Document:

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                                                                     EXHIBIT 4.1

                                STOCK OPTION PLAN

                                       OF

                             GENESIS MICROCHIP INC.

                                2900 John Street
                            Markham, Ontario L3R SG3

                                 (416) 470-2742

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                                    ARTICLE I
                                    ---------
                                   DEFINITIONS
                                   -----------

     1.1   Definitions. In this Plan:
           -----------

           (a)   "Anniversary" in respect of an Option means the day which is
365 days after the date of grant of the Option (except for a year in which
February has 29 days, in which event it shall mean the day which is 366 days
after the date of the grant of the Option);

           (b)   "Board" means the Board of Directors of the Company;

           (c)   "Cause" includes:

                 (i)   willful misconduct or negligence in the performance of
duties and obligations in connection with employment with the Company;

                 (ii)  knowingly or willfully doing some act (whether or not in
the line of one's employment) that may or does reflect in a negative fashion or
is or may be grossly prejudicial to, the general reputation or industry position
of the Company;

                 (iii) failure to comply with the terms of employment with the
Company; or,

                 (iv)  misrepresenting one's history or experience prior to
employment with the Company.

           (d)   "Company" means Genesis Microchip Inc.;

           (e)   "Employee" means a person in the full time employ of the
Company;

           (f)   "Consultant" means a person on contract from time to time with
the Company;

           (g)   "Disabled" or "Disability" means the mental or physical state
of the relevant person when such person:

                 (i)   is unable due to illness, disease, mental or physical
disability or similar cause to fulfill in the opinion of the Board his
responsibilities as an Employee or Consultant of the Company:

                     (1)  for any consecutive six (6) month period; or

                     (2)  for nine (9) months in any consecutive twenty-four
(24) month period; or

                 (ii)  is declared mentally incompetent or incapable of managing
his affairs by a court of competent jurisdiction in Canada;

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           (h)   "Exercise Price" of an Option means the price per Share payable
on the exercise of the Option as determined under Section 4.1;

           (i)   "Option" means a right to subscribe for one or more Shares
pursuant to the Plan;

           (j)   "Participant" means an Employee or Consultant who has been
granted an Option;

           (k)   "Plan" means this Stock Option Plan of Genesis Microchip Inc.;

           (l)   "Retirement" means termination of employment by the Participant
or the Company for reasons other than death, disability, or cause; and

           (m)   "Shares" means the Common Shares in the capital of the Company
from time to time subject to this Agreement and includes:

                 (i)   any shares or securities into which any Shares may
hereafter be converted, changed, classified, redivided, redesignated,
consolidated, subdivided or otherwise changed;

                 (ii)  any shares in the capital of the Company which may
hereafter be issued to any holder of Shares by way of stock dividend or
otherwise; and

                 (iii) any shares of the Company or any successor or other body
corporate which may be received by the holders of Shares on a reorganization,
amalgamation, consolidation, merger, statutory or otherwise.

     1.2   Gender and Number. Words importing the singular shall include the
           -----------------
plural and vice versa and words importing gender shall include all genders.

     1.3   Amendment of Plan. Prior to the time any Option is granted under this
           -----------------
Plan the Board may direct, with respect to such Option, the provisions
applicable thereto and may substitute provisions from those herein referred to,
including prescribing alternate provisions relating to:

           (a)   the number and kind of Shares subject to the Plan;

           (b)   the Employees or Consultants to whom Options under the Plan are
to be granted;

           (c)   the number of Shares to be optioned to each Participant;

           (d)   the Option price;

           (e)   the date on which Options are to be granted;

                                       -2-

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           (f)   the provisions respecting accrual of the right to exercise to
Option; and

           (g)   payment of the Option price.

                                   ARTICLE II
                                   ----------
                              ESTABLISHMENT OF PLAN
                              ---------------------

     2.1   Establishment. The Company hereby establishes the Plan effectively
           -------------
 July 1, 1987.

     2.2   Purposes. The purpose of the Plan is to encourage and reward key
           --------
 Employees of the Company.

     2.3   No Employment Rights. Participation in the Plan shall not give any
           --------------------
Employee and/or Consultant the right to be retained in the employ of the Company
or any right to or interest in any Option or Share except as specifically
provided herein.

                                  ARTICLE III
                                  -----------
                                GRANT OF OPTIONS
                                ----------------

     3.1   Grant. Options shall be granted to key Employees and Consultants by
           -----
 the Company in the discretion of the Board.

