

                  (d)      select the Awardees;

                  (e)      determine the times Awards are granted;

                  (f)      determine the number of Shares subject to each Award;

                  (g)      determine the methods of payment that may be used to
purchase Award Shares;

                  (h)      determine the methods of payment that may be used to
satisfy withholding tax obligations;

                  (i)      determine the other terms of each Award, including
but not limited to the time or times at which Awards may be exercised, whether
and under what

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conditions an Award is assignable, and whether an Option is a Nonstatutory
Option or an Incentive Stock Option;

                  (j)      modify or amend any Award;

                  (k)      authorize any person to sign any Award Agreement or
other document related to this Plan on behalf of the Company;

                  (l)      determine the form of any Award Agreement or other
document related to this Plan, and whether that document, including signatures,
may be in electronic form;

                  (m)      interpret this Plan and any Award Agreement or
document related to this Plan;

                  (n)      correct any defect, remedy any omission, or reconcile
any inconsistency in this Plan, any Award Agreement or any other document
related to this Plan;

                  (o)      adopt, amend, and revoke rules and regulations under
this Plan, including rules and regulations relating to sub-plans and Plan
addenda;

                  (p)      adopt, amend, and revoke special rules and procedures
which may be inconsistent with the terms of this Plan, set forth (if the
Administrator so chooses) in sub-plans regarding (for example) the operation and
administration of this Plan and the terms of Awards, if and to the extent
necessary or useful to accommodate non-U.S. Applicable Laws and practices as
they apply to Awards and Award Shares held by, or granted or issued to, persons
working or resident outside of the United States or employed by Affiliates
incorporated outside the United States;

                  (q)      determine whether a transaction or event should be
treated as a Change in Control, a Divestiture or neither;

                  (r)      determine the effect of a Fundamental Transaction
and, if the Board determines that a transaction or event should be treated as a
Change in Control or a Divestiture, then the effect of that Change in Control or
Divestiture; and

                  (s)      make all other determinations the Administrator deems
necessary or advisable for the administration of this Plan.

         4.3      SCOPE OF DISCRETION. Subject to the provisions of this Section
4.3, on all matters for which this Plan confers the authority, right or power on
the Board, the Committee, or other Administrator to make decisions, that body
may make those decisions in its sole and absolute discretion. Those decisions
will be final, binding and conclusive. In making its decisions, the Board,
Committee or other Administrator need

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not treat all persons eligible to receive Awards, all Awardees, all Awards or
all Award Shares the same way. Notwithstanding anything herein to the contrary,
and except as provided in Section 14.3, the discretion of the Board, Committee
or other Administrator is subject to the specific provisions and specific
limitations of this Plan, as well as all rights conferred on specific Awardees
by Award Agreements and other agreements.

5.       PERSONS ELIGIBLE TO RECEIVE AWARDS

         5.1      ELIGIBLE INDIVIDUALS. Awards (including Substitute Awards) may
be granted to, and only to, Employees, Directors and Consultants, including to
prospective Employees, Directors and Consultants conditioned on the beginning of
their service for the Company or an Affiliate. However, Incentive Stock Options
may only be granted to Employees, as provided in Section 7(g).

         5.2      SECTION 162(m) LIMITATION.

                  (a)      OPTIONS AND SARs. Subject to the provisions of this
Section 5.2, for so long as the Company is a "publicly held corporation" within
the meaning of Section 162(m) of the Code: (i) no Employee may be granted one or
more SARs and Options within any fiscal year of the Company under this Plan to
purchase more than 1,500,000 Shares under Options or to receive compensation
calculated with reference to more than that number of Shares under SARs, subject
to adjustment pursuant to Section 10, (ii) Options and SARs may be granted to an
Executive only by the Committee (and, notwithstanding anything to the contrary
in Section 4.1(a), not by the Board). If an Option or SAR is cancelled without
being exercised or if the Option Price of an Option is reduced, that cancelled
or repriced Option or SAR shall continue to be counted against the limit on
Awards that may be granted to any individual under this Section 5.2.
Notwithstanding anything herein to the contrary, a new Employee of the Company
or an Affiliate shall be eligible to receive up to a maximum of 2,000,000 Shares
under Options in the calendar year in which they commence employment, or such
compensation calculated with reference to such number of Shares under SARs,
subject to adjustment pursuant to Section 10.

                  (b)      CASH AWARDS AND STOCK AWARDS. Any Cash Award or Stock
Award intended as "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code must vest or become exercisable contingent on the
achievement of one or more Objectively Determinable Performance Conditions. The
Committee shall have the discretion to determine the time and manner of
compliance with Section 162(m) of the Code.

6.       TERMS AND CONDITIONS OF OPTIONS

         The following rules apply to all Options:

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         6.1      PRICE. No Nonstatutory Option may have an Option Price less
than 85% of the Fair Market Value of the Shares on the Grant Date. No Option
intended as "qualified incentive-based compensation" within the meaning of
Section 162(m) of the Code may have an Option Price less than 100% of the Fair
Market Value of the Shares on the Grant Date. In no event will the Option Price
of any Option be less than the par value of the Shares issuable under the Option
if that is required by Applicable Law. The Option Price of an Incentive Stock
Option shall be subject to Section 7(f).

         6.2      TERM. No Option shall be exercisable after its Expiration
Date. No Option may have an Expiration Date that is more than ten years after
its Grant Date. Additional provisions regarding the term of Incentive Stock
Options are provided in Sections 7(a) and 7(e).

         6.3      VESTING. Options shall be exercisable: (a) on the Grant Date,
or (b) in accordance with a schedule related to the Grant Date, the date the
Optionee's directorship, employment or consultancy begins, or a different date
specified in the Option Agreement. Additional provisions regarding the vesting
of Incentive Stock Options are provided in Section 7(c). No Option granted to an
individual who is subject to the overtime pay provisions of the Fair Labor
Standards Act may be exercised before the expiration of six months after the
Grant Date.

         6.4      FORM AND METHOD OF PAYMENT.

                  (a)      The Board or Committee shall determine the acceptable
form and method of payment for exercising an Option.

                  (b)      Acceptable forms of payment for all Option Shares are
cash, check or wire transfer, denominated in U.S. dollars except as specified by
the Administrator for non-U.S. Employees or non-U.S. sub-plans.

