Document:

Exhibit 10.01

 

	
  SALE OF REAL ESTATE GOODS

  AND TITLE

  with
  conditions precedent

  	
  AGENT

  In
  the presence of and with the assistance of (1)

  Representing (2)

  REPUBLIQUE
  TRANSACTIONS

  10, rue Pasumot - Face aux Halles

  21200 BEAUNE

  Tel: 03 80 22 39 60 — Fax: 03 80 22 39 69

  TRANSACTION CARD No. 334

   

  

 

The undersigned

SELLER(S)(3)

UNEDIC, 80 rue de Reuilly,
Paris XIIth, represented by Jean-Pierre Revoil in his capacity as General
Director, duly authorized to sign for this sale,

On the one hand,

And

PURCHASER(S)(3)

Gaming Partners
International SAS, with capital of €8,000,000, registered with the Company
Registry of Beaune under number 515 720 647, management code 57B64, having as
its representative Gérard Pierre Charlier, represented pursuant to a power of
attorney dated 18 May 2006 by Remi Nicolas,

On the other hand,

It being noted that if the sale
is to occur between various sellers and purchasers, same will act jointly and
severally amongst each other and shall be referred to in the present agreement
as “THE SELLER” and “THE PURCHASER” in the singular.

have agreed and decided as
follows:

The seller, binding
itself, its heirs and assigns jointly amongst them, whether minors or disabled
persons, to the most extensive usual and lawful guarantees, sells to the purchaser, who accepts and undertakes to acquire, subject
to the conditions precedent listed hereunder, the real estate good
and title described below:

(1) Certificate holder (name,
certificate ...)

(2) Stamp of the professional
card holder (company name, professional card, financial guarantee ...)

(3) For each physical person,
indicate: surname, first name, residence, date and place of birth, nationality,
profession, marital status

  For
companies, indicate: type, name, capital, headquarters, Commercial Registry
number, name position and address of its representative.

Initials:

 

 

 

LOCATION and DESCRIPTION

Address: (No., street, floor, building, door number, postal code, city):
17, rue Jacques Germain 21420 Savigny les Beaune

Description: indicate the municipal plan information (section number) - For co-owned goods: lot numbers - number of thousandths -
private surface of lots in excess of 8m2, with the exclusion of lots to be used
as cellars, garages and parking spots (mandatory notation, Art. 46 of the Law
of 07.10.65 arising from the Law of 12.18.96), surname, name, address and
capacity of the person having conducted the measuring, and attach the
measurement document to the present agreement.

Building for use as
offices and business with a basement, main floor and floor, municipal plan AT
10, equal to 5,500 m2

 

Such as the said premises
exist and extend in their current state, with all accessories, with no exception
or reserve, the purchaser declaring it has knowledge of same, having seen and
visited same, and waiving the requirement of a further description.

SELLER
DECLARATIONS

The seller declares:

1 — CIVIL STATUS:
that it undertakes to provide in the present act the usual civil declarations
and nothing in these declarations opposes the realization of said act.

2 — ORIGIN OF THE OWNERSHIP:
that it is the sole owner of the goods, having acquired same, and it undertakes
to provide all property title and documents required for the sale at the agent’s
first request.

3 — EASEMENTS AND URBANISM:
that the goods the subject of the present agreement, to its knowledge, are not
subject to any easement other than that resulting from the natural location of
the premises, the development and urban plan and the law in general, urban
questions being the subject of a condition precedent set out below.

4 —  MORTGAGE: that the goods to be sold are free of any specific
property right and any judicial or legal mortgages. If mortgage registrations
should exist, it undertakes to provide a release and discharge certificate at
its cost.

5 — RENTAL STATUS:
that on the day of actual possession, the premises shall be

                                                  X             Free of any rental, occupation or
requisition

                                                  o            Rented pursuant to the rental
agreement attached hereto

6 — STATUS OF THE BUILDING WITH
REGARD TO THE REGULATIONS:  year of
construction of the building 1978-1979

A — ASBESTOS (Decree 96-97
of 02/07/96, amended by Decrees 97-855 of 09/12/97, 2001-840 of
09/13/01 and 2002-839 of 05/03/02):

 

o
constructed building, the building permit for
which was granted after 07/01/1997: excluded from the field of
application of the Decree;

o
constructed building, the building permit for
which was granted before 07/01/1997:

·                  Attach the asbestos report: any owner shall produce, at the
latest on the date of the present pre-agreement, a report established according
to methods for detecting materials and products containing asbestos (Appendix I of the Order of 08/22/02), indicating the
presence or absence of said materials and products, their location and state of
preservation.

This report or, when the technical “asbestos”
dossier exists, the summary sheet contained
in this dossier, constitutes the asbestos report
referred to in Article L.1334-7 of the Public Health Code.

In the absence of the ASBESTOS REPORT, no clause exempting
the guarantee regarding hidden defects is allowed with regard to defects
constituted by the presence of asbestos.