     3.2   Limitation on Shares Available for the Plan. At any particular time,
           --------------------------------------------
the number of Shares reserved under this Plan for the granting of Options and
for Options already granted but not yet terminated, exercised or lapsed shall
not exceed 10% of the outstanding Shares at any time. In addition, the number of
Shares reserved for issuance at any time shall not exceed 10% of the then
Outstanding Shares (on a non-diluted basis) and the aggregate number of Shares
reserved for issuance to any one person shall not exceed 5% of the Outstanding
Shares (on a non-diluted basis). If for any reason any Option granted under the
Plan lapses, expires or terminates or is terminated in whole or in part, the
Shares subject to such lapsed, expired or terminated Option may again be used
for the purposes of the Plan.

     3.3   Exercise Price. Except as hereinafter provided, the Exercise Price in
           --------------
respect of Shares reserved under an Option shall be the amount determined by the
Board in its sole discretion to be the market price of the Shares on the day the
Option is granted. Notwithstanding the foregoing, the Board may establish an
Exercise Price in respect of Shares under an Option which represents a discount
from the market price of the Shares, subject to not more than the maximum
discount allowed under any applicable law or any rule or regulation of any
applicable regulatory authority.

     3.4   No Payment on Grant of Option. No payment to the Company shall be
           -----------------------------
required or made on the grant of an Option. The Option price shall be payable in
cash at the time the Option is exercised.

                                       -3-

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     3.5   Certificate. The grant of an Option shall be evidenced by an option
           -----------
agreement between the Company and the Participant substantially in the form of
Schedule "A" (as the same may be amended from time to time in the discretion of
the Board, so long as such amendments are not inconsistent with the Plan), to be
executed by the Participant within ten (10) days of being notified of the grant
of the Option by the Company.

     3.6   Adjustment of Shares. In the event of any reclassification of the
           --------------------
Shares, recapitalization, stock split, stock dividend, combination of shares,
reorganization, merger, amalgamation, consolidation, or sale of assets for stock
of another corporation, the number or kind of securities covered by Options
granted under the Plan or both, the maximum amount of securities with respect to
which Options may be granted to one individual under the Plan, and the exercise
price of Options granted under the Plan, shall be appropriately and equitably
adjusted by the Board. In addition, in the event of a liquidation, dissolution,
reorganization, merger, amalgamation, consolidation, or sale of assets for stock
of another corporation, the Board shall take such action as may be appropriate
and equitable to accelerate the time within which and the extent to which
Options granted under the Plan may be exercised, to terminate Options granted
under the Plan at or prior to the date of any such action, or to provide the
terms for the assumption of Options granted under the Plan by any surviving,
consolidated, amalgamated successor or transferee corporation.

                                   ARTICLE IV
                                   ----------
                               EXERCISE OF OPTION
                               ------------------

     4.1   Exercise of Option. The term of each Option granted shall not exceed
           ------------------
five (5) years from the date the Option is granted and no such Option may be
exercised in whole or in part later than five (5) years from the date such
Option is granted (the "Option Period"). The right to exercise the Option
granted herein shall vest in amounts as follows: (i) at any time subsequent to
the first Anniversary of the grant of the Option, such Option may be exercised
to the extent of 15% of the aggregate number of Shares covered by such Option;
(ii) at any time subsequent to the second Anniversary of the grant of the
Option, such Option may be exercised to the extent of an additional 30% of the
aggregate number of Shares covered by such Option, and to the extent the right
to exercise such Option therefore shall have occurred and not have been
exercised, and (iii) at any time subsequent to the third Anniversary of the
grant of the Option until the expiry of the Option Period, such Option may be
exercised in full, except to the extent it theretofore shall have been
exercised.

     4.2   Death or Disability of Participant. If a Participant dies or is
           ----------------------------------
Disabled prior to the expiration of the Option Period the Participant or his
legal personal representatives may during the ninety (90) day period following
the date of such death or Disability exercise the Option in respect of the
number of shares derived by the use of the following formula: The number of
shares subject to the Option shall be multiplied by a fraction the denominator
of which is 36 and the numerator of which is the lesser of 36 or the number of
complete months elapsed between the date the Option is granted and the date of
such death or disability. The number of shares in respect of which the option
has already been exercised shall be deducted from the number of shares
determined as aforesaid. The remaining number of shares shall be the number of
shares with respect to which the Option may be exercised in whole or in part.

                                       -4-

<PAGE>

     4.3 Retirement of Participant. If a Participant retires from the Company,
         -------------------------
the Participant may within thirty (30) days of such Retirement exercise any
unexercised Option then held by him provided that such Option has vested in the
Participant as of the day immediately preceding his Retirement.