                  (c)      In addition, the Administrator may permit payment to
be made by any of the following methods:

                           (i)      other Shares, or the designation of other
Shares, which (A) are "mature" shares for purposes of avoiding variable
accounting treatment under generally accepted accounting principles (generally
mature shares are those that have been owned by the Optionee for more than six
months on the date of surrender), and (B) have a Fair Market Value on the date
of surrender equal to the Option Price of the Shares as to which the Option is
being exercised;

                           (ii)     provided that a public market exists for the
Shares, consideration received by the Company under a procedure under which a
licensed broker-dealer advances funds on behalf of an Optionee or sells Option
Shares on behalf of an Optionee (a "CASHLESS EXERCISE PROCEDURE"), provided that
if the Company extends or

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arranges for the extension of credit to an Optionee under any Cashless Exercise
Procedure, no Officer or Director may participate in that Cashless Exercise
Procedure;

                           (iii)    with respect only to Optionees who are
neither Officers nor Directors as of the date of exercise, one or more
promissory notes meeting the requirements of Section 6.4(e) provided, however,
that promissory notes may not be used for any portion of an Award which is not
vested at the time of exercise;

                           (iv)     cancellation of any debt owed by the Company
or any Affiliate to the Optionee by the Company including without limitation
waiver of compensation due or accrued for services previously rendered to the
Company; and

                           (v)      any combination of the methods of payment
permitted by any paragraph of this Section 6.4.

                  (d)      The Administrator may also permit any other form or
method of payment for Option Shares permitted by Applicable Law.

                  (e)      The promissory notes referred to in Section 6.4(c)
(iii) shall be full recourse. Unless the Committee specifies otherwise after
taking into account any relevant accounting issues, the promissory notes shall
bear interest at a fair market value rate when the Option is exercised. Interest
on the promissory notes shall also be at least sufficient to avoid imputation of
interest under Sections 483, 1274, and 7872 of the Code. The promissory notes
and their administration shall at all times comply with any applicable margin
rules of the Federal Reserve. The promissory notes may also include such other
terms as the Administrator specifies. Payment may not be made by promissory note
by Officers or Directors if Shares are registered under Section 12 of the
Exchange Act.

         6.5      NONASSIGNABILITY OF OPTIONS. Except as determined by the
Administrator, no Option shall be assignable or otherwise transferable by the
Optionee except by will or by the laws of descent and distribution. However,
Options may be transferred and exercised in accordance with a Domestic Relations
Order and may be exercised by a guardian or conservator appointed to act for the
Optionee. Incentive Stock Options may only be assigned in compliance with
Section 7(h).

         6.6      SUBSTITUTE OPTIONS. The Board may cause the Company to grant
Substitute Options in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger, tender offer,
or other similar transaction) or of all or a portion of the assets of any
entity. Any such substitution shall be effective on the effective date of the
acquisition. Substitute Options may be Nonstatutory Options or Incentive Stock
Options. Unless and to the extent specified otherwise by the Board, Substitute
Options shall have the same terms and conditions as the options they replace,
except that (subject to the provisions of Section 10) Substitute

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Options shall be Options to purchase Shares rather than equity securities of the
granting entity and shall have an Option Price determined by the Board.

         6.7      REPRICINGS. In furtherance of, and not in limitation of the
provisions of Section 10, Options may be repriced, replaced or regranted through
cancellation or modification without stockholder approval.

7.       INCENTIVE STOCK OPTIONS

         The following rules apply only to Incentive Stock Options and only to
the extent these rules are more restrictive than the rules that would otherwise
apply under this Plan. With the consent of the Optionee, or where this Plan
provides that an action may be taken notwithstanding any other provision of this
Plan, the Administrator may deviate from the requirements of this Section,
notwithstanding that any Incentive Stock Option modified by the Administrator
will thereafter be treated as a Nonstatutory Option.

                  (a)      The Expiration Date of an Incentive Stock Option
shall not be later than ten years from its Grant Date, with the result that no
Incentive Stock Option may be exercised after the expiration of ten years from
its Grant Date.

                  (b)      No Incentive Stock Option may be granted more than
ten years from the date this Plan was approved by the Board.

                  (c)      Options intended to be incentive stock options under
Section 422 of the Code that are granted to any single Optionee under all
incentive stock option plans of the Company and its Affiliates, including
incentive stock options granted under this Plan, may not vest at a rate of more
than $100,000 in Fair Market Value of stock (measured on the grant dates of the
options) during any calendar year. For this purpose, an option vests with
respect to a given share of stock the first time its holder may purchase that
share, notwithstanding any right of the Company to repurchase that share. Unless
the administrator of that option plan specifies otherwise in the related
agreement governing the option, this vesting limitation shall be applied by, to
the extent necessary to satisfy this $100,000 rule, treating certain stock
options that were intended to be incentive stock options under Section 422 of
the Code as Nonstatutory Options. The stock options or portions of stock options
to be reclassified as Nonstatutory Options are those with the highest option
prices, whether granted under this Plan or any other equity compensation plan of
the Company or any Affiliate that permits that treatment. This Section 7(c)
shall not cause an Incentive Stock Option to vest before its original vesting
date or cause an Incentive Stock Option that has already vested to cease to be
vested.

                  (d)      In order for an Incentive Stock Option to be
exercised for any form of payment other than those described in Section 6.4(b),
that right must be stated at the time of grant in the Option Agreement relating
to that Incentive Stock Option.

                                       12

<PAGE>

                  (e)      Any Incentive Stock Option granted to a Ten Percent
Stockholder, must have an Expiration Date that is not later than five years from
its Grant Date, with the result that no such Option may be exercised after the
expiration of five years from the Grant Date. A "TEN PERCENT STOCKHOLDER" is any
person who, directly or by attribution under Section 424(d) of the Code, owns
stock possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Affiliate on the Grant Date.

                  (f)      The Option Price of an Incentive Stock Option shall
never be less than the Fair Market Value of the Shares at the Grant Date. The
Option Price for the Shares covered by an Incentive Stock Option granted to a
Ten Percent Stockholder shall never be less than 110% of the Fair Market Value
of the Shares at the Grant Date.

                  (g)      Incentive Stock Options may be granted only to
Employees. If an Optionee changes status from an Employee to a Consultant, that
Optionee's Incentive Stock Options become Nonstatutory Options if not exercised
within the time period described in Section 7(i) (determined by treating that
change in status as a Termination solely for purposes of this Section 7(g)).

                  (h)      No rights under an Incentive Stock Option may be
transferred by the Optionee, other than by will or the laws of descent and
distribution. During the life of the Optionee, an Incentive Stock Option may be
exercised only by the Optionee. The Company's compliance with a Domestic
Relations Order, or the exercise of an Incentive Stock Option by a guardian or
conservator appointed to act for the Optionee, shall not violate this Section
7(h).

