Document:

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                                                                    Exhibit 10.1

                                                                    QUINTON
                                                              your heart company

                        QUINTON CARDIOLOGY SYSTEMS, INC.

                 1998 AMENDED AND RESTATED EQUITY INCENTIVE PLAN

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                               QIC HOLDING CORP.

                1998 AMENDED AND RESTATED EQUITY INCENTIVE PLAN

                            ADOPTED OCTOBER 5, 1998
                    APPROVED BY SHAREHOLDERS OCTOBER 30,1998
                       TERMINATION DATE: OCTOBER 4, 2008
                           AMENDED NOVEMBER 13, 1998
                     AMENDED AND RESTATED FEBRUARY 21, 2002

1.      PURPOSES.

        (a)     ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

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

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

2.      DEFINITIONS.

        (a)     "AFFILIATE" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.

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

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

        (d)     "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c).

        (e)     "COMMON STOCK" means the common stock, $.001 par value per
share, of the Company.

        (f)     "COMPANY" means QIC Holding Corp., a California corporation.

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

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

        (i)     "COVERED EMPLOYEE" means the chief executive officer and the
four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

        (j)     "DIRECTOR" means a member of the Board of Directors of the
Company.

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

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

        (m)     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (n)     "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock determined as follows:

                (i)     If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable.

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

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

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        (o)     "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

        (p)     "LISTING DATE" means the first date upon which any security of
the Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.

        (q)     "NON-EMPLOYEE DIRECTOR" means a Director of the Company who
either (i) is not a current Employee or Officer of the Company or its parent or
a subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.

        (r)     "NONQUALIFIED STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

        (s)     "OFFICER" means (i) before the Listing Date, any person
designated by the Company as an officer and (ii) on and after the Listing Date,
a person who is an officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder.

        (t)     "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option granted pursuant to the Plan.

        (u)     "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

        (v)     "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

        (w)     "OUTSIDE DIRECTOR" means a Director of the Company who either
(i) is not a current employee of the Company or an "affiliated corporation"
(within the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the Company or an
"affiliated corporation" at any time and is not currently receiving direct or
indirect remuneration from the Company or an "affiliated corporation" for
services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.

        (x)     "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

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        (y)     "PLAN" means this Quinton Cardiology Systems, Inc. 1998 Amended
and Restated Equity Incentive Plan.

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

        (aa)    "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (bb)    "STOCK AWARD" means any right granted under the Plan, including
an Option, a stock bonus and a right to acquire restricted stock.

        (cc)    "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

        (dd)    "TEN PERCENT SHAREHOLDER" means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3.      ADMINISTRATION.

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

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

                (i)     To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of Stock Award shall
be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; and the number of shares with respect
to which a Stock Award shall be granted to each such person.

                (ii)    To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

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

                (iv)    Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

        (c)     DELEGATION TO COMMITTEE.

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

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administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

                (ii)    COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY
TRADED. At such time as the Common Stock is publicly traded, in the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

4.      SHARES SUBJECT TO THE PLAN.

        (a)     SHARE RESERVE. Subject to the provisions of Section 11 relating
to adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate four million seventy-six thousand
seven hundred (4,076,700) shares of Common Stock.

        (b)     REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full (or vested in the case of restricted stock), the
stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. If any Common Stock acquired pursuant to
the exercise of an Option shall for any reason be repurchased by the Company
under an unvested share repurchase option provided under the Plan, the stock
repurchased by the Company under such repurchase option shall revert to and
again become available for issuance under the Plan.

        (c)     SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.

        (d)     SHARE RESERVE LIMITATION. Prior to the Listing Date, at no time
        shall the total number of shares issuable upon exercise of all
        outstanding Options and the total number of shares provided for under
        any stock bonus or similar plan of the Company exceed the applicable
        percentage as calculated in accordance with the conditions and
        exclusions of Section 260.140.45 of Title 10 of the California Code of
        Regulations, based on the shares of the Company which are outstanding at
        the time the calculation is made.(1)

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(1)     Section 260.140.45 generally provides that the total number of shares
        issuable upon exercise of all outstanding options (exclusive of certain
        rights) and the total number of shares called for under any stock bonus
        or similar plan shall not exceed a number of shares which is equal to
        30% of the then outstanding shares of the issuer (convertible preferred
        or convertible senior common shares counted on an as if converted
        basis), exclusive of shares subject to promotional waivers under Section
        260.141, unless a percentage higher than 30% is approved by at least
        two-thirds of the outstanding shares entitled to vote.

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5.      ELIGIBILITY.

        (a)     ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options
may be granted only to Employees. Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.

        (b)     TEN PERCENT SHAREHOLDERS. No Ten Percent Shareholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock at the date of grant and the Option is not exercisable after
the expiration of five (5) years from the date of grant.

                Prior to the Listing Date, no Ten Percent Shareholder shall be
eligible for the grant of a Nonqualified Stock Option unless the exercise price
of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of the Common Stock at the date of grant.

                Prior to the Listing Date, no Ten Percent Shareholder shall be
eligible for a restricted stock award unless the purchase price of the
restricted stock is at least one hundred percent (100%) of the Fair Market Value
of the Common Stock at the date of grant.

        (c)     SECTION 162(m) LIMITATION. Subject to the provisions of Section
11 relating to adjustments upon changes in stock, no Employee shall be eligible
to be granted Options covering more than eight hundred fifteen thousand three
hundred forty (815,340) shares of Common Stock during any calendar year. This
subsection 5(c) shall not apply prior to the Listing Date and, following the
Listing Date, this subsection 5(c) shall not apply until (i) the earliest of:
(1) the first material modification of the Plan (including any increase in the
number of shares reserved for issuance under the Plan in accordance with Section
4); (2) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (3) the expiration of the Plan; or (4) the first meeting of
shareholders at which Directors of the Company are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of the
Exchange Act; or (ii) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder.