     4.4 Method of Exercise. Subject to the provisions of the Plan an Option may
         ------------------
be exercised in whole or in part by delivering to the Secretary of the Company
at its registered offices:

         (a)  a written notice of exercise specifying the number of Shares to be
purchased, such notice received by the Company within the time limit specified
in Section 4.1; and

         (b)  cash or a certified cheque representing payment in full of the
Exercise Price for the purchased Shares.

     A Participant shall not be deemed to have acquired the Shares as to which
the Option is exercised or to have any rights as a shareholder with respect
thereto until the date of issue imprinted on the certificate representing the
said Shares.

                                   ARTICLE V
                                   ---------
                          LAPSE AND SURRENDER OF OPTION
                          -----------------------------

     5.1 Expiration of Exercise Period. Upon the expiration of the Option Period
         -----------------------------
any Option granted shall immediately lapse and cease to be exercisable.

     5.2 Termination of Options. In the event that the Company terminates the
         ----------------------
employment of a Participant for cause, then all unexercised Options shall
immediately terminate and cease to be exercisable. The determination of whether
a Participant's employment with the Company has been terminated for cause shall
be made by the Board in its sole discretion and such determination shall be
final, binding and conclusive for all purposes.

                                   ARTICLE VI
                                   ----------
                                     GENERAL
                                     -------

     6.1 Allotment and Issues. Following receipt by the Company of the notice
         --------------------
and payment referred to in Section 4.4 and subject to Section 5.2, Shares to be
issued pursuant to the exercise of an Option will be issued not later than
thirty (30) days after the date of exercise of the Option. Such Shares shall be
subject to those restrictions contained in the Articles of Incorporation of the
Company or its by-laws.

     6.2 Consent. Any allotment or issue of Shares under the Plan shall be
         -------
subject to any applicable legislation or rule or regulation and to prior receipt
of all necessary or appropriate consents, if any, of any governmental or
regulatory authorities or agencies.

     6.3 Ranking and Dividends. Shares allotted and issued pursuant to the
         ---------------------
exercise of an Option shall not be entitled to receive dividends paid by
reference to a record date falling before the

                                       -5-

<PAGE>

date of exercise of the Option, but will otherwise rank pari passu in all
respects and form one uniform class with the Shares in issue on the date of
exercise.

     6.4       Option not Transferable. An Option granted under the Plan shall
               -----------------------
be transferable only by will or by the laws of intestacy and shall be
exercisable, during the lifetime of the Participant to whom the Option is
granted, only by the Participant and, upon the death of the Participant, by the
Participant's legal personal representatives only as herein provided. Except as
specifically provided above, no Option granted under the Plan and none of the
rights and privileges thereby conferred shall be transferred, assigned, pledged,
hypothecated in any way or made the subject of any security interest of any kind
whatever (whether by operation of law or otherwise), and no such Option, right,
or privilege shall be subject to execution, attachment or similar process. Upon
any attempt to so transfer, assign, pledge, hypothecate, make subject to a
security interest or otherwise dispose of the Option, or of any right or
privilege conferred thereby contrary to the provisions hereof, or upon the levy
of any execution attachment or similar process upon such Option, right or
privilege the Option and such rights and privileges shall immediately lapse and
cease to be exercisable.

     6.5       Administration.  The Plan shall be administered by the Board.
               --------------

     6.6       Amendment and Termination. The Board may at any time by
               -------------------------
resolution amend, add to, change, alter, suspend or terminate the Plan, (a
"Change") but no such Change shall affect the terms or conditions of any Option
previously granted and not yet wholly exercised or expired without the written
consent of the affected Participants.

     6.7       Section Headings Not Part of Plan. The headings given to the
               ---------------------------------
various Articles and Sections of the Plan and Schedule are inserted solely for
convenience of reference only, do not form part of the Plan and do not affect
the interpretation thereof or define, limit or construe the contents of any
provisions of this Plan.

     6.8       Governing Law. This Agreement and the rights and obligations and
               -------------
relations of the parties hereto shall be governed by and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada
applicable therein (but without giving effect to any conflict of laws rules).
The parties hereto agree that the Courts of Ontario shall have jurisdiction to
entertain any action or other legal proceedings based on any provisions of this
Agreement. Each party hereto does hereby attorn to the jurisdiction of the
Courts of the Province of Ontario.

                                       -6-

<PAGE>

                                   SCHEDULE A
                                   ----------

                                OPTION AGREEMENT
                                ----------------

     MEMORANDUM OF AGREEMENT made as of the ______________________ day of
September, 1990.