                  (i)      An Incentive Stock Option shall be treated as a
Nonstatutory Option if it remains exercisable after, and is not exercised
within, the three-month period beginning with the Optionee's Termination for any
reason other than the Optionee's death or disability (as defined in Section
22(e) of the Code). In the case of Termination due to death, an Incentive Stock
Option shall continue to be treated as an Incentive Stock Option if it remains
exercisable after, and is not exercised within, the three-month period after the
Optionee's Termination provided it is exercised before the Expiration Date. In
the case of Termination due to disability, an Incentive Stock Option shall be
treated as a Nonstatutory Option if it remains exercisable after, and is not
exercised within, one year after the Optionee's Termination.

                  (j)      An Incentive Stock Option may only be modified by the
Board.

8.       STOCK APPRECIATION RIGHTS, STOCK AWARDS AND CASH AWARDS

         8.1      STOCK APPRECIATION RIGHTS. The following rules apply to SARs:

                                       13

<PAGE>

                  (a)      GENERAL. SARs may be granted either alone, in
addition to, or in tandem with other Awards granted under this Plan. The
Administrator may grant SARs to eligible participants subject to terms and
conditions not inconsistent with this Plan and determined by the Administrator.
The specific terms and conditions applicable to the Awardee shall be provided
for in the Award Agreement. SARs shall be exercisable, in whole or in part, at
such times as the Administrator shall specify in the Award Agreement. The grant
or vesting of a SAR may be made contingent on the achievement of Objectively
Determinable Performance Conditions.

                  (b)      EXERCISE OF SARs. Upon the exercise of an SAR, in
whole or in part, an Awardee shall be entitled to a payment in an amount equal
to the excess of the Fair Market Value of a fixed number of Shares covered by
the exercised portion of the SAR on the date of exercise, over the Fair Market
Value of the Shares covered by the exercised portion of the SAR on the Grant
Date. The amount due to the Awardee upon the exercise of a SAR shall be paid in
cash, Shares or a combination thereof, over the period or periods specified in
the Award Agreement. An Award Agreement may place limits on the amount that may
be paid over any specified period or periods upon the exercise of a SAR, on an
aggregate basis or as to any Awardee. A SAR shall be considered exercised when
the Company receives written notice of exercise in accordance with the terms of
the Award Agreement from the person entitled to exercise the SAR. If a SAR has
been granted in tandem with an Option, upon the exercise of the SAR, the number
of shares that may be purchased pursuant to the Option shall be reduced by the
number of shares with respect to which the SAR is exercised.

                  (c)      NONASSIGNABILITY OF SARs. Except as determined by the
Administrator, no SAR shall be assignable or otherwise transferable by the
Awardee except by will or by the laws of descent and distribution.
Notwithstanding anything herein to the contrary, SARs may be transferred and
exercised in accordance with a Domestic Relations Order.

                  (d)      SUBSTITUTE SARs. The Board may cause the Company to
grant Substitute SARs in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger) or all or a
portion of the assets of any entity. Any such substitution shall be effective on
the effective date of the acquisition. Unless and to the extent specified
otherwise by the Board, Substitute SARs shall have the same terms and conditions
as the options they replace, except that (subject to the provisions of Section
10) Substitute SARs shall be exercisable with respect to the Fair Market Value
of Shares rather than equity securities of the granting entity and shall be on
terms that, as determined by the Board in its sole and absolute discretion,
properly reflects the substitution.

                  (e)      REPRICINGS. A SAR may be repriced, replaced or
regranted, through cancellation or modification without stockholder approval.

                                       14

<PAGE>

         8.2      STOCK AWARDS. The following rules apply to all Stock Awards:

                  (a)      GENERAL. The specific terms and conditions of a Stock
Award applicable to the Awardee shall be provided for in the Award Agreement.
The Award Agreement shall state the number of Shares that the Awardee shall be
entitled to receive or purchase, the terms and conditions on which the Shares
shall vest, the price to be paid and, if applicable, the time within which the
Awardee must accept such offer. The offer shall be accepted by execution of the
Award Agreement. The Administrator may require that all Shares subject to a
right of repurchase or risk of forfeiture be held in escrow until such
repurchase right or risk of forfeiture lapses. The grant or vesting of a Stock
Award may be made contingent on the achievement of Objectively Determinable
Performance Conditions.

                  (b)      RIGHT OF REPURCHASE. If so provided in the Award
Agreement, Award Shares acquired pursuant to a Stock Award may be subject to
repurchase by the Company or an Affiliate if not vested in accordance with the
Award Agreement.

                  (c)      FORM OF PAYMENT. The Administrator shall determine
the acceptable form and method of payment for exercising a Stock Award.
Acceptable forms of payment for all Award Shares are cash, check or wire
transfer, denominated in U.S. dollars except as specified by the Administrator
for non-U.S. Employees or non-U.S. sub-plans. In addition, the Administrator may
permit payment to be made by any of the methods permitted with respect to the
exercise of Options pursuant to Section 6.4.

                  (d)      NONASSIGNABILITY OF STOCK AWARDS. Except as
determined by the Administrator, no Stock Award shall be assignable or otherwise
transferable by the Awardee except by will or by the laws of descent and
distribution. Notwithstanding anything to the contrary herein, Stock Awards may
be transferred and exercised in accordance with a Domestic Relations Order.

                  (e)      SUBSTITUTE STOCK AWARD. The Board may cause the
Company to grant Substitute Stock Awards in connection with the acquisition by
the Company or an Affiliate of equity securities of any entity (including by
merger) or all or a portion of the assets of any entity. Unless and to the
extent specified otherwise by the Board, Substitute Stock Awards shall have the
same terms and conditions as the stock awards they replace, except that (subject
to the provisions of Section 10) Substitute Stock Awards shall be Stock Awards
to purchase Shares rather than equity securities of the granting entity and
shall have a Purchase Price that, as determined by the Board in its sole and
absolute discretion, properly reflects the substitution. Any such Substituted
Stock Award shall be effective on the effective date of the acquisition.

         8.3      CASH AWARDS. THE FOLLOWING RULES APPLY TO ALL CASH AWARDS:

                                       15

<PAGE>

         Cash Awards may be granted either alone, in addition to, or in tandem
with other Awards granted under this Plan. After the Administrator determines
that it will offer a Cash Award, it shall advise the Awardee, by means of an
Award Agreement, of the terms, conditions and restrictions related to the Cash
Award.

9.       EXERCISE OF AWARDS

         9.1      IN GENERAL. An Award shall be exercisable in accordance with
this Plan and the Award Agreement under which it is granted.

         9.2      TIME OF EXERCISE. Options and Stock Awards shall be considered
exercised when the Company receives: (a) written notice of exercise from the
person entitled to exercise the Option or Stock Award, (b) full payment, or
provision for payment, in a form and method approved by the Administrator, for
the Shares for which the Option or Stock Award is being exercised, and (c) with
respect to Nonstatutory Options, payment, or provision for payment, in a form
approved by the Administrator, of all applicable withholding taxes due upon
exercise. An Award may not be exercised for a fraction of a Share. SARs shall be
considered exercised when the Company receives written notice of the exercise
from the person entitled to exercise the SAR.