6.      OPTION PROVISIONS.

        Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonqualified Stock Options at the time of
grant, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through

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incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

        (a)     TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Shareholders, no Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

        (b)     EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

        (c)     EXERCISE PRICE OF A NONQUALIFIED STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise
price of each Nonqualified Stock Option granted prior to the Listing Date shall
be not less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonqualified Stock Option granted on or after the Listing Date shall be not
less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, a Nonqualified Stock Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

        (d)     CONSIDERATION. The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash or check at the time the Option is exercised or
(ii) at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonqualified Stock Option) by (1) delivery to the
Company (either actually or, if the Common Stock is registered under Section
12(b) or 12(g) of the Exchange Act, by attestation) of shares of Common Stock
already held by the Participant for at least six months (or any shorter period
necessary to avoid a charge to the Company's earnings for financial reporting
purposes) that on the day prior to the exercise date have a Fair Market Value
equal to the aggregate exercise price of the shares being purchased under the
Option, (2) if the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, delivery of a properly executed exercise notice, together with
irrevocable instructions to a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any tax withholding obligations that may arise
in connection with the exercise, all in accordance with the regulations of the
Federal Reserve Board, or (3) in any other form of legal consideration that may
be acceptable to the Board; provided, however, that at any time that the Company
is incorporated in Delaware, payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.

        In addition, to assist an Optionholder (including an Optionholder who is
an officer or a director of the Company) in acquiring shares of Common Stock
pursuant to a Stock Award granted under the Plan, the Plan Administrator, in its
sole discretion, may authorize, either at the date of grant or at any time
before the acquisition of Series A Common Stock pursuant to the Stock Award, (i)
the payment by an Optionholder of the purchase price of the Series A Common
Stock by a promissory note or (ii) the guarantee by the Company of a loan
obtained

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by the Optionholder from a third party. Such notes or loans must be full
recourse to the extent necessary to avoid charges to the Company's earnings for
financial reporting purposes and bear a marked rate of interest. Subject to the
foregoing, the Plan Administrator shall in its sole discretion specify the terms
of any loans or loan guarantees, including the interest rate and terms of and
security for repayment.

        (e)     TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

        (f)     TRANSFERABILITY OF A NONQUALIFIED STOCK OPTION. A Nonqualified
Stock Option granted prior to the Listing Date shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. A Nonqualified
Stock Option granted on or after the Listing Date shall be transferable to the
extent provided in the Option Agreement. If the Nonqualified Stock Option does
not provide for transferability, then the Nonqualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(f), the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

        (g)     VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments which may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.

        (h)     MINIMUM VESTING PRIOR TO THE LISTING DATE. Notwithstanding the
foregoing subsection 6(g), Options granted prior to the Listing Date shall
provide for vesting of the total number of shares at a rate of at least twenty
percent (20%) per year over five (5) years from the date the Option was granted,
subject to reasonable conditions such as continued employment. However, in the
case of such Options granted to Officers, Directors or Consultants, the Option
may become fully exercisable, subject to reasonable conditions such as continued
employment, at any time or during any period established by the Company; for
example, the vesting provision of the Option may provide for vesting of less
than twenty percent (20%) per year of the total number of shares subject to the
Option.

        (i)     TERMINATION OF CONTINUOUS SERVICE. In the event an
Optionholder's Continuous Service terminates (other than upon the Optionholder's
death or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise it as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement, which, for Options granted prior to the Listing Date, shall not be
less than thirty (30) days,

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unless such termination is for cause), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate.

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

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

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

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

        (n)     RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in
subsection 10(h), the Option may, but need not, include a provision whereby the
Company may elect, prior to the Listing Date, to repurchase all or any part of
the vested shares acquired by the Optionholder pursuant to the exercise of the
Option. The Company may not exercise its right of repurchase pursuant to this
subsection 6(n) earlier than six months and one day following the date the
shares were purchased by the Participant (or any shorter period determined by
the

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Company to be sufficient to avoid a charge to the Company's earnings for
financial reporting purposes or required by applicable law).

        (o)     RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionholder of
the intent to transfer all or any part of the shares exercised pursuant to the
Option. The Participant may not give such notice to the Company, and the Company
may not exercise its right of first refusal pursuant to this subsection 6(o)
earlier than six months and one day following the date the shares were purchased
by the Participant (or any shorter period determined by the Company to be
sufficient to avoid a charge to the Company's earnings for financial reporting
purposes or required by applicable law) Except as expressly provided in this
subsection 6(o), such right of first refusal shall otherwise comply with any
applicable provisions of the Bylaws of the Company.

7.      PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

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

                (i)     CONSIDERATION. A stock bonus shall be awarded in
consideration for past services actually rendered to the Company for its
benefit.

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

                (iii)   TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject
to the "Repurchase Limitation" in subsection 10(h), in the event a Participant's
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the stock bonus agreement.

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

        (b)     RESTRICTED STOCK AWARDS. Each restricted stock purchase
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase

                                       10
<PAGE>
agreements need not be identical, but each restricted stock purchase agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

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

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

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

                (iv)    TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject
to the "Repurchase Limitation" in subsection l0(h), in the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.

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

8.      COVENANTS OF THE COMPANY.

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

        (b)     SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise

                                       11
<PAGE>
of the Stock Awards; provided, however, that this undertaking shall not require
the Company to register under the Securities Act the Plan, any Stock Award or
any stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such Stock Awards unless and until such authority is obtained.

9.      USE OF PROCEEDS FROM STOCK.

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

10.     MISCELLANEOUS.

        (a)     ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

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

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

        (d)     INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that
the aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonqualified Stock Options.

        (e)     INVESTMENT ASSURANCES. The Company may require a Participant, as
a condition of exercising or acquiring stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written

                                       12
<PAGE>
assurances satisfactory to the Company stating that the Participant is acquiring
the stock subject to the Stock Award for the Participant's own account and not
with any present intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if the issuance of the shares upon the exercise or
acquisition of stock under the Stock Award has been registered under a then
currently effective registration statement under the Securities Act or as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

        (f)     WITHHOLDING OBLIGATIONS. To the extent provided by the terms of
a Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares from the shares of the Common Stock
otherwise issuable to the participant as a result of the exercise or acquisition
of stock under the Stock Award; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock. The value of the shares so withheld may
not exceed the employer's minimum required tax withholding rate, and the value
of the shares so tendered may not exceed such rate to the extent the Participant
has owned the tendered shares for less than six months if such limitation is
necessary to avoid a charge to the Company's earnings for financial reporting
purposes.