·                  Communication of technical dossiers:

 

	
  1) TECHNICAL DOSSIER (Art. 8 of the Decree): does not apply to buildings for residential
  use with one housing unit.

  	
  2) TECHNICAL “ASBESTOS”
  DOSSIER (Art. 10-2 and
  following of the Decree of 02/07/96) established according to the
  methods for detecting materials and products containing asbestos (Appendix I of the Order of 08/22/02) and including the
  elements resulting from this study, as well as the content of the technical
  dossier.

  The SUMMARY SHEET
  in the “asbestos” technical dossier is the asbestos
  report and contains the information indicated in Appendix III of
  the Order of 08/22/02.

  which
  applies only to owners of the following types of buildings:

  ·      Tall buildings and sites receiving the public classified in the 1st to 4th  categories (Art. 123-19 of the
  Construction and Housing Code), with the exception of the private areas of collective
  housing buildings;

  ·      Office buildings and sites receiving the public classified in the 5th category, buildings for the conduct of
  industrial or agricultural activities and the work and private areas of
  co-owned building. (constitution of the
  dossier at the latest by 12/31/05)

  
	
  Delivery of the building
  permit               Research effected

  - before 01/01/1980                    asbestos spraying

  - before
  07/29/1996                    asbestos insulation

  - before 07/01/1997                    asbestos in suspended

                                                       ceilings

  
	
  The research conducted
  concluded:

  X  absence of asbestos;

  o   presence of asbestos: the result of the
  diagnosis provided

       to the owner on 06/26/2003, implying:

       o
  a periodic control before 3 months (1)

       o
  monitoring of the dustiness level

       o
  works within a 36 month period (1)

       (1) from the date the diagnosis is
  provided

  

 

·                  In the case of demolition (Art. 10-4, as
amended (Decree 2002-839 of 05/03/02) of Decree 96-96 of 02/07/96):
prior to demolition, conduct a DETECTION STUDY (pursuant to
the terms of the 7th paragraph of Art. 10-3, as amended
(Decree 2002-839 of 3 May 2002)) for products and materials
containing asbestos (Order of 01/02/02 defines
the categories of these products and materials, as well as intervention methods).

The technical and detection
dossiers prior to demolition are conducted by a technical controller or a
construction technician having subscribed to professional insurance for this
type of mission.

 

The seller also provides
the purchaser with all of the research, diagnostics and result documents
proving its status in relation to the regulations on asbestos. The purchaser
shall not demand the provision of any supplementary or additional document from
the seller. Unless otherwise agreed by the parties, the purchaser takes act of
the building in relation to these regulations (regardless
of the state of progress of the result, as well as its furtherances and consequences)
and undertakes to be responsible in relation thereto.

B — LEAD POISONING (Art. L. 1334-5
of the New Public Health Code): that the building is:

X excluded from the field of application of the regulations;

o intended in whole or part for housing, that
it was built before 1948 and is located in a zone with a risk of exposure to lead
as defined by the Prefect. It is therefore subject to the terms of Article L.
1334-5 of the New Public Health Code. A statement of risk of exposure to
lead established less than a year before the signature of the present agreement
is attached to the present agreement.

C - FIGHT AGAINST TERMITES (Law 99-471
of 06/08/99):

X it has no knowledge of the presence of termites;

o the presence of termites has been declared to
the Town Hall (Art. 2 of the Law);

o the building is located in a contaminated or
risk zone the subject of a prefectorial order. Therefore, pursuant to the
regulations, a parasitic statement is provided by the seller to the notary
responsible for preparing the authentic act. The statement shall be prepared
less than three months from the signature of the notarized act.

In the absence thereof, the
discovery of termites in the building constitutes a hidden defect that may lead
to the cancellation of the sale.

The seller shall immediately
provide the purchaser with all of the documents in its possession related to
the construction or renovation of the present building and, if applicable, the
full diagnostic report, the obligation of results of which are the purchaser’s responsibility.
The purchaser shall not demand of the seller any supplementary or additional
document.

D — MAJOR TECHNOLOGICAL AND
NATURAL RISKS (Art. L. 125-5 of the Environmental Code):

That the building:

o  a) is located
in a zone of risk subject to an approved or prescribed prevention plan for
technological risks;

o  b) is located in
a zone exposed to risks subject to an approved or prescribed prevention plan
for projected natural risks or for which certain terms have been made
immediately enforceable (Art. L. 562-2 of
the Environmental Code);

o  c) is located
in a Ia, Ib, II or III seismic zone (indicated in Art. 4 of
Decree No. 91-461 of 05.14.91);

o d) when built,
suffered a disaster due to a technological or natural catastrophe having caused
the payment of an indemnity (Art. L. 125-2 to L.
128-2 of the Insurance Code); and that the
municipality in which the building is located (Art. L. 125-5
III of the Environmental Code):

o  e) is included
on the list established by the Prefect;

o  f) is not
indicated on the list established by the Prefect;

CONDITIONS
PRECEDENT

Other than potential conditions
precedent relating to the obtaining of loans and provision of a certificate
related to asbestos, the parties formally subject the realization of the sale
to the

 

following conditions
precedent, stipulated solely in favor of the purchaser who may waive same:

1 — URBANISM:
that the urbanism information memorandum reveals no easement or charge
whatsoever that renders the building unsuitable for its normally foreseeable
use. In this regard, it is to be noted that the building line easement shall
not be considered a condition precedent unless it precludes the use of the
building for its intended purpose.