         9.3      ISSUANCE OF AWARD SHARES. The Company shall issue Award Shares
in the name of the person properly exercising the Award. If the Awardee is that
person and so requests, the Award Shares shall be issued in the name of the
Awardee and the Awardee's spouse. The Company shall endeavor to issue Award
Shares promptly after an Award is exercised or after the Grant Date of a Stock
Award, as applicable. Until Award Shares are actually issued, as evidenced by
the appropriate entry on the stock register of the Company or its transfer
agent, the Awardee will not have the rights of a stockholder with respect to
those Award Shares, even though the Awardee has completed all the steps
necessary to exercise the Award. No adjustment shall be made for any dividend,
distribution, or other right for which the record date precedes the date the
Award Shares are issued, except as provided in Section 10.

         9.4      TERMINATION

                  (a)      IN GENERAL. Except as provided in an Award Agreement
or in writing by the Administrator, including in an Award Agreement, and as
otherwise provided in Sections 9.4(b), (c), (d) and (e) after an Awardee's
Termination, the Awardee's Awards shall be exercisable to the extent (but only
to the extent) they are vested on the date of that Termination and only during
the three months after the Termination, but in no event after the Expiration
Date. To the extent the Awardee does not exercise an Award within the time
specified for exercise, the Award shall automatically terminate.

                                       16

<PAGE>

                  (b)      LEAVES OF ABSENCE. Unless otherwise provided in the
Award Agreement, no Award may be exercised more than three months after the
beginning of a leave of absence, other than a personal or medical leave approved
by an authorized representative of the Company with employment guaranteed upon
return. Awards shall not continue to vest during a leave of absence, unless
otherwise determined by the Administrator with respect to an approved personal
or medical leave with employment guaranteed upon return.

                  (c)      DEATH OR DISABILITY. Unless otherwise provided by the
Administrator, if an Awardee's Termination is due to death or disability (as
determined by the Administrator with respect to all Awards other than Incentive
Stock Options and as defined by Section 22(e) of the Code with respect to
Incentive Stock Options), all Awards of that Awardee to the extent exercisable
at the date of that Termination may be exercised for one year after that
Termination, but in no event after the Expiration Date. In the case of
Termination due to death, an Award may be exercised as provided in Section 17.
In the case of Termination due to disability, if a guardian or conservator has
been appointed to act for the Awardee and been granted this authority as part of
that appointment, that guardian or conservator may exercise the Award on behalf
of the Awardee. Death or disability occurring after an Awardee's Termination
shall not cause the Termination to be treated as having occurred due to death or
disability. To the extent an Award is not so exercised within the time specified
for its exercise, the Award shall automatically terminate.

                  (d)      DIVESTITURE. If an Awardee's Termination is due to a
Divestiture, the Board may take any one or more of the actions described in
Section 10.3 or 10.4 with respect to the Awardee's Awards.

                  (e)      TERMINATION FOR CAUSE. In the discretion of the
Administrator, which may be exercised on the date of grant, or at a date later
in time, if an Awardee's Termination is due to Cause, all of the Awardee's
Awards shall automatically terminate and cease to be exercisable at the time of
Termination and the Administrator may rescind any and all exercises of Awards by
the Awardee that occurred after the first event constituting Cause. "Cause"
means employment-related dishonesty, fraud, misconduct or disclosure or misuse
of confidential information, or other employment-related conduct that is likely
to cause significant injury to the Company, an Affiliate, or any of their
respective employees, officers or directors (including, without limitation,
commission of a felony or similar offense), in each case as determined by the
Administrator. "Cause" shall not require that a civil judgment or criminal
conviction have been entered against or guilty plea shall have been made by the
Awardee regarding any of the matters referred to in the previous sentence.
Accordingly, the Administrator shall be entitled to determine "Cause" based on
the Administrator's good faith belief. If the Awardee is criminally charged with
a felony or similar offense, that shall be a sufficient, but not a necessary,
basis for such a belief.

                                       17

<PAGE>

                  (f)      ADMINISTRATOR DISCRETION. Notwithstanding the
provisions of Section 9.4 (a)-(e), the Plan Administrator shall have complete
discretion, exercisable either at the time an Award is granted or at any time
while the Award remains outstanding, to:

                           (i)      Extend the period of time for which the
Award is to remain exercisable, following the Awardee's Termination, from the
limited exercise period otherwise in effect for that Award to such greater
period of time as the Administrator shall deem appropriate, but in no event
beyond the Expiration Date; and/or

                           (ii)     Permit the Award to be exercised, during the
applicable post-Termination exercise period, not only with respect to the number
of vested Shares for which such Award may be exercisable at the time of the
Awardee's Termination but also with respect to one or more additional
installments in which the Awardee would have vested had the Awardee not been
subject to Termination.

                  (g)      CONSULTING OR EMPLOYMENT RELATIONSHIP. Nothing in
this Plan or in any Award Agreement, and no Award or the fact that Award Shares
remain subject to repurchase rights, shall: (A) interfere with or limit the
right of the Company or any Affiliate to terminate the employment or consultancy
of any Awardee at any time, whether with or without cause or reason, and with or
without the payment of severance or any other compensation or payment, or (B)
interfere with the application of any provision in any of the Company's or any
Affiliate's charter documents or Applicable Law relating to the election,
appointment, term of office, or removal of a Director.

10.      CERTAIN TRANSACTIONS AND EVENTS

         10.1     IN GENERAL. Except as provided in this Section 10, no change
in the capital structure of the Company, merger, sale or other disposition of
assets or a subsidiary, change in control, issuance by the Company of shares of
any class of securities or securities convertible into shares of any class of
securities, exchange or conversion of securities, or other transaction or event
shall require or be the occasion for any adjustments of the type described in
this Section 10. Additional provisions with respect to the foregoing
transactions are set forth in Section 14.3.

         10.2     CHANGES IN CAPITAL STRUCTURE. In the event of any stock split,
reverse stock split, recapitalization, combination or reclassification of stock,
stock dividend, spin-off, or similar change to the capital structure of the
Company (not including a Fundamental Transaction or Change in Control), the
Board shall make whatever adjustments it concludes are appropriate to: (a) the
number and type of Awards that may be granted under this Plan, (b) the number
and type of Options that may be granted to any individual under this Plan, (c)
the terms of any SAR, (d) the Purchase Price of any Stock Award, (e) the Option
Price and number and class of securities issuable under each outstanding Option,
and (f) the repurchase price of any securities substituted for Award

                                       18

<PAGE>

Shares that are subject to repurchase rights. The specific adjustments shall be
determined by the Board. Unless the Board specifies otherwise, any securities
issuable as a result of any such adjustment shall be rounded down to the next
lower whole security. The Board need not adopt the same rules for each Award or
each Awardee.