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

        (h)     REPURCHASE LIMITATION. The terms of any repurchase option shall
be specified in the Stock Award. For repurchases of vested shares, the price
paid to the Participant on repurchase shall be the Fair Market Value at the time
of repurchase. For repurchases of unvested Shares, the repurchase price shall be
the lesser of the Fair Market Value at the time of repurchase and the aggregate
original purchase price paid for such unvested shares. To the extent required by
Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of
Regulations, any repurchase option contained in a Stock Award granted prior to
the Listing Date to a person who is not an Officer, Director or Consultant shall
be upon the terms described below:

                (i)     FAIR MARKET VALUE. If the repurchase option gives the
Company the right to repurchase the shares upon termination of employment at not
less than the Fair Market Value of the shares to be purchased on the date of
termination of Continuous Service, then (i) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the shares
within ninety (90) days of termination of Continuous Service (or in the case of
shares issued upon exercise of Stock Awards after such date of termination,
within ninety (90) days after the date of the exercise) or such longer period as
may be agreed to by the Company and the Participant (for example, for purposes
of satisfying the

                                       13
<PAGE>
requirements of Section 1202(c)(3) of the Code regarding "qualified small
business stock") and (ii) the right terminates when the shares become publicly
traded.

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

11.     ADJUSTMENTS UPON CHANGES IN STOCK.

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

        (b)     CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then such Stock Awards shall be
terminated if not exercised (if applicable) prior to such event.

        (c)     CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale of all or substantially all of the assets of
the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation shall assume any Stock Awards outstanding
under the Plan or shall substitute similar stock awards (including an award to
acquire the same consideration paid to the shareholders in the transaction
described in this subsection 11(c)) for those outstanding under the Plan. In the
event any surviving corporation or acquiring corporation refuses to assume such
Stock Awards or to substitute similar stock awards for those outstanding under
the Plan, then with respect to Stock Awards held by Participants whose
Continuous Service has not terminated, the vesting of such Stock Awards (and, if
applicable, the time during which such Stock Awards may be exercised) shall be
accelerated in full, and the Stock Awards shall terminate if not exercised (if
applicable) at or prior to such

                                       14
<PAGE>
event. With respect to any other Stock Awards outstanding under the Plan, such
Stock Awards shall terminate if not exercised (if applicable) prior to such
event.

12.     AMENDMENT OF THE PLAN AND STOCK AWARDS.

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

        (b)     SHAREHOLDER APPROVAL. The Board may, in its sole discretion,
submit any other amendment to the Plan for shareholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

        (c)     CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

        (d)     NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

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

13.     TERMINATION OR SUSPENSION OF THE PLAN.

        (a)     PLAN TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the day before the
tenth (l0th) anniversary of the date the Plan is adopted by the Board or
approved by the shareholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

        (b)     NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

14.     EFFECTIVE DATE OF PLAN.

        The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the shareholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.

                                       15<PAGE>
                                                                    Exhibit 10.2

                        QUINTON CARDIOLOGY SYSTEMS, INC.

                            2002 STOCK INCENTIVE PLAN

                               SECTION 1. PURPOSE

        The purpose of the Quinton Cardiology Systems, Inc. 2002 Stock Incentive
Plan (the "Plan") is to enhance the long-term shareholder value of Quinton
Cardiology Systems, Inc., a California corporation (the "Company"), by offering
opportunities to selected persons to participate in the Company's growth and
success, and to encourage them to remain in the service of the Company or a
Related Company (as defined in Section 2) and to acquire and maintain stock
ownership in the Company.

                             SECTION 2. DEFINITIONS

        In the Plan:

        "AWARD" means any Option or Stock Award.

        "BOARD" means the Board of Directors of the Company.

        "CAUSE," unless otherwise defined in the instrument evidencing the Award
or in a written employment or services agreement between the Company or a
Related Company and the Participant, means dishonesty, fraud, misconduct,
unauthorized use or disclosure of confidential information or trade secrets, or
conviction or confession of a crime punishable by law (except minor violations),
in each case as determined by the Plan Administrator, and its determination
shall be conclusive and binding.

        "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

        "COMMON STOCK" means the common stock, no par value per share, of the
Company.

        "COMPANY TRANSACTION," unless otherwise defined in the instrument
evidencing the Award or in a written employment or services agreement between
the Participant and the Company or a Related Company, means consummation of
either

        (a)     a merger or consolidation of the Company with or into any other
company, entity or person or

        (b)     a sale, lease, exchange or other transfer in one transaction or
a series of related transactions undertaken with a common purpose of all or
substantially all the Company's then outstanding securities or all or
substantially all the Company's assets;

                                       1
<PAGE>
provided, however, that a Company Transaction shall not include a Related Party
Transaction.

        "DISABILITY" unless otherwise defined by the Plan Administrator or in
the instrument evidencing the Award or in a written employment or services
agreement between the Participant and the Company or a Related Company, means a
mental or physical impairment of the Participant that is expected to result in
death or that has lasted or is expected to last for a continuous period of 12
months or more and that causes the Participant to be unable, in the opinion of
the Plan Administrator, to perform his or her duties for the Company or a
Related Company and to be engaged in any substantial gainful activity.

        "EARLY RETIREMENT" means Termination of Service prior to Retirement on
terms and conditions approved by the Plan Administrator.

        "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

        "FAIR MARKET VALUE" means the per share value of the Common Stock as
established in good faith by the Plan Administrator or, if the Common Stock is
(a) listed on the Nasdaq National Market, the closing sales price for the Common
Stock as reported by that market for regular session trading for a single
trading day, or (b) listed on the New York Stock Exchange or the American Stock
Exchange, the closing sales price for the Common Stock as such price is
officially quoted in the composite tape of transactions on such exchange for
regular session trading for a single trading day. If there is no such reported
price for the Common Stock for the date in question, then such price on the last
preceding date for which such price exists shall be determinative of Fair Market
Value.