2 — MORTGAGE:
that the mortgage statement reveals no inscription or privilege in an amount in
excess of the agreed sales price or of a nature to cause the failure of the
granting of a potential credit.

3 — PREEMPTION RIGHT:
the parties acknowledge having been informed that the present sale may be
subject to a preemption right if the goods to be sold are located in a
protected sector, a zone subject to urban preemption or any other property
restoration scheme. Should the preemption right be exercised, the purchaser
shall be fully freed and shall immediately retrieve, with no formality, the sum
held by the receiver. The preemptor shall subrogate the purchaser in all of its
rights and duties, including the payment of the negotiation commission if under
the responsibility of the purchaser.

If one of the conditions
precedent is not realized (except when waived by the
purchaser), each of the parties shall be fully freed, without an
indemnity payable by either party, and the amount paid by the purchaser as a
down payment shall be immediately returned to same without further formality.

SELLER
PROHIBITION

The seller shall not,
until the signature of the authentic act, assign to a person other than the
purchaser the sold goods, regardless of the advantages it may benefit from in
relation thereto, the purchaser reserving the right to legally demand the
cancellation of all acts entered into in violation of the present agreement,
notwithstanding damages and interest.

EXECUTION

Upon signature of the
present agreement, the parties grant their definitive approval to the agreement
and the price therein, and the seller shall in no case refuse to execute the
sale by prevailing itself of Art. 1590 of the Civil Code and by offering to pay
double the amount paid. The authentic act shall be established pursuant to an
invitation by the notary on the date provided below subject to said notary
having obtained all the items, title and documents required to perfect said
act.

Date provided for the
signature of the authentic act: June 30, 2006

Designated notary: Maître
Griveaux

Notary in: Chalon sur Saône                            Tel:                         Clerk:

Potentially assisted by: Maître Echinard

Notary in: Beaune                                              Tel:                         Clerk:

 

PENALTY
CLAUSE

In application of the “EXECUTION” clause above, it is agreed that should one of the parties refuse to enter into the authentic act in
the required period of time, unless justified by the application of a condition
precedent, said party may be forced in relation thereto by all lawful means and
be caused to pay the expenses for the procedure and recourse to justice,

 

without prejudice to
damages and interest. However, the non-defaulting party may take act of the
refusal of its co-contractor and cancel the agreement.

In both cases, it is
expressly agreed that the non-defaulting party shall be paid as a set indemnity
for its prejudice the sum of sixty-five thousand euros by the other party.

 

Furthermore, in both
cases, the agent’s compensation shall be fully due in the conditions provided
below under “NEGOTIATIONS”, once the
transaction has been definitively concluded (Art. 71, Decree 72 678 of
07/20/72).

NEGOTIATIONS

The parties formally
agree that the agent described in the first page has caused their meeting,
with the potential participation of:

and negotiated and
prepared the terms, price and conditions for the present agreement.

Each of the parties
therefore undertakes to paid said agent, once the final condition precedent has
been fulfilled, the compensation or portion of compensation payable thereto indicated
in the agency agreement and below:

To be paid by the SELLER
(commission included in the price stipulated in the
SALES PRICE paragraph) - see agency agreement and commission
voucher, i.e. €25,000, excluding tax and VAT, agency agreement No.: 1917 dated February 2,
2006.

 

This sum shall be
withdrawn from the first amounts paid by the purchaser. To this end, the
parties formally authorize any third party who holds the sums (receiver, notary) to perform this withdrawal before any other
assignment or reimbursement whatsoever, as soon as the final condition
precedent to the sale has been fulfilled. Should the preemption right be
exercised, the commission shall remain due subject to the terms of the agency
agreement: for its part, the seller for the portion for which it is
responsible, and the preemptor for the portion for which the purchaser is
responsible.

·                  PAYMENT OF THE SEQUESTERED SUM (Art. 271-2
of the Construction and Housing Code):

The present act is:

X conducted by a professional having received a
mandate to assist in the sale: the purchaser effects a payment into the hands of a professional
holding a financial guarantee for the reimbursement of sums
deposited pursuant to the terms indicated below (“PURCHASER
PAYMENT - SEQUESTERED SUM” paragraph).

o  concluded between two non-professionals: no payment is
possible before the expiry of the withdrawal deadline. After this deadline, the
present agreement shall be subject to the condition precedent of a payment by the purchaser.