         10.3     FUNDAMENTAL TRANSACTIONS. Except for grants to Non-Employee
Directors pursuant to Section 11 herein, in the event of (a) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption shall be binding on all
Participants), (b) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (c) the sale of all or
substantially all of the assets of the Company, or (d) the acquisition, sale, or
transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction (each, a "FUNDAMENTAL TRANSACTION"), any or all
outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement shall be
binding on all participants under this Plan. In the alternative, the successor
corporation may substitute equivalent Awards or provide substantially similar
consideration to participants as was provided to stockholders (after taking into
account the existing provisions of the Awards). The successor corporation may
also issue, in place of outstanding Shares held by the participants,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the participant. In the event such successor
corporation (if any) does not assume or substitute Awards, as provided above,
pursuant to a transaction described in this Subsection 10.3, the vesting with
respect to such Awards shall fully and immediately accelerate or the repurchase
rights of the Company shall fully and immediately terminate, as the case may be,
so that the Awards may be exercised or the repurchase rights shall terminate
before, or otherwise in connection with the closing or completion of the
Fundamental Transaction or event, but then terminate. Notwithstanding anything
in this Plan to the contrary, the Committee may, in its sole discretion, provide
that the vesting of any or all Award Shares subject to vesting or a right of
repurchase shall accelerate or lapse, as the case may be, upon a transaction
described in this Section 10.3. If the Committee exercises such discretion with
respect to Options, such Options shall become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee
determines, and if such Options are not exercised prior to the consummation of
the Fundamental Transaction, they shall terminate at such time as determined by
the Committee. Subject to any greater rights granted to participants under the
foregoing provisions of this Section 10.3, in the event of the occurrence of any
Fundamental

                                       19

<PAGE>

Transaction, any outstanding Awards shall be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
or sale of assets.

         10.4     CHANGES OF CONTROL. The Board may also, but need not, specify
that other transactions or events constitute a "CHANGE IN CONTROL". The Board
may do that either before or after the transaction or event occurs. Examples of
transactions or events that the Board may treat as Changes of Control are: (a)
any person or entity, including a "group" as contemplated by Section 13(d)(3) of
the Exchange Act, acquires securities holding 30% or more of the total combined
voting power or value of the Company, or (b) as a result of or in connection
with a contested election of Company Directors, the persons who were Company
Directors immediately before the election cease to constitute a majority of the
Board. In connection with a Change in Control, notwithstanding any other
provision of this Plan, the Board may, but need not, take any one or more of the
actions described in Section 10.3. In addition, the Board may extend the date
for the exercise of Awards (but not beyond their original Expiration Date). The
Board need not adopt the same rules for each Award or each Awardee.
Notwithstanding anything in this Plan to the contrary, in the event of a
Termination of services for any reason other than death, disability or Cause,
within 18 months following the consummation of a Fundamental Transaction or
Change in Control, any Awards, assumed or substituted in a Fundamental
Transaction or Change in Control, which are subject to vesting conditions and/or
the right of repurchase in favor of the Company or a successor entity, shall
accelerate fully so that such Award Shares are immediately exercisable upon
Termination or, if subject to the right of repurchase in favor of the Company,
such repurchase rights shall lapse as of the date of Termination. Such Awards
shall be exercisable for a period of three (3) months following termination.

         10.5     DIVESTITURE. If the Company or an Affiliate sells or otherwise
transfers equity securities of an Affiliate to a person or entity other than the
Company or an Affiliate, or leases, exchanges or transfers all or any portion of
its assets to such a person or entity, then the Board may specify that such
transaction or event constitutes a "DIVESTITURE". In connection with a
Divestiture, notwithstanding any other provision of this Plan, the Board may,
but need not, take one or more of the actions described in Section 10.3 or 10.4
with respect to Awards or Award Shares held by, for example, Employees,
Directors or Consultants for whom that transaction or event results in a
Termination. The Board need not adopt the same rules for each Award or each
Awardee.

         10.6     DISSOLUTION. If the Company adopts a plan of dissolution, the
Board may cause Awards to be fully vested and exercisable (but not after their
Expiration Date) before the dissolution is completed but contingent on its
completion and may cause the Company's repurchase rights on Award Shares to
lapse upon completion of the dissolution. The Board need not adopt the same
rules for each Award or each Awardee. Notwithstanding anything herein to the
contrary, in the event of a dissolution of the Company, to the extent not
exercised before the earlier of the completion of the

                                       20

<PAGE>

dissolution or their Expiration Date, Awards shall terminate immediately prior
to the dissolution.

         10.7     CUT-BACK TO PRESERVE BENEFITS. If the Administrator determines
that the net after-tax amount to be realized by any Awardee, taking into account
any accelerated vesting, termination of repurchase rights, or cash payments to
that Awardee in connection with any transaction or event set forth in this
Section 10 would be greater if one or more of those steps were not taken or
payments were not made with respect to that Awardee's Awards or Award Shares,
then, at the election of the Awardee, to such extent, one or more of those steps
shall not be taken and payments shall not be made.

11.      AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS AND NON-EMPLOYEE
         DIRECTOR FEE OPTION GRANTS

         11.1     AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS

                  (a)      GRANT DATES. Option grants to Non-Employee Directors
shall be made on the dates specified below:

                           (i)      Each Non-Employee Director who is then
serving as a member of the Board on the Effective Date (the "CURRENT DIRECTORS")
and each Non-Employee Director who is first elected or appointed to the Board at
any time after the effective date of this Plan shall automatically be granted,
on the date of such initial election or appointment, a Nonstatutory Option to
purchase 7,500 Shares (the "INITIAL GRANT").

                           (ii)     Commencing in 2004, on the date of each
annual stockholders meeting, each individual who is to continue to serve as a
Non-Employee Director shall automatically be granted a Nonstatutory Option to
purchase 3,750 Shares (the "ANNUAL GRANT"), provided, however, that such
individual has served as a Non-Employee Director for at least six (6) months.

                  (b)      EXERCISE PRICE.

                           (i)      The Option Price shall be equal to one
hundred percent (100%) of the Fair Market Value of the Shares on the Option
grant date.

                           (ii)     The Option Price shall be payable in one or
more of the alternative forms authorized pursuant to Section 6.4. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the Option Price must be made on the date of exercise.

                  (c)      OPTION TERM. Each Option shall have a term of ten
(10) years measured from the Option grant date.

                                       21

<PAGE>

                  (d)      EXERCISE AND VESTING OF OPTIONS. Except as otherwise
determined by the whole Board, the Shares underlying each Option granted
pursuant to Section 11.1 shall vest and be exercisable as set forth below.