        "GRANT DATE" means the date on which the Plan Administrator completes
the corporate action authorizing the grant of an Award or such later date
specified by the Plan Administrator provided that conditions to the
exercisability or vesting of Awards shall not defer the Grant Date.

        "INCENTIVE STOCK OPTION" means an Option granted with the intention that
it qualify as an "incentive stock option" as that term is defined in Section 422
of the Code.

        "NONQUALIFIED STOCK OPTION" means an Option other than an Incentive
Stock Option.

        "OPTION" means the right to purchase Common Stock granted under Section
7.

        "OPTION EXPIRATION DATE" has the meaning set forth in Section 7.6.

        "OPTION TERM" has the meaning set forth in Section 7.3.

        "PARTICIPANT" means the person to whom an Award is granted.

                                       2
<PAGE>
        "PLAN ADMINISTRATOR" has the meaning set forth in Section 3.1.

        "RELATED COMPANY" means any entity that, directly or indirectly, is in
control of or is controlled by, the Company.

        "RELATED PARTY TRANSACTION" means (a) a merger or consolidation of the
Company in which the holders of the outstanding voting securities of the Company
immediately prior to the merger or consolidation hold at least a majority of the
outstanding voting securities of the Successor Company immediately after the
merger or consolidation; (b) a sale, lease, exchange or other transfer of the
Company's assets to a majority-owned subsidiary company; (c) a transaction
undertaken for the principal purpose of restructuring the capital of the
Company, including but not limited to, reincorporating the Company in a
different jurisdiction or creating a holding company; or (d) a corporate
dissolution or liquidation.

        "RETIREMENT," unless otherwise defined by the Plan Administrator from
time to time for purposes of the Plan, means Termination of Service on or after
the date the individual reaches "normal retirement age" as that term is defined
in Section 411(a)(8) of the Code.

        "SECURITIES ACT" means the Securities Act of 1933, as amended.

        "STOCK AWARD" means an Award of shares of Common Stock or units
denominated in Common Stock granted under Section 9, the rights of ownership of
which may be subject to restrictions prescribed by the Plan Administrator.

        "SUCCESSOR COMPANY" means the surviving company, the successor company
or its parent, as applicable, in connection with a Company Transaction.

        "TERMINATION OF SERVICE" means a termination of employment or service
relationship with the Company or a Related Company for any reason, whether
voluntary or involuntary, including death, Disability, Early Retirement or
Retirement, as determined by the Plan Administrator in its sole discretion. Any
question as to whether and when there has been a Termination of Service for the
purposes of an Award and the cause of such Termination of Service shall be
determined by the Plan Administrator and its determination shall be final.
Transfer of the Participant's employment or service relationship between Related
Companies, or between the Company and any Related Company, shall not be
considered a Termination of Service for purposes of an Award, but unless the
Plan Administrator determines otherwise, a Termination of Service shall be
deemed to occur if the Participant's employment or service relationship is with
an entity that has ceased to be a Related Company.

        "VESTING COMMENCEMENT DATE" means the Grant Date or such other date
selected by the Plan Administrator as the date from which the Option begins to
vest for purposes of Section 7.4.

                                       3
<PAGE>
                            SECTION 3. ADMINISTRATION

3.1     PLAN ADMINISTRATOR

        The Plan shall be administered by the Board and/or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board (a "Plan Administrator"). If and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
the Board shall consider in selecting the members of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act. Notwithstanding
the foregoing, the Board may delegate the responsibility for administering the
Plan with respect to designated classes of eligible persons to different
committees consisting of one or more members of the Board, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time. To the extent consistent with applicable law, the Board may authorize one
or more officers of the Company to grant Awards to designated classes of
eligible persons, within the limits specifically prescribed by the Board.

3.2     ADMINISTRATION AND INTERPRETATION BY PLAN ADMINISTRATOR

        Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including selecting the
persons to be granted Awards, determining the type of Awards, the number of
shares of Common Stock subject to an Award, and all terms, conditions,
restrictions and limitations, if any, of an Award, and approving the forms of
agreement for use under the Plan. The Plan Administrator shall also have
exclusive authority to interpret the Plan and the terms of any instrument
evidencing the Award and may from time to time adopt and change rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate ministerial duties to such of the Company's
officers as it so determines. For purposes of determining the effect on an Award
of a Company-approved leave of absence or a Participant's working less than full
time, the human resources director or other person performing that function may
be deemed the Plan Administrator.

                      SECTION 4. STOCK SUBJECT TO THE PLAN

4.1     AUTHORIZED NUMBER OF SHARES

        Subject to adjustment from time to time as provided in Section 12.1, the
maximum number of shares of Common Stock available for issuance under the Plan
shall be:

                                       4
<PAGE>
        (a)     250,000 shares; plus

        (b)     an annual increase to be added as of the first day of each
fiscal year of the Company equal to the least of (i) 1,500,000 shares and (ii)
3% of the outstanding Common Stock of the Company as of the end of the Company's
immediately preceding fiscal year on a fully diluted basis (assuming exercise of
all outstanding options and warrants and conversion of all outstanding
convertible securities) and (iii) a lesser amount determined by the Board;
provided that any shares from any such increases in previous years that are not
actually issued shall continue to be available for issuance under the Plan; plus

        (c)     any authorized shares (i) not issued or subject to outstanding
awards under the Company's 1998 Amended and Restated Equity Incentive Plan (the
"Prior Plan") on the date the initial registration of the Common Stock under
12(b) or 12(g) of the Exchange Act first becomes effective and (ii) any shares
subject to outstanding awards under the Prior Plan on such date that thereafter
cease to be subject to such awards (other than by reason of exercise or
settlement of the awards to the extent they are exercised for or settled in
vested and nonforfeitable shares), up to an aggregate maximum of 3,228,164
shares.