Said payment
shall be effected at the latest ___ days after the expiry of the withdrawal
deadline in the manner described below (“PURCHASER PAYMENT - SEQUESTERED
SUM” paragraph).

If the present private agreement
does not relate to the purchase of a building for the use of housing or if the
purchaser is a “NON-PROFESSIONAL”, the SRU Law
does not

 

apply and the payment is effected as described below (“PURCHASER
PAYMENT - SEQUESTERED SUM” paragraph).

PURCHASER
PAYMENT — SEQUESTERED SUM

1 SEQUESTER: the
purchaser shall immediately provide this deposit to:

Maître Griveaux                                                                      
receiver

mutually agreed to by the
parties as the receiver for this payment.

The amount is:

Sum in
full letters                                                                            Sum
in numerals

Thirty-two thousand and
five hundred euros                                                              €32,500

Payment reference: CIC Lyonnaise de Banque

 

This payment shall be
credited to the agreed sales price, unless one of the conditions precedent herein
applies, in which case it shall be fully returned to the purchaser.

2 MISSION OF THE RECEIVER:
the receiver shall provide the seller within eight business days with a copy of
the receipt provided to the purchaser and shall keep the sum entrusted to him
for the purposes of allocation in accordance with the distribution described
above. The payment of this sum to either of the parties pursuant to these terms
shall discharge the receiver of its mission, with no requirement for a receipt
or proof of any type. However, in the case of a pure and simple failure to
conclude the agreement, the withdrawal deadline (if
applicable), having lapsed and the conditions precedent having been
fulfilled, said receiver shall only remit the sums by virtue of an amicable
agreement signed by the parties or a judicial ruling.

JURISDICTION

The courts in the
location of the goods to be sold have sole jurisdiction over any disputes that
may arise between the parties.

GOODWILL
AFFIRMATION

The undersigned parties
affirm, subject to the penalties described by Article 8 of the Law of 18 April 1918
(Article 1837 of the General Tax Code),
that the present undertaking is the full expression of the agreed price.

BARRED AS NULL

................ Words

................ Lines

Initials:

SIGNATURE(s) of
the PARTIES

Signed in Beaune in one original
copy, the author being responsible for delivering a copy to the other party.

 

N.B.: for
safety, use original forms exclusively!

The
SELLER                                                                                                            The
PURCHASER

Date and signature(s) preceded by the                        Date and signature(s) preceded
by the

handwritten words “read and approved                      handwritten words “read
and approved

 — agreed”                                                                         —
agreed”

 

Therefore  (the information duties below enter into effect at the earliest on 06/01/05
and at the latest on 06/01/06, depending on the publication of the prefectorial
order, Art. 5 of the Decree of 02/15/05):

-                                           Case a), b), c): if the
municipality in which the building is located is included on the list
established by the Prefect (case e), the
seller shall inform the purchaser of the existence of risks; it shall attach to
the present agreement a statement of risks prepared under its care less than six
months before the date of signature of the present agreement, in the form
defined by Order of the Ministry of Ecology (Art. 4 of Decree No. 2005-134
of 02.15.05). This statement shall include excerpts from the
documents and dossier that allow for the determination of the building location
in terms of potential risks (Art. 212° and II of
Decree No. 2005-134 of 02/15/05).

-                                           Case d) a building that suffered from
a disaster having caused the payment of an indemnity: the seller
shall inform the purchaser in writing of any disaster having arisen during the
period in which it was owner or of which it was informed pursuant to the
present terms. This information is indicated in the authentic act related to the
execution of the present sale.

In the absence of compliance
with the present terms, the purchaser may pursue the execution of the present agreement
or petition the judge for a reduction in the sales price (Art. L. 125-5
V of the Environmental Code).

SALES
PRICE

Should the sale conclude,
its PRICE is payable in full on the date of
signature of the authentic act (indicate the net price
and commission if said commission is to be paid by the purchaser, or the price including
the commission if said commission is to be paid by the seller):

Amount(s) in full letters                                                                   Amount
in numerals

PRICE: Six hundred and fifty thousand
euros                                             €650,000

 

By express
agreement, the effective payment of the total price and costs, as well as the
signature of the authentic act required for the ownership declaration, are
conditions the fulfillment of which shall cause the transfer of the ownership
right to the purchaser.

PROPERTY
— ENJOYMENT

Date of
effective enjoyment

Upon completion of the act

The purchaser shall
become the owner of the goods for sale upon the date of signature of the
authentic act and shall take effective enjoyment on the date indicated herein via
the actual taking of possession or the receipt of rent:

CONDITIONS

The sale is consented and
accepted under ordinary lawful conditions that the purchaser undertakes to
fulfill:

1 — ENJOYMENT:
to take possession of the goods sold in the state in which they exist at the
time of actual possession without a guarantee on the part of the seller with
regard to the state of the ground, subsoil or buildings, defects of any nature,
whether apparent or hidden, an error in description or content if same is
higher or lower by 1/20th and whether in its favor or to its detriment. However,
pursuant to Art. 4 of Decree 78-464 of 03.24.1978, the present clause
shall be considered null if the seller is a “real estate professional”.