                           (i)      INITIAL GRANT. The Shares underlying each
Option issued pursuant to the Initial Grant shall vest and be exercisable as to
4.1666% of the Shares at the end of each full succeeding month from the date of
grant, rounded down to the nearest whole Share, for so long as the Non-Employee
Director continuously remains a Director of, or a Consultant to, the Company
provided, however, that the Shares underlying each Option issued to Current
Directors, pursuant to the Initial Grant, shall be fully vested and immediately
exercisable on the grant date.

                           (ii)     ANNUAL GRANT. The Shares underlying each
Option issued pursuant to the Annual Grant shall vest and be exercisable as to
8.3333% of the Shares at the end of each full succeeding month from the date of
grant, rounded down to the nearest whole Share, for so long as the Non-Employee
Director continuously remains a Director of, or a Consultant to, the Company.

                  (e)      TERMINATION OF BOARD SERVICE. The following
provisions shall govern the exercise of any Options held by the Awardee at the
time the Awardee ceases to serve as a Non-Employee Director:

                           (i)      IN GENERAL. Except as otherwise provided in
Section 11.3, after cessation of service as a Director (the "CESSATION DATE"),
the Awardee's Options shall be exercisable to the extent (but only to the
extent) they are vested on the Cessation Date and only during the three months
after such Cessation Date, but in no event after the Expiration Date. To the
extent the Awardee does not exercise an Option within the time specified for
exercise, the Option shall automatically terminate.

                           (ii)     DEATH OR DISABILITY. If an Awardee's
cessation of service on the Board is due to death or disability (as determined
by the Board), all Options of that Awardee, to the extent exercisable upon such
Cessation Date, may be exercised for one year after the Cessation Date, but in
no event after the Expiration Date. In the case of a cessation of service due to
death, an Option may be exercised as provided in Section 17. In the case of a
cessation of service due to disability, if a guardian or conservator has been
appointed to act for the Awardee and been granted this authority as part of that
appointment, that guardian or conservator may exercise the Option on behalf of
the Awardee. Death or disability occurring after an Awardee's cessation of
service shall not cause the cessation of service to be treated as having
occurred due to death or disability. To the extent an Option is not so exercised
within the time specified for its exercise, the Option shall automatically
terminate.

         11.2     DIRECTOR FEE OPTION GRANTS

                                       22

<PAGE>

                  (a)      OPTION GRANTS. The Board shall have the sole and
exclusive authority to determine the calendar year or years for which the
Director fee option grant program (the "DIRECTOR FEE OPTION PROGRAM") is to be
in effect. For each such calendar year the program is in effect, each
Non-Employee Director may elect to apply all or any portion of the annual
retainer fee otherwise payable in cash, for his or her service on the Board for
that year, to the acquisition of a special Option grant under this Director Fee
Option Program. Such election must be filed with the Company's Chief Financial
Officer prior to first day of the calendar year for which the annual retainer
fee which is the subject of that election is otherwise payable. Each
Non-Employee Director who files such a timely election shall automatically be
granted an Option under this Director Fee Option Program on the first trading
day in January in the calendar year for which the annual retainer fee which is
the subject of that election would otherwise be payable in cash.

                  (b)      OPTION TERMS. Each Option shall be a Nonstatutory
Option governed by the terms and conditions specified below.

                           (i)      EXERCISE PRICE.

                           A.       The Purchase Price shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per Share on the Option
grant date.

                           B.       The Purchase Price shall become immediately
due upon exercise of the Option and shall be payable in one or more of the
alternative forms authorized pursuant to Section 6.4 of this Plan. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the Purchase Price must be made on the date that the Option is
exercised.

                           (ii)     NUMBER OF OPTION SHARES. The number of
Shares subject to the Option shall be determined pursuant to the following
formula (rounded down to the nearest whole number):

                           X = A / (B x 66-2/3%), where

                           X is the number of Option Shares,

                           A is the portion of the annual retainer fee subject
                  to the Non-Employee Director's election, and

                           B is the Fair Market Value of a Share on the option
                  grant date.

                           (iii)    EXERCISE AND TERM OF OPTIONS. The Option
shall become exercisable in a series of twelve (12) equal monthly installments
upon the Awardee's completion of each month of Board service over the twelve
(12)-month period measured

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<PAGE>

from the grant date. Each Option shall have a maximum term of ten (10) years
measured from the Option grant date.

                           (iv)     TERMINATION OF BOARD SERVICE. Should the
Awardee cease Board service for any reason (other than death or permanent
disability) while holding one or more Options under this Director Fee Option
Program, then each such Option shall remain exercisable, for any or all of the
Shares for which the Option is exercisable at the time of such cessation of
Board service, until the earlier of (x) the expiration of the ten (10)-year
Option term or (y) the expiration of the three (3)-year period measured from the
date of such cessation of Board service. However, each Option held by the
Awardee under this Director Fee Option Program at the time of his or her
cessation of Board service shall immediately terminate and cease to remain
outstanding with respect to any and all Shares for which the Option is not
otherwise at that time exercisable.

                           (v)      DEATH OR PERMANENT DISABILITY. Should the
Awardee's service as a Board member cease by reason of death or permanent
disability, then each Option held by such Awardee under this Director Fee Option
Program shall immediately become exercisable for all the Shares at the time
subject to that Option, and the Option may be exercised for any or all of those
Shares as fully-vested Shares until the earlier of (x) the expiration of the ten
(10)-year option term or (y) the expiration of the three (3)-year period
measured from the date of such cessation of Board service.

         Should the Awardee die after cessation of his or her Board service but
while holding one or more Options under this Director Fee Option Program, then
each such Option may be exercised, for any or all of the shares for which the
Option is exercisable at the time of the Awardee's cessation of Board service
(less any Shares subsequently purchased by the Awardee prior to death), by the
personal representative of the Awardee's estate or by the person or persons to
whom the Option is transferred pursuant to the Awardee's will or in accordance
with the laws of descent and distribution or by the designated beneficiary or
beneficiaries of such option. Such right of exercise shall lapse, and the Option
shall terminate, upon the earlier of (xx) the expiration of the ten (10)-year
Option term or (yy) the three (3)-year period measured from the date of the
Awardee's cessation of Board service.

         11.3     CERTAIN TRANSACTIONS AND EVENTS

                  (a)      In the event of a Fundamental Transaction while the
Awardee remains a Non-Employee Director, the Shares at the time subject to each
outstanding Option held by such Awardee pursuant to Section 11, but not
otherwise vested, shall automatically vest in full so that each such Option
shall, immediately prior to the effective date of the Fundamental Transaction,
become exercisable for all the Shares as fully vested Shares and may be
exercised for any or all of those vested Shares. Immediately following the
consummation of the Fundamental Transaction, each Option

                                       24

<PAGE>

shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or Affiliate thereof).