BETWEEN:
                  GENESIS MICROCHIP INC., a corporation
                  ---------------------
                  incorporated under the laws of the
                  Province of Ontario,

                  (hereinafter called the "Corporation")
                                                              OF THE FIRST PART

                  -and-

                  ____________________,

                  (hereinafter called the Purchaser")
                                                             OF THE SECOND PART

               THIS AGREEMENT WITNESSES that in consideration of good and
valuable consideration (the receipt and sufficiency whereof are hereby
acknowledged by the Corporation) it is agreed by and between the parties hereto
as follows:

     1.        In this Agreement the term "share" or "shares" shall mean, as the
case may be, one or more common shares in the capital of the Corporation as
constituted at the date of this Agreement.

     2.        The Corporation hereby grants to the Purchaser, subject to the
terms and conditions hereinafter set out, an irrevocable option to purchase at
any time or from time to time * shares of the Corporation (the said * shares
being hereinafter called the "optioned shares"), at the price of
________________ (Canadian funds) per optioned share.

     3.        The Purchaser shall, subject to the terms and conditions
hereinafter set out, have the right to exercise the option hereby granted with
respect to all or any part of the optioned shares at any time or from time to
time after the date hereof and prior to the close of business on the date which
is the fifth yearly anniversary of the date hereof (hereinafter called the
"expiry date"). At the close of business on the expiry date, the option hereby
granted shall forthwith expire and terminate

<PAGE>

and be of no further force or effect whatsoever as to such of the optioned
shares in respect of which the option hereby granted has not then been
exercised.

     4.        In the event of the death of the Purchaser on or prior to the
expiry date, the option hereby granted may be exercised, as to such of the
optioned shares in respect of which such option has not previously been
exercised by the legal personal representatives of the Purchaser at any time up
to and including (but not after) the close of business on the expiry date.

     5.        In the event of the resignation or discharge of the Purchaser as
an employee of the Corporation, the option hereby granted shall not be affected.

     6.        Subject to the provisions hereof, the option hereby granted shall
be exercisable (at any time and from time to time as aforesaid) by the Purchaser
or his legal personal representatives giving a notice in writing addressed to
the Corporation at its principal office in Ontario and addressed to the
attention of the President of the Corporation, which notice shall specify
therein the number of optioned shares in respect of which such notice is being
exercised and shall be accompanied by payment (by cash or certified cheque) in
full of the purchase price for such number of optioned shares so specified
therein. Upon any such exercise of option as aforesaid the Corporation shall
forthwith deliver to Purchaser or his legal personal representatives within ten
(10) days following receipt by the Corporation of any such notice of exercise of
option a certificate or certificates in the name of the Purchaser or his legal
personal representatives representing in the aggregate such number of optioned
shares as the Purchaser or his legal personal representatives shall have then
paid.

     7.        Nothing herein contained or done pursuant hereto shall obligate
the Purchaser to purchase and/or pay for any optioned shares except those
optioned shares in respect of which the Purchaser shall have exercised his
option to purchase hereunder in the manner hereinbefore provided.

     8.        In the event of any sub-division, re-division or change of the
shares of the Corporation at any time prior to the expiry date into a greater
number of shares, the Corporation shall deliver at the time of any exercise
thereafter of the option hereby granted such additional number of shares as
would have resulted from such sub-division, re-division or change if such
exercise of the option hereby granted had taken place prior to the date of such
sub-division, re-division or change. In the event of any consolidation or change
of the shares of the Corporation at any time prior to the expiry date into a
lesser number of shares, the number of shares deliverable by the Corporation on
any exercise thereafter of the option hereby granted shall be reduced to such
number of shares as would have resulted from such consolidation or change if
such exercise of the option hereby granted had taken place prior to the date of
such consolidation or change.

     9.        The Purchaser shall have no rights whatsoever as a shareholder in
respect of any of the optioned shares (including any right to receive dividends
or other distributions therefrom or thereon) other than in respect of optioned
shares in respect of which the Purchaser shall have exercised his option to
purchase hereunder and which the Purchaser shall have actually taken up and paid
for.

                                      -2-

<PAGE>

     10.       Time shall be of the essence of this Agreement.

     11.       This Agreement shall enure to the benefit of and be binding upon
the Corporation, its successors and assigns, and the Purchaser and his legal
personal representatives. This Agreement shall not be assignable by the
Purchaser or his legal personal representatives.

     12.       This Agreement shall be construed in accordance with and be
governed by the laws of the Province of Ontario and shall be deemed to have been
made in said Province.