3 — EASEMENTS: suffer
the passive easements, whether apparent or not or continuous or not, that may
apply to the goods sold, and to use those that exist, if applicable.

 

4 — TAXES — CHARGES:
to pay, from the date of taking possession, the taxes and charges of any nature
to which the goods are or will become subject, it being noted that the property
tax shall be paid by the two parties in proportion to their occupation during
the calendar year in which possession was transferred.

5 — INSURANCE: to
be responsible for the continuation or termination of insurance policies and
subscriptions entered into by the seller for the sold goods. In any event,
maintain insurance for said goods with a company known to be solvent.

6 — EXPENSES: to
pay all expenses, rights and fees for the present agreement and those flowing
therefrom.

A - AMOUNT TO BE FINANCED

	
  ·

  	
   

  	
  Sales price

  	
   

  	
  €

  	
  650,000

  	
   

  
	
  ·

  	
   

  	
  Provision for
  the costs of the act

  	
   

  	
  €

  	
  41,405

  	
   

  
	
  ·

  	
   

  	
  Negotiation expenses (if at the
  expense of the purchaser)

  	
   

  	
   

  	
   

  
	
  ·

  	
   

  	
  TOTAL  

  	
   

  	
  €

  	
  691,405

  	
   

  

 

B — FINANCING PLAN

The purchaser declares
that it does not intend to request a loan to finance its purchase, this
financing being subject to insurance for its full amount by said purchaser’s personal
and associated assets.

It confirms below its
intent in handwriting, pursuant to Article L. 312-17 of the Consumer
Code.

HANDWRITTEN DECLARATION(S) OF THE PURCHASER
or CO-PURCHASERS

“I, the undersigned (surname and
first name) declare this purchase is affected without recourse to a loan. I
acknowledge having been informed that should I take recourse to a loan, I shall
not be entitled to the condition precedent of its obtention provided in Book
III, Chapter II of the Consumer Code with regard to real estate credits.”

I, the undersigned, Rémi
NICOLAS, acting on behalf of GPI SAS declare this purchase is affected without
recourse to a loan. I acknowledge having been informed that should I have
recourse to a loan, I shall not be entitled to the condition precedent of its
obtention provided in Book III, Chapter II of the Consumer Code with regard to
real estate credits.EXHIBIT 10.1

VIVUS, INC.

2001 STOCK OPTION PLAN

(As Amended on July 12, 2006)

1.             Purpose
of the Plan. The purpose of this 2001 Stock Option Plan is to:

·                                          attract
and retain the best available personnel for positions of substantial
responsibility;

·                                          provide
additional incentive to Employees, Directors and Consultants; and

·                                          promote
the success of the Company’s business.

Awards granted
under the Plan may be Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, and Restricted Stock Units as determined by the Administrator at the
time of grant.

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

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

(b)           “Applicable Laws” means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where Awards
are, or will be, granted under the Plan.

(c)           “Award” means, individually or
collectively, a grant under the Plan of Options, Restricted Stock and
Restricted Stock Units.

(d)           “Award Agreement” means the
written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan, including any Option Agreement
and Restricted Stock Purchase Agreement. The Award Agreement is subject to the
terms and conditions of the Plan.

(e)           “Board” means the Board of
Directors of the Company.

(f)            “Change in Control” means the
occurrence of any of the following events:

(i)    Any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding
voting securities;

 1
 

(ii)   The consummation of the sale or disposition
by the Company of all or substantially all of the Company’s assets;

(iii)  A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the Directors are Incumbent Directors. “Incumbent Directors” means Directors
who either (A) are Directors as of the date hereof, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of Directors to the Company); or

(iv)  The consummation of a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or its parent) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity or
its parent outstanding immediately after such merger or consolidation.

(g)           “Code” means the Internal
Revenue Code of 1986, as amended.

(h)           “Committee” means a committee
of Directors appointed by the Board in accordance with Section 4 of the
Plan.

(i)            “Common Stock” means the
Common Stock of the Company.

(j)            “Company” means VIVUS, Inc.,
a Delaware corporation.

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

(l)            “Director” means a member of
the Board.

(m)          “Disability” means total and
permanent disability as defined in Section 22(e)(3) of the Code.

(n)           “Employee” means any person,
including Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. A Service Provider shall not cease to be an Employee
in the case of (i) any leave of absence approved by the Company, or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. For purposes of Incentive Stock Options, no such
leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of
a leave of absence approved by the Company is not so guaranteed, then
three (3) months following the 91st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.

 2
 

(o)           “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

(p)           “Fair Market Value” means, as
of any date, the value of Common Stock determined as follows:

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

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

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

(q)           “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.

(r)            “Inside Director”
means a Director who is an Employee.

(s)           “Nonstatutory Stock Option”
means an Option not intended to qualify as an Incentive Stock Option.