                  (b)      In the event of a Change in Control while the Awardee
remains a Non-Employee Director, the Shares at the time subject to each
outstanding Option held by such Awardee pursuant to Section 11, but not
otherwise vested, shall automatically vest in full so that each such Option
shall, immediately prior to the effective date of the Change in Control, become
exercisable for all the Shares as fully vested Shares and may be exercised for
any or all of those vested Shares. Each such Option shall remain exercisable for
such fully vested Shares until the expiration or sooner termination of the
Option term in connection with a Change in Control.

                  (c)      Each Option which is assumed in connection with a
Fundamental Transaction shall be appropriately adjusted, immediately after such
Fundamental Transaction, to apply to the number and class of securities which
would have been issuable to the Awardee in consummation of such Fundamental
Transaction had the Option been exercised immediately prior to such Fundamental
Transaction. Appropriate adjustments shall also be made to the Option Price
payable per share under each outstanding Option, provided the aggregate Option
Price payable for such securities shall remain the same. To the extent the
actual holders of the Company's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Fundamental
Transaction, the successor corporation may, in connection with the assumption of
the outstanding Options granted pursuant to Section 11, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Fundamental Transaction.

                  (d)      The grant of Options pursuant to Section 11 shall in
no way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

                  (e)      The remaining terms of each Option granted pursuant
to Section 11 shall, as applicable, be the same as terms in effect for Awards
granted under this Plan. Notwithstanding the foregoing, the provisions of
Section 9.4 and Section 10 shall not apply to Options granted pursuant to
Section 11.

         11.4     LIMITED TRANSFERABILITY OF OPTIONS. Each Option granted
pursuant to Section 11 may be assigned in whole or in part during the Awardee's
lifetime to one or more members of the Awardee's family or to a trust
established exclusively for one or more such family members or to an entity in
which the Awardee is majority owner or to the Awardee 's former spouse, to the
extent such assignment is in connection with the Awardee 's estate or financial
plan or pursuant to a Domestic Relations Order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
Option pursuant to the assignment. The terms applicable to the

                                       25

<PAGE>

assigned portion shall be the same as those in effect for the Option immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Administrator may deem appropriate. The Awardee may also
designate one or more persons as the beneficiary or beneficiaries of his or her
outstanding Options under Section 11, and those Options shall, in accordance
with such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Awardee 's death while holding those Options. Such
beneficiary or beneficiaries shall take the transferred Options subject to all
the terms and conditions of the applicable Award Agreement evidencing each such
transferred Option, including (without limitation) the limited time period
during which the Option may be exercised following the Awardee 's death.

12.      WITHHOLDING AND TAX REPORTING

         12.1     TAX WITHHOLDING ALTERNATIVES

                  (a)      GENERAL. Whenever Award Shares are issued or become
free of restrictions, the Company may require the Awardee to remit to the
Company an amount sufficient to satisfy any applicable tax withholding
requirement, whether the related tax is imposed on the Awardee or the Company.
The Company shall have no obligation to deliver Award Shares or release Award
Shares from an escrow or permit a transfer of Award Shares until the Awardee has
satisfied those tax withholding obligations. Whenever payment in satisfaction of
Awards is made in cash, the payment will be reduced by an amount sufficient to
satisfy all tax withholding requirements.

                  (b)      METHOD OF PAYMENT. The Awardee shall pay any required
withholding using the forms of consideration described in Section 6.4(b), except
that, in the discretion of the Administrator, the Company may also permit the
Awardee to use any of the forms of payment described in Section 6.4(c). The
Administrator, in its sole discretion, may also permit Award Shares to be
withheld to pay required withholding. If the Administrator permits Award Shares
to be withheld, the Fair Market Value of the Award Shares withheld, as
determined as of the date of withholding, shall not exceed the amount determined
by the applicable minimum statutory withholding rates.

         12.2     REPORTING OF DISPOSITIONS. Any holder of Option Shares
acquired under an Incentive Stock Option shall promptly notify the
Administrator, following such procedures as the Administrator may require, of
the sale or other disposition of any of those Option Shares if the disposition
occurs during: (a) the longer of two years after the Grant Date of the Incentive
Stock Option and one year after the date the Incentive Stock Option was
exercised, or (b) such other period as the Administrator has established.

13.      COMPLIANCE WITH LAW

         The grant of Awards and the issuance and subsequent transfer of Award
Shares shall be subject to compliance with all Applicable Law, including all
applicable securities

                                       26

<PAGE>

laws. Awards may not be exercised, and Award Shares may not be transferred, in
violation of Applicable Law. Thus, for example, Awards may not be exercised
unless: (a) a registration statement under the Securities Act is then in effect
with respect to the related Award Shares, or (b) in the opinion of legal counsel
to the Company, those Award Shares may be issued in accordance with an
applicable exemption from the registration requirements of the Securities Act
and any other applicable securities laws. The failure or inability of the
Company to obtain from any regulatory body the authority considered by the
Company's legal counsel to be necessary or useful for the lawful issuance of any
Award Shares or their subsequent transfer shall relieve the Company of any
liability for failing to issue those Award Shares or permitting their transfer.
As a condition to the exercise of any Award or the transfer of any Award Shares,
the Company may require the Awardee to satisfy any requirements or
qualifications that may be necessary or appropriate to comply with or evidence
compliance with any Applicable Law.

14.      AMENDMENT OR TERMINATION OF THIS PLAN OR OUTSTANDING AWARDS

         14.1     AMENDMENT AND TERMINATION. The Board may at any time amend,
suspend, or terminate this Plan.

         14.2     STOCKHOLDER APPROVAL. The Company shall obtain the approval of
the Company's stockholders for any amendment to this Plan if stockholder
approval is necessary or desirable to comply with any Applicable Law or with the
requirements applicable to the grant of Awards intended to be Incentive Stock
Options. The Board may also, but need not, require that the Company's
stockholders approve any other amendments to this Plan.

         14.3     EFFECT. No amendment, suspension, or termination of this Plan,
and no modification of any Award even in the absence of an amendment,
suspension, or termination of this Plan, shall impair any existing contractual
rights of any Awardee unless the affected Awardee consents to the amendment,
suspension, termination, or modification. Notwithstanding anything herein to the
contrary, no such consent shall be required if the Board determines, in its sole
and absolute discretion, that the amendment, suspension, termination, or
modification: (a) is required or advisable in order for the Company, this Plan
or the Award to satisfy Applicable Law, to meet the requirements of any
accounting standard or to avoid any adverse accounting treatment, or (b) in
connection with any transaction or event described in Section 10, is in the best
interests of the Company or its stockholders. The Board may, but need not, take
the tax or accounting consequences to affected Awardees into consideration in
acting under the preceding sentence. Those decisions shall be final, binding and
conclusive. Termination of this Plan shall not affect the Administrator's
ability to exercise the powers granted to it under this Plan with respect to
Awards granted before the termination of Award Shares issued under such Awards
even if those Award Shares are issued after the termination.