        Shares issued under the Plan shall be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company.

4.2     REUSE OF SHARES

        Any shares of Common Stock that have been made subject to an Award that
are not issued under the Plan upon exercise or settlement of the Award shall
again be available for issuance in connection with future grants of Awards under
the Plan. In addition, if shares issued under the Plan are reacquired by the
Company pursuant to any forfeiture provision, such shares shall again be
available for the purposes of the Plan. Notwithstanding the foregoing, the
maximum number of shares that may be issued upon the exercise of Incentive Stock
Options shall equal the aggregate share number stated in Section 4.1, subject to
adjustment from time to time as provided in Section 12.1.

                             SECTION 5. ELIGIBILITY

        An Award may be granted to any officer, director or employee of the
Company or a Related Company that the Plan Administrator from time to time
selects. An Award may also be granted to any consultant, advisor or independent
contractor who provides services to the Company or any Related Company, so long
as such Participant (a) renders bona fide services that are not in connection
with the offer and sale of the Company's securities in a capital-raising
transaction and (b) does not directly or indirectly promote or maintain a market
for the Company's securities.

                                       5
<PAGE>
                                SECTION 6. AWARDS

6.1     FORM AND GRANT OF AWARDS

        The Plan Administrator shall have the authority, in its sole discretion,
to determine the type or types of Awards to be granted under the Plan. Awards
may be granted singly or in combination.

6.2     SETTLEMENT OF AWARDS

        The Company may settle Awards through the delivery of shares of Common
Stock, the granting of replacement Awards or any combination thereof as the Plan
Administrator shall determine. Any Award settlement may be subject to such
conditions, restrictions and contingencies as the Plan Administrator shall
determine. The Plan Administrator may permit or require the deferral of any
Award payment, subject to such rules and procedures as it may establish, which
may include provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred stock equivalents.

6.3     ACQUIRED COMPANY AWARDS

        Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of an Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the persons holding such
awards shall be deemed to be Participants.

                          SECTION 7. AWARDS OF OPTIONS

7.1     GRANT OF OPTIONS

        The Plan Administrator shall have the authority, in its sole discretion,
to grant Options designated as Incentive Stock Options or as Nonqualified Stock
Options.

                                       6
<PAGE>
7.2     OPTION EXERCISE PRICE

        The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than the minimum
exercise price required by Section 8.3 with respect to Incentive Stock Options.

7.3     TERM OF OPTIONS

        Subject to earlier termination in accordance with the terms of the Plan
and the instrument evidencing the Option, the maximum term of an Option (the
"Option Term") shall be as established for that Option by the Plan Administrator
or, if not so established, shall be ten years from the Grant Date. For Incentive
Stock Options, the Option Term shall be as specified in Section 8.4.

7.4     EXERCISE OF OPTIONS

        The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, any of which provisions may be waived
or modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:

<TABLE>
<CAPTION>
     PERIOD OF PARTICIPANT'S CONTINUOUS
     EMPLOYMENT OR SERVICE WITH THE COMPANY
     OR ITS RELATED COMPANIES FROM THE VESTING           PORTION OF TOTAL OPTION
     COMMENCEMENT DATE                                   THAT IS VESTED AND EXERCISABLE
<S>                                                      <C>
     After six months                                    1/4th

     Each additional one-month period of                 An additional 1/36th
     continuous service completed thereafter

     After 3.5 years                                     100%
</TABLE>

        The Plan Administrator, in its sole discretion, may adjust the vesting
schedule of an Option held by a Participant who works less than "full time" as
that term is defined by the Plan Administrator or who takes a Company-approved
leave of absence.

        To the extent an Option has vested and become exercisable, the Option
may be exercised in whole or from time to time in part by delivery to the
Company of a written stock option exercise agreement or notice, in a form and in
accordance with procedures established by the Plan Administrator, setting forth
the number of shares with respect to which the Option is being exercised, the
restrictions imposed on the shares purchased under such exercise agreement, if
any, and such representations and agreements as may be required by

                                       7
<PAGE>
the Plan Administrator, accompanied by payment in full as described in Section
7.5. An Option may be exercised only for whole shares and may not be exercised
for less than a reasonable number of shares at any one time, as determined by
the Plan Administrator.

7.5     PAYMENT OF EXERCISE PRICE

        The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid before the Company will issue the shares being purchased and must
be in a form or a combination of forms acceptable to the Plan Administrator for
that purchase, which forms may include:

        (a)     cash;

        (b)     check;

        (c)     tendering (either actually or, if the Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of
Common Stock already owned by the Participant for at least six months (or any
shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) that on the day prior to the exercise date have a
Fair Market Value equal to the aggregate exercise price of the shares being
purchased under the Option;

        (d)     if the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act, delivery of a properly executed exercise notice, together
with irrevocable instructions to a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise, all in accordance with the regulations of the
Federal Reserve Board; or

        (e)     such other consideration as the Plan Administrator may permit.

        In addition, to assist a Participant (including a Participant who is an
officer or a director of the Company) in acquiring shares of Common Stock
pursuant to an Award granted under the Plan, the Plan Administrator, in its sole
discretion, may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Award, (i) the payment by a
Participant of the purchase price of the Common Stock by a promissory note or
(ii) the guarantee by the Company of a loan obtained by the Participant from a
third party. Such notes or loans must be full recourse to the extent necessary
to avoid charges to the Company's earnings for financial reporting purposes and
bear a marked rate of interest. Subject to the foregoing, the Plan Administrator
shall in its sole discretion specify the terms of any loans or loan guarantees,
including the interest rate and terms of and security for repayment.

                                       8
<PAGE>
7.6     POST-TERMINATION EXERCISES

        The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option shall continue to be exercisable,
and the terms and conditions of such exercise, if a Participant ceases to be
employed by, or to provide services to, the Company or a Related Company, which
provisions may be waived or modified by the Plan Administrator at any time. If
not so established in the instrument evidencing the Option, the Option shall be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time:

        (a)     Any portion of an Option that is not vested and exercisable on
the date of a Participant's Termination of Service shall expire on such date.