(t)            “Notice of Grant” means a
written or electronic notice evidencing certain terms and conditions of an
individual Award grant. The Notice of Grant is part of the Award Agreement.

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

(v)           “Option” means a stock option
granted pursuant to the Plan.

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

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

(y)           “Optioned Stock” means the
Common Stock subject to an Award.

 3
 

(z)            “Optionee” means the holder
of an outstanding Award granted under the Plan.

(aa)         “Outside Director”
means a Director who is not an Employee.

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

(cc)         “Period of Restriction” means
the period during which the transfer of Shares of Restricted Stock are subject
to restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events
as determined
by the Administrator.

(dd)         “Plan” means this 2001 Stock
Option Plan.

(ee)         “Restricted Stock” means Shares issued pursuant to an Award of Restricted
Stock under Section 7 of the Plan, or issued pursuant to the early exercise
of an Option.

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

(gg)         “Restricted Stock Unit” means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, granted pursuant to Section 8.
Each Restricted Stock Unit represents an unfunded and unsecured obligation of
the Company.

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

(ii)           “Section 16(b) “ means
Section 16(b) of the Exchange Act.

(jj)           “Service Provider” means an
Employee, Director or Consultant.

(kk)         “Share” means a share of the
Common Stock, as adjusted in accordance with Section 11 of the Plan.

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

3.             Stock Subject to the Plan.
Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares that may be optioned and sold under the Plan is One Million
(1,000,000) Shares plus (a) any
Shares that have been reserved but not issued under the Company’s 1991
Incentive Stock Plan (the “1991 Plan”) as of the date of stockholder approval
of this Plan; (b) any Shares returned to the 1991 Plan as a result of
termination of options or repurchase of Shares issued under the 1991 Plan; and (c) an
annual increase to be added on the first day of the Company’s fiscal year
beginning in 2003, equal to the least of (i) one million (1,000,000)
shares, (ii) two and one-half percent (2.5%) of the outstanding shares on
such date, or (iii) an amount determined by the Board. The Shares may be
authorized, but unissued, or reacquired Common Stock.

 4
 

If an Award expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an Option Exchange
Program, or, with respect
to Restricted Stock and Restricted Stock Units, is forfeited to or repurchased
by the Company, the unpurchased Shares (or for Awards other than Options, the forfeited, repurchased or
unissued Shares) which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated); provided, however, that if unvested Shares
issued pursuant to Awards of Restricted Stock and Restricted Stock Units are
repurchased by the Company or are forfeited to the Company, such Shares will
become available for future grant under the Plan. To the extent an Award under the Plan is paid
out in cash rather than Shares, such cash payment will not result in reducing
the number of Shares available for issuance under the Plan.

4.             Administration
of the Plan.

(a)           Procedure.

(i)    Multiple Administrative Bodies. Different
Committees with respect to different groups of Service Providers may administer
the Plan.

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

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

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

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

(i)    to determine the Fair Market Value;

(ii)   to select the Service Providers to whom Awards
may be granted hereunder;

(iii)  to determine the number of shares of Common
Stock to be covered by each Award granted hereunder;

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

(v)   to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on

 5
 

performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation regarding
any Award or the shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion, shall determine;

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

(vii) to institute an Option Exchange Program;

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

(ix)   to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of satisfying applicable foreign laws;

(x)    to modify or amend each Award (subject to Section 14(c) of the Plan), including
the discretionary authority to extend the post-termination exercisability
period of Options longer than is otherwise provided for in the Plan;

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

(xii)  to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;

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

(c)           Effect of Administrator’s Decision.
The Administrator’s decisions, determinations and interpretations shall be
final and binding on all Optionees and any other holders of Awards.

5.             Eligibility.
Nonstatutory Stock Options, Restricted Stock and Restricted Stock Units may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

6.             Stock
Options.

(a)           Limitations.

(i)    Each Option shall be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such

 6
 

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

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

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

(A)          No Service Provider shall be granted,
in any fiscal year of the Company, Options to purchase more than one million
(1,000,000) of the outstanding Shares on the date granted.

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

(C)           The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 11.

(D)          If an Option is cancelled in the same
fiscal year of the Company in which it was granted (other than in connection
with a transaction described in Section 11), the cancelled Option will be
counted against the limits set forth in subsections (i) and (ii) above.
For this purpose, if the exercise price of an Option is reduced, the
transaction will be treated as a cancellation of the Option and the grant of a
new Option.

(b)           Term of Option. The term of
each Option shall be stated in the Award Agreement. In the case of an Incentive
Stock Option, the term shall be ten (10) years from the date of grant or
such shorter term as may be provided in the Award Agreement. Moreover, in the
case of an Incentive Stock Option granted to an Optionee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such shorter term as may
be provided in the Award Agreement.

(c)           Option Exercise Price and
Consideration.