                                       27

<PAGE>

15.      RESERVED RIGHTS

         15.1     NONEXCLUSIVITY OF THIS PLAN. This Plan shall not limit the
power of the Company or any Affiliate to adopt other incentive arrangements
including, for example, the grant or issuance of stock options, stock, or other
equity-based rights under other plans.

         15.2     UNFUNDED PLAN. This Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Awardees, any such
accounts will be used merely as a convenience. The Company shall not be required
to segregate any assets on account of this Plan, the grant of Awards, or the
issuance of Award Shares. The Company and the Administrator shall not be deemed
to be a trustee of stock or cash to be awarded under this Plan. Any obligations
of the Company to any Awardee shall be based solely upon contracts entered into
under this Plan, such as Award Agreements. No such obligations shall be deemed
to be secured by any pledge or other encumbrance on any assets of the Company.
Neither the Company nor the Administrator shall be required to give any security
or bond for the performance of any such obligations.

16.      SPECIAL ARRANGEMENTS REGARDING AWARD SHARES

         16.1     ESCROW OF STOCK CERTIFICATES. To enforce any restrictions on
Award Shares, the Administrator may require their holder to deposit the
certificates representing Award Shares, with stock powers or other transfer
instruments approved by the Administrator endorsed in blank, with the Company or
an agent of the Company to hold in escrow until the restrictions have lapsed or
terminated. The Administrator may also cause a legend or legends referencing the
restrictions to be placed on the certificates.

         16.2     REPURCHASE RIGHTS

                  (a)      GENERAL. If a Stock Award is subject to vesting
conditions, the Company shall have the right, during the seven months after the
Awardee's Termination, to repurchase any or all of the Award Shares that were
unvested as of the date of that Termination. The repurchase price shall be
determined by the Administrator in accordance with this Section 16.2 which shall
be either (i) the Purchase Price for the Award Shares (minus the amount of any
cash dividends paid or payable with respect to the Award Shares for which the
record date precedes the repurchase) or (ii) the lower of (A) the Purchase Price
for the Shares or (B) the Fair Market Value of those Award Shares as of the date
of the Termination. The repurchase price shall be paid in cash. The Company may
assign this right of repurchase.

                  (b)      PROCEDURE. The Company or its assignee may choose to
give the Awardee a written notice of exercise of its repurchase rights under
this Section 16.2. However, the Company's failure to give such a notice shall
not affect its rights to repurchase Award Shares. The Company must, however,
tender the repurchase price

                                       28

<PAGE>

during the period specified in this Section 16.2 for exercising its repurchase
rights in order to exercise such rights.

17.      BENEFICIARIES

         An Awardee may file a written designation of one or more beneficiaries
who are to receive the Awardee's rights under the Awardee's Awards after the
Awardee's death. An Awardee may change such a designation at any time by written
notice. If an Awardee designates a beneficiary, the beneficiary may exercise the
Awardee's Awards after the Awardee's death. If an Awardee dies when the Awardee
has no living beneficiary designated under this Plan, the Company shall allow
the executor or administrator of the Awardee's estate to exercise the Award or,
if there is none, the person entitled to exercise the Option under the Awardee's
will or the laws of descent and distribution. In any case, no Award may be
exercised after its Expiration Date.

18.      MISCELLANEOUS

         18.1     GOVERNING LAW. This Plan, the Award Agreements and all other
agreements entered into under this Plan, and all actions taken under this Plan
or in connection with Awards or Award Shares, shall be governed by the laws of
the State of Delaware.

         18.2     DETERMINATION OF VALUE. Fair Market Value shall be determined
as follows:

                  (a)      LISTED STOCK. If the Shares are traded on any
established stock exchange or quoted on a national market system, Fair Market
Value shall be the closing sales price for the Shares as quoted on that stock
exchange or system for the date the value is to be determined (the "VALUE DATE")
as reported in The Wall Street Journal or a similar publication. If no sales are
reported as having occurred on the Value Date, Fair Market Value shall be that
closing sales price for the last preceding trading day on which sales of Shares
are reported as having occurred. If no sales are reported as having occurred
during the five trading days before the Value Date, Fair Market Value shall be
the closing bid for Shares on the Value Date. If Shares are listed on multiple
exchanges or systems, Fair Market Value shall be based on sales or bid prices on
the primary exchange or system on which Shares are traded or quoted.

                  (b)      STOCK QUOTED BY SECURITIES DEALER. If Shares are
regularly quoted by a recognized securities dealer but selling prices are not
reported on any established stock exchange or quoted on a national market
system, Fair Market Value shall be the mean between the high bid and low asked
prices on the Value Date. If no prices are quoted for the Value Date, Fair
Market Value shall be the mean between the high bid and low asked prices on the
last preceding trading day on which any bid and asked prices were quoted.

                                       29
<PAGE>

                  (c)      NO ESTABLISHED MARKET. If Shares are not traded on
any established stock exchange or quoted on a national market system and are not
quoted by a recognized securities dealer, the Administrator (following
guidelines established by the Board or Committee) will determine Fair Market
Value in good faith. The Administrator will consider the following factors, and
any others it considers significant, in determining Fair Market Value: (i) the
price at which other securities of the Company have been issued to purchasers
other than Employees, Directors, or Consultants, (ii) the Company's
stockholder's equity, prospective earning power, dividend-paying capacity, and
non-operating assets, if any, and (iii) any other relevant factors, including
the economic outlook for the Company and the Company's industry, the Company's
position in that industry, the Company's goodwill and other intellectual
property, and the values of securities of other businesses in the same industry.

         18.3     RESERVATION OF SHARES. During the term of this Plan, the
Company shall at all times reserve and keep available such number of Shares as
are still issuable under this Plan.

         18.4     ELECTRONIC COMMUNICATIONS. Any Award Agreement, notice of
exercise of an Award, or other document required or permitted by this Plan may
be delivered in writing or, to the extent determined by the Administrator,
electronically. Signatures may also be electronic if permitted by the
Administrator.

         18.5     NOTICES. Unless the Administrator specifies otherwise, any
notice to the Company under any Option Agreement or with respect to any Awards
or Award Shares shall be in writing (or, if so authorized by Section 18.4,
communicated electronically), shall be addressed to the Secretary of the
Company, and shall only be effective when received by the Secretary of the
Company.

                                       30

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