        (b)     Any portion of an Option that is vested and exercisable on the
date of a Participant's Termination of Service shall expire on the earliest to
occur of

                (i)     if the Participant's Termination of Service occurs for
reasons other than Cause, Disability or death, the date which is three months
after such Termination of Service;

                (ii)    if the Participant's Termination of Service occurs by
reason of Disability or death, the one-year anniversary of such Termination of
Service; and

                (iii)   the last day of the Option Term (the "Option Expiration
Date").

        Notwithstanding the foregoing, if a Participant dies after his or her
Termination of Service but while an Option is otherwise exercisable, the portion
of the Option that is vested and exercisable on the date of such Termination of
Service shall expire upon the earlier to occur of (y) the Option Expiration Date
and (z) the one-year anniversary of the date of death, unless the Plan
Administrator determines otherwise.

        Also notwithstanding the foregoing, in case a Participant's Termination
of Service occurs for Cause, all Options granted to the Participant shall
automatically expire upon first notification to the Participant of such
termination, unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company is suspended
pending an investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option shall likewise be suspended
during the period of investigation. If any facts that would constitute
termination for Cause are discovered after a Participant's Termination of
Service, any Option then held by the Participant may be immediately terminated
by the Plan Administrator, in its sole discretion.

        (c)     A Participant's change in status from an employee to a
consultant, advisor or independent contractor or a change in status from a
consultant, advisor or independent contractor to an employee, shall not be
considered a Termination of Service for purposes of this Section 7.

                                       9
<PAGE>
        (d)     The effect of a Company-approved leave of absence on the
application of this Section 7 shall be determined by the Plan Administrator, in
its sole discretion.

                  SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

        Notwithstanding any other provisions of the Plan, and to the extent
required by Section 422 of the Code, Incentive Stock Options shall be subject to
the following additional terms and conditions:

8.1     DOLLAR LIMITATION

        To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which a Participant's Incentive
Stock Options become exercisable for the first time during any calendar year
(under the Plan and all other stock option plans of the Company and its parent
and subsidiary corporations) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a Nonqualified Stock Option. In the event the
Participant holds two or more such Options that become exercisable for the first
time in the same calendar year, such limitation shall be applied on the basis of
the order in which such Options are granted.

8.2     ELIGIBLE EMPLOYEES

        Individuals who are not employees of the Company or one of its parent or
subsidiary corporations may not be granted Incentive Stock Options.

8.3     EXERCISE PRICE

        The exercise price of an Incentive Stock Option shall be at least 100%
of the Fair Market Value of the Common Stock on the Grant Date, and in the case
of an Incentive Stock Option granted to a Participant who owns more than 10% of
the total combined voting power of all classes of the stock of the Company or of
its parent or subsidiary corporations (a "Ten Percent Shareholder"), shall not
be less than 110% of the Fair Market Value of the Common Stock on the Grant
Date. The determination of more than 10% ownership shall be made in accordance
with Section 422 of the Code.

8.4     OPTION TERM

        Subject to earlier termination in accordance with the terms of the Plan
and the instrument evidencing the Option, the Option Term of an Incentive Stock
Option shall not exceed ten years, and in the case of an Incentive Stock Option
granted to a Ten Percent Shareholder, shall not exceed five years.

                                       10
<PAGE>
8.5     EXERCISABILITY

        An Option designated as an Incentive Stock Option shall cease to qualify
for favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
after the date of a Participant's Termination of Service if termination was for
reasons other than death or Disability, (b) more than one year after the date of
a Participant's Termination of Service if termination was by reason of
Disability, or (c) after the Participant has been on leave of absence for more
than 90 days, unless the Participant's reemployment rights are guaranteed by
statute or contract.

8.6     TAXATION OF INCENTIVE STOCK OPTIONS

        In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
acquired upon the exercise of an Incentive Stock Option for two years after the
Grant Date and one year after the date of exercise.

        A Participant may be subject to the alternative minimum tax at the time
of exercise of an Incentive Stock Option. The Participant shall give the Company
prompt notice of any disposition of shares acquired on the exercise of an
Incentive Stock Option prior to the expiration of such holding periods.

8.7     PROMISSORY NOTES

        The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.

8.8     CODE DEFINITIONS

        For the purposes of this Section 8, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.

                             SECTION 9. STOCK AWARDS

9.1     GRANT OF STOCK AWARDS

        The Plan Administrator is authorized to make Awards of Common Stock or
Awards denominated in units of Common Stock on such terms and conditions and
subject to such repurchase or forfeiture restrictions, if any (which may be
based on continuous service with the Company or the achievement of performance
goals, where such goals may be stated in absolute terms or relative to
comparison companies), as the Plan Administrator shall determine, in its sole
discretion, which terms, conditions and restrictions shall be set forth in

                                       11
<PAGE>
the instrument evidencing the Award. The terms, conditions and restrictions that
the Plan Administrator shall have the power to determine shall include, without
limitation, the manner in which shares subject to Stock Awards are held during
the periods they are subject to restrictions and the circumstances under which
repurchase or forfeiture of the Stock Award shall occur by reason of a
Participant's Termination of Service.

9.2     ISSUANCE OF SHARES

        Upon the satisfaction of any terms, conditions and restrictions
prescribed in respect to a Stock Award, or upon a Participant's release from any
terms, conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court directs,
the appropriate number of shares of Common Stock.

9.3     WAIVER OF RESTRICTIONS

        Notwithstanding any other provisions of the Plan, the Plan Administrator
may, in its sole discretion, waive the repurchase or forfeiture period and any
other terms, conditions or restrictions on any Stock Award under such
circumstances and subject to such terms and conditions as the Plan Administrator
shall deem appropriate.

                             SECTION 10. WITHHOLDING

        The Company may require the Participant to pay to the Company the amount
of any taxes that the Company is required by applicable federal, state, local or
foreign law to withhold with respect to the grant, vesting or exercise of an
Award. The Company shall not be required to issue any shares of Common Stock
under the Plan until such obligations are satisfied.