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

(A)          In the case of an Incentive Stock
Option

 7
 

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

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

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

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

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

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

(A)          cash;

(B)           check;

(C)           promissory note;

(D)          other Shares which, in the case of
Shares acquired directly or indirectly from the Company, (A) have been
owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which said Option shall be
exercised;

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

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

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

 8
 

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

(d)           Exercise of Option.

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

An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with
the Award Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised, together
with any required tax withholding. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Award Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 11 of the Plan.

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

(ii)   Termination of Relationship as a Service
Provider. If an Optionee ceases to be a Service Provider, other than upon
the Optionee’s death or Disability, the Optionee may exercise his or her Option
within such period of time as is specified in the Award Agreement to the extent
that the Option is vested on the date such Optionee ceases to be a Service
Provider (but in no event later than the expiration of the term of such Option
as set forth in the Award Agreement). In the absence of a specified time in the
Award Agreement, the Option shall remain exercisable for ninety (90) days
following the date such Optionee ceases to be a Service Provider. If, on the
date such Optionee ceases to be a Service Provider, the Optionee is not vested
as to his or her entire Option, the Shares covered by the unvested portion of
the Option shall revert to the Plan. If, after Optionee ceases to be a Service
Provider, the Optionee does not exercise his or her Option within the time
specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

(iii)  Disability of Optionee. If an Optionee
ceases to be a Service Provider as a result of the Optionee’s Disability, the
Optionee may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent the Option is vested on the date
of termination due to such Disability (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award

 9
 

Agreement, the Option shall remain exercisable for
twelve (12) months following the termination due to Optionee’s Disability. If,
on the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

(iv)  Death of Optionee. If an Optionee dies
while a Service Provider, the Option may be exercised following the Optionee’s
death within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of death (but in no event may the
option be exercised later than the expiration of the term of such Option as set
forth in the Award Agreement), by the Optionee’s designated beneficiary,
provided such beneficiary has been designated prior to Optionee’s death in a
form acceptable to the Administrator. If no such beneficiary has been
designated by the Optionee, then such Option may be exercised by the personal
representative of the Optionee’s estate or by the person(s) to whom the
Option is transferred pursuant to the Optionee’s Will or in accordance with the
laws of descent and distribution. In the absence of a specified time in the Award
Agreement, the Option shall remain exercisable for twelve (12) months following
Optionee’s death. If, at the time of death, Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.

7.             Restricted Stock.

(a)           Grant of Restricted Stock. Subject
to the terms and provisions of the Plan, the Administrator, at any time and
from time to time, may grant Shares of Restricted Stock to Service Providers in
such amounts as the Administrator, in its sole discretion, will determine.

(b)           Restricted Stock Agreement. Each
Award of Restricted Stock will be evidenced by an Award Agreement that will
specify the Period of Restriction, the number of Shares granted, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine. Unless the Administrator determines otherwise, Shares of Restricted
Stock will be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.

(c)           Transferability. Except as
provided in this Section 7, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction.

(d)           Other Restrictions. The
Administrator, in its sole discretion, may impose such other restrictions on
Shares of Restricted Stock as it may deem advisable or appropriate.

(e)           Removal of Restrictions. Except
as otherwise provided in this Section 7, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan will be released
from escrow as soon as practicable after the last day of the Period of
Restriction. The Administrator, in its discretion, may accelerate the time at
which any restrictions will lapse or be removed.

 10
 

(f)            Voting Rights. During the
Period of Restriction, Service Providers holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.

(g)           Dividends and Other Distributions.
During the Period of Restriction, Service Providers holding Shares of
Restricted Stock will be entitled to receive all dividends and other
distributions paid with respect to such Shares unless the Administrator
determines otherwise. If any such dividends or distributions are paid in
Shares, the Shares will be subject to the same restrictions on transferability
and forfeitability as the Shares of Restricted Stock with respect to which they
were paid.

(h)           Return of Restricted Stock to
Company. On the date set forth in the Award Agreement, the Restricted Stock
for which restrictions have not lapsed will revert to the Company and again
will become available for grant under the Plan.

8.             Restricted Stock Units.

(a)           Grant. Restricted Stock Units may be granted at any
time and from time to time as determined by the Administrator. Each Restricted
Stock Unit grant will be evidenced by an Award Agreement that will specify such
other terms and conditions as the Administrator, in its sole discretion, will
determine, including all terms, conditions, and restrictions related to the
grant, the number of Restricted Stock Units and the form of payout, which,
subject to Section 8(d), may be left to the discretion of the
Administrator.

(b)           Vesting Criteria and Other Terms. The
Administrator will set vesting criteria in its discretion, which, depending on
the extent to which the criteria are met, will determine the number of
Restricted Stock Units that will be paid out to the Participant. After the
grant of Restricted Stock Units, the Administrator, in its sole discretion, may
reduce or waive any restrictions for such Restricted Stock Units. Each Award of
Restricted Stock Units will be evidenced by an Award Agreement that will
specify the vesting criteria, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

(c)           Earning Restricted Stock Units. Upon meeting the
applicable vesting criteria, the Participant will be entitled to receive a
payout as specified in the Award Agreement. Notwithstanding the foregoing, at
any time after the grant of Restricted Stock Units, the Administrator, in its
sole discretion, may reduce or waive any vesting criteria that must be met to
receive a payout.