               IN WITNESS WHEREOF this Agreement has been executed by the
parties hereto.

                                             GENESIS MICROCHIP INC.

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

SIGNED, SEALED AND DELIVERED      )
                                  )
      in the presence of          )
                                  )
                                  )            ---------------------------------
                                  )            Name:
                                  )

                                      -3-<PAGE>

                                                                     EXHIBIT 4.2

                             GENESIS MICROCHIP INC.

                         1997 EMPLOYEE STOCK OPTION PLAN

     1.  Purposes of the Plan. The purposes of this Plan are:
         --------------------

      .  to attract and retain the best available personnel for positions of
         substantial responsibility,

      .  to provide additional incentive to Employees, and

      .  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 Ontario corporate law, U.S. federal
and state securities laws, Ontario securities regulation, the Code, any stock
exchange or quotation system on which the Shares are 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) "Company" means Genesis Microchip Inc., an Ontario corporation.

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

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

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

<PAGE>

         (j) "Employee" means any person employed by the Company or any Parent
or Subsidiary of the Company. A person shall not cease to be an Employee in the
case of (i) any leave of absence approved by the Company or (ii) transfers
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 181st 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.

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

         (l) "Fair Market Value" means, as of any date, the value of Shares
determined as follows:

             (i)   If the Shares are 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, the Fair Market
Value of the Shares shall be the closing sales price for the Shares (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

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

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

         (m) "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.

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

         (o) "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.

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

         (q) "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.

                                      -2-

<PAGE>

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

         (s)  "Optioned Shares" means the Shares subject to an Option or Stock
Purchase Right.

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

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

         (v)  "Plan" means this 1997 Employee Stock Option Plan.

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

         (x)  "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to Shares 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.

         (y)  "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.

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

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

         (bb) "Shares" mean common shares of the Company, as adjusted in
accordance with Section 13 of the Plan.

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

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

     3. Shares Subject to the Plan. Subject to the provisions of Section 13 of
        --------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan shall be 800,000 Shares, plus an annual increase to be added on
the first day of each fiscal year equal to the lesser of (i) 2,000,000 Shares,
(ii) 3.5% 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 Shares.

     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

                                      -3-

<PAGE>

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 Employees to whom Options and Stock Purchase
Rights may be granted hereunder;

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

              (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

                                      -4-

<PAGE>

Purchase Right or the Shares 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 Shares covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;

              (vii)  to institute an Option Exchange Program;

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

              (ix)   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;

              (x)    to modify or amend each Option or Stock Purchase Right
(subject to Section 15(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;

              (xi)   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;

              (xii)  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;

              (xiii) 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.  Eligibility. Options and Stock Purchase Rights 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

                                      -5-

<PAGE>

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 (U.S.), 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 Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.

              (ii)  In connection with his or her initial service, an Employee
may be granted Options to purchase up to an additional 300,000 Shares which
shall not count against the limit set forth in sub Section (i) above.

              (iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.

              (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 13), 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 19 of the Plan, the Plan shall become
         ------------
effective upon the effective date of its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless terminated earlier under
Section 15 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 shares
representing more than ten percent (10%) of the total combined voting power of
all classes of shares 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:

                                      -6-

<PAGE>

         (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 shares representing more than ten percent (10%) of the
voting power of all classes of shares 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 which 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)  cheque;

         (iii) 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 (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;

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

         (v)   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;

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

                                      -7-

<PAGE>

         (vii) 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 Shares, 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 13 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 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

                                      -8-

<PAGE>

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.

         (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.

                                      -9-

<PAGE>

         (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 13
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. 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 covered by each outstanding
Option and Stock Purchase Right, and the number of Shares 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 Shares 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 resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Shares, or any
other increase or decrease in the number of issued Shares 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 any class, or securities convertible into shares of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to an Option or Stock Purchase Right.

         (b) 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 twenty (20) days prior to
such transaction as to all of the Optioned Shares 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.

         (c) 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

                                      -10-

<PAGE>

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 Shares, 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 twenty (20) 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 Shares subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
shares, cash, or other securities or property) received in the merger or sale of
assets by holders of Shares 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 shares 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 Shares subject to the Option or Stock
Purchase Right, to be solely common shares of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Shares in the merger or sale of assets.

     14. 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.

     15. Amendment And Termination Of The Plan.
         -------------------------------------

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

         (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.

                                      -11-

<PAGE>

      16. 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.

      17. 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.

      18. 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.

      19. 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.

                                      -12-

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