        The Plan Administrator may permit or require a Participant to satisfy
all or part of his or her tax withholding obligations by (a) paying cash to the
Company, (b) having the Company withhold from any cash amounts otherwise due or
to become due from the Company to the Participant, or (c) having the Company
withhold a number of shares of Common Stock that would otherwise be issued to
the Participant (or become vested in the case of Stock Awards) having a value
equal to the tax withholding obligations, or (d) surrendering a number of shares
of Common Stock the Participant already owns having a value equal to the tax
withholding obligations. The value of the shares so withheld may not exceed the
employer's minimum required tax withholding rate, and the value of the shares so
tendered may not exceed such rate to the extent the Participant has owned the
tendered shares for less than six months if such limitation is necessary to
avoid a charge to the Company for financial reporting purposes.

                                       12
<PAGE>
                            SECTION 11. ASSIGNABILITY

        No Award or interest in an Award may be assigned, pledged or transferred
by the Participant or made subject to attachment or similar proceedings
otherwise than by will or by the applicable laws of descent and distribution,
except to the extent a Participant designates a beneficiary on a
Company-approved form who may exercise the Award or receive payment under the
Award after the Participant's death. During a Participant's lifetime, an Award
may be exercised only by the Participant. Notwithstanding the foregoing and to
the extent permitted by Section 422 of the Code, the Plan Administrator, in its
sole discretion, may permit a Participant to assign or transfer an Award;
provided, however, that an Award so assigned or transferred shall be subject to
all the terms and conditions of the Plan and those contained in the instrument
evidencing the Award.

                             SECTION 12. ADJUSTMENTS

12.1    ADJUSTMENT OF SHARES

        In the event, at any time or from time to time after board approval of
the Plan, a stock dividend, stock split, spin-off, combination or exchange of
shares, recapitalization, merger, consolidation, distribution to shareholders
other than a normal cash dividend, or other change in the Company's corporate or
capital structure results in (a) the outstanding shares of Common Stock, or any
securities exchanged therefor or received in their place, being exchanged for a
different number or kind of securities of the Company or of any other company or
(b) new, different or additional securities of the Company or of any other
company being received by the holders of shares of Common Stock of the Company,
then the Plan Administrator shall make proportional adjustments in (i) the
maximum number and kind of securities subject to the Plan and issuable as
Incentive Stock Options as set forth in Section 4 and (ii) the number and kind
of securities that are subject to any outstanding Award and the per share price
of such securities, without any change in the aggregate price to be paid
therefor. The determination by the Plan Administrator as to the terms of any of
the foregoing adjustments shall be conclusive and binding. Notwithstanding the
foregoing, a dissolution or liquidation of the Company or a Company Transaction
shall not be governed by this Section 12.1 but shall be governed by Sections
12.2 and 12.3, respectively.

12.2    DISSOLUTION OR LIQUIDATION

        To the extent not previously exercised or settled, and unless otherwise
determined by the Plan Administrator in its sole discretion, Options and Stock
Awards denominated in units shall terminate immediately prior to the dissolution
or liquidation of the Company. To the extent a forfeiture provision or
repurchase right applicable to an Award has not been waived by the Plan
Administrator, the Award shall be forfeited immediately prior to the
consummation of the dissolution or liquidation.

                                       13
<PAGE>
12.3    COMPANY TRANSACTION

        12.3.1          OPTIONS

        In the event of a Company Transaction, except as otherwise provided in
the instrument evidencing an Option or in a written employment or services
agreement between a Participant and the Company or a Related Company,

        (a)     Except as provided in subsection (b) below, each outstanding
Option shall be assumed or an equivalent option or right substituted by the
Successor Company.

        (b)     If in connection with a Company Transaction the Successor
Company refuses to assume or substitute for an Option, then each such
outstanding Option shall become fully vested and exercisable with respect to
100% of the unvested portion of the Option. In such case, the Plan Administrator
shall notify the Participant in writing or electronically that the unvested
portion of the Option specified above shall be fully vested and exercisable for
a specified time period. At the expiration of the time period, the Option shall
terminate, provided that the Company Transaction has occurred.

        (c)     For the purposes of this Section 12.3, the Option shall be
considered assumed or substituted for if following the Company Transaction the
option or right confers the right to purchase or receive, for each share of
Common Stock subject to the Option immediately prior to the Company Transaction,
the consideration (whether stock, cash, or other securities or property)
received in the Company Transaction by holders of Common Stock for each share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if such
consideration received in the Company Transaction is not solely common stock of
the Successor Company, the Plan Administrator may, with the consent of the
Successor Company, provide for the consideration to be received upon the
exercise of the Option, for each share of Common Stock subject thereto, to be
solely common stock of the Successor Company substantially equal in fair market
value to the per share consideration received by holders of Common Stock in the
Company Transaction. The determination of such substantial equality of value of
consideration shall be made by the Plan Administrator, and its determination
shall be conclusive and binding.

        (d)     All Options shall terminate and cease to remain outstanding
immediately following the Company Transaction, except to the extent assumed by
the Successor Company.

        12.3.2          STOCK AWARDS

        In the event of a Company Transaction, except as otherwise provided in
the instrument evidencing the Award and unless otherwise provided in a written
employment or services agreement between a Participant and the Company or a
Related Company, the vesting of shares subject to Stock Awards shall accelerate,
and the forfeiture provisions to

                                       14
<PAGE>
which such shares are subject shall lapse, if and to the same extent that the
vesting of outstanding Options accelerates in connection with the Company
Transaction. If unvested Options are to be assumed or substituted by a Successor
Company without acceleration upon the occurrence of a Company Transaction, the
repurchase or forfeiture provisions to which such Stock Awards are subject shall
continue with respect to shares of the Successor Company that may be issued in
exchange for such shares.