(d)           Form and Timing of Payment. Payment of earned
Restricted Stock Units will be made as soon as practicable after the date(s) set
forth in the Award Agreement. The Administrator, in its sole discretion, may
pay earned Restricted Stock Units in cash, Shares, or a combination thereof. Shares
represented by Restricted Stock Units that are fully paid in cash again will be
available for grant under the Plan.

(e)           Cancellation. On the date set forth in the Award
Agreement, all unearned Restricted Stock Units will be forfeited to the
Company.

 11
 

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

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

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

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

(c)           Each person who
first becomes an Outside Director following the effective date of this Plan, as
determined in accordance with Section 13 hereof, shall be automatically
granted an Option to purchase thirty two thousand (32,000) Shares (the “First
Option”) on the date on which such person first becomes an Outside Director,
whether through election by the stockholders of the Company or appointment by
the Board to fill a vacancy; provided, however, that an Inside Director who
ceases to be an Inside Director but who remains a Director shall not receive a
First Option.

(d)           Each Outside
Director shall be automatically granted an Option to purchase eight thousand
(8,000) Shares (a “Subsequent Option”) on the date of the annual meeting of the
stockholders of the Company, if as of such date, he or she shall have served on
the Board for at least the preceding six (6) months.

(e)           Notwithstanding the
provisions of subsections (c) and (d) hereof, any exercise of an
Option granted before the Company has obtained stockholder approval of the Plan
in accordance with Section 18 hereof shall be conditioned upon obtaining
such stockholder approval of the Plan in accordance with Section 18
hereof.

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

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

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

(iii)  subject
to Section 11 hereof, the First Option shall vest and become exercisable
as to twenty five percent (25%) of the Shares subject to the First Option on
each anniversary of its date of grant, provided that the Optionee continues to
serve as a Director on such dates.

 12
 

(iv)  subject
to Section 11 hereof, the Subsequent Option shall vest and become
exercisable as to twelve and one-half percent (12.5%) of the Shares subject to
the Subsequent Option on the first day of each month following its date of
grant, provided that the Optionee continues to serve as a Director on such
date.

11.           Adjustments
Upon Changes in Capitalization, Merger or Change in Control.

(a)           Changes in Capitalization. Subject
to any required action by the stockholders of the Company, the number of shares
of Common Stock that have been authorized for issuance under the Plan but as to
which no Awards have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Awards, the number of Shares that may be added
annually to the Plan pursuant to Section 3(i), the number of shares that
may be granted pursuant to the automatic grant provisions of Section 10,
and the number of shares of Common Stock as well as the price per share of
Common Stock covered by each such outstanding Award shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Award.

(b)           Dissolution or Liquidation. In
the event of the proposed dissolution or liquidation of the Company, the
Administrator shall notify each Optionee as soon as practicable prior to the
effective date of such proposed transaction. The Administrator in its
discretion may provide for an Optionee to have the right to exercise his or her
Option until ten (10) days prior to such transaction as to all of the
Optioned Stock covered thereby, including Shares as to which the Option would
not otherwise be exercisable. In addition, the Administrator may provide that
any Company repurchase option applicable to any Shares purchased upon exercise
of an Award shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed action.

(c)           Merger or Change in Control. In
the event of a merger of the Company with or into another corporation, or a
Change in Control, each outstanding Award shall be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. With respect to Options granted to an Outside Director pursuant to Section 10
that are assumed or substituted for, if following such assumption or
substitution the Optionee’s status as a Director or a director of the successor
corporation, as applicable, is terminated other than upon a voluntary
resignation by the Optionee, then the Optionee shall fully vest in and have the
right to exercise the Option as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable.

 13
 

In the event that the
successor corporation does not assume or substitute for the Award, the Optionee
will fully vest in and have the right to exercise all of his or her outstanding
Options, including Shares as to which such Options would not otherwise be
vested or exercisable, and all restrictions on Restricted Stock and Restricted
Stock Units will lapse. If an Award is not assumed or substituted in the
event of a merger or Change in Control, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Award shall terminate upon the expiration of such period.

For the purposes
of this subsection (c), the Award shall be considered assumed if, following the
merger or Change in Control, the option or right confers the right to purchase
or receive, for each Share subject to the Award immediately prior to the merger
or Change in Control, the consideration (whether stock, cash, or other
securities or property) received in the merger or Change in Control by holders
of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or Change
in Control is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Award,
for each Share subject to the Award, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or Change in
Control.

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

13.           Term
of Plan. Subject to Section 18 of the Plan, the Plan shall become effective upon its
adoption by