12.4    FURTHER ADJUSTMENT OF AWARDS

        Subject to Sections 12.2 and 12.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation, dissolution or change of control of the Company, as
defined by the Plan Administrator, to take such further action as it determines
to be necessary or advisable with respect to Awards. Such authorized action may
include (but shall not be limited to) establishing, amending or waiving the
type, terms, conditions or duration of, or restrictions on, Awards so as to
provide for earlier, later, extended or additional time for exercise, lifting
restrictions and other modifications, and the Plan Administrator may take such
actions with respect to all Participants, to certain categories of Participants
or only to individual Participants. The Plan Administrator may take such action
before or after granting Awards to which the action relates and before or after
any public announcement with respect to such sale, merger, consolidation,
reorganization, liquidation, dissolution or change of control that is the reason
for such action.

12.5    LIMITATIONS

        The grant of Awards shall in no way affect the Company's right 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.

12.6    FRACTIONAL SHARES

        In the event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares resulting from
such adjustment.

                           SECTION 13. MARKET STANDOFF

        In the event of an underwritten public offering by the Company of its
equity securities pursuant to an effective registration statement filed under
the Securities Act, including the Company's initial public offering, no person
may sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose of or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to any shares
issued pursuant to an Award granted under the Plan without the prior written
consent of the Company or its underwriters. Such limitations shall be in effect
for such period of time as may be requested by the Company or such underwriters;
provided, however, that in

                                       15
<PAGE>
no event shall such period exceed 180 days. The limitations of this Section 13
shall in all events terminate two years after the effective date of the
Company's initial public offering.

        In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to
the provisions of this Section 13, to the same extent the purchased shares are
at such time covered by such provisions.

        In order to enforce the limitations of this Section 13, the Company may
impose stop-transfer instructions with respect to the purchased shares until the
end of the applicable standoff period.

                      SECTION 14. AMENDMENT AND TERMINATION

14.1    AMENDMENT, SUSPENSION OR TERMINATION OF PLAN

        The Board may amend, suspend or terminate the Plan or any portion of the
Plan at any time and in such respects as it shall deem advisable; provided,
however, that to the extent required for compliance with Section 422 of the Code
or any applicable law or regulation, shareholder approval shall be required for
any amendment that would (a) increase the total number of shares available for
issuance under the Plan, (b) modify the class of employees eligible to receive
Options, or (c) otherwise require shareholder approval under any applicable law
or regulation. Any amendment made to the Plan that would constitute a
"modification" to Incentive Stock Options outstanding on the date of such
amendment shall not, without the consent of the Participant, be applicable to
such outstanding Incentive Stock Options but shall have prospective effect only.

14.2    TERM OF PLAN

        Unless sooner terminated as provided herein, the Plan shall terminate
ten years after the earlier of the Plan's adoption by the Board and approval by
the shareholders.

14.3    CONSENT OF PARTICIPANT

        The suspension, amendment or termination of the Plan or a portion
thereof or the amendment of an outstanding Award shall not, without the
Participant's consent, materially adversely affect any rights under any Award
theretofore granted to the Participant under the Plan. Any change or adjustment
to an outstanding Incentive Stock Option shall not, without the consent of the
Participant, be made in a manner so as to constitute a "modification" that would
cause such Incentive Stock Option to fail to continue to qualify as an Incentive
Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to
Sections 12.1 through 12.3 shall not be subject to these restrictions.

                                       16
<PAGE>
                               SECTION 15. GENERAL

15.1    EVIDENCE OF AWARDS

        Awards granted under the Plan shall be evidenced by a written instrument
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.

15.2    NO INDIVIDUAL RIGHTS

        Nothing in the Plan or any Award granted under the Plan shall be deemed
to constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Company or limit in any way the
right of the Company or any Related Company to terminate a Participant's
employment or other relationship at any time, with or without Cause.

15.3    ISSUANCE OF SHARES

        Notwithstanding any other provision of the Plan, the Company shall have
no obligation to issue or deliver any shares of Common Stock under the Plan or
make any other distribution of benefits under the Plan unless, in the opinion of
the Company's counsel, such issuance, delivery or distribution would comply with
all applicable laws (including, without limitation, the requirements of the
Securities Act or the laws of any state or foreign jurisdiction), and the
applicable requirements of any securities exchange or similar entity.

        The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under the laws of any state or foreign jurisdiction, any
shares of Common Stock, security or interest in a security paid or issued under,
or created by, the Plan, or to continue in effect any such registrations or
qualifications if made. The Company may issue certificates for shares with such
legends and subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or desirable for
compliance by the Company with federal, state and foreign securities laws.

        To the extent the Plan or any instrument evidencing an Award provides
for issuance of stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be effected on a noncertificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock exchange.

15.4    NO RIGHTS AS A SHAREHOLDER

        No Option or Stock Award denominated in units shall entitle the
Participant to any cash dividend, voting or other right of a shareholder unless
and until the date of issuance under the Plan of the shares that are the subject
of such Award.

                                       17
<PAGE>
15.5    COMPLIANCE WITH LAWS AND REGULATIONS

        Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its sole discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an Incentive Stock Option pursuant to the Plan
shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.

15.6    PARTICIPANTS IN OTHER COUNTRIES

        The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of other countries in which the Company or
any Related Company may operate to ensure the viability of the benefits from
Awards granted to Participants employed in such countries and to meet the
objectives of the Plan.

15.7    NO TRUST OR FUND

        The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.

15.8    SEVERABILITY

        If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.

15.9    CHOICE OF LAW

        The Plan and all determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the state of California without giving effect to
principles of conflicts of law.

                                       18
<PAGE>
                           SECTION 16. EFFECTIVE DATE

        The effective date is the date on which the Plan is adopted by the
Board. If the shareholders of the Company do not approve the Plan within 12
months after the Board's adoption of the Plan, any Incentive Stock Options
granted under the Plan will be treated as Nonqualified Stock Options.

                                       19
<PAGE>
                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                                  SUMMARY PAGE

<TABLE>
<CAPTION>
  DATE OF BOARD                                 SECTION/EFFECT     DATE OF SHAREHOLDER
     ACTION                  ACTION              OF AMENDMENT            APPROVAL
<S>                   <C>                       <C>                <C>
February 21, 2002     Initial Plan Adoption                         February 21, 2002

</TABLE>

                                      S-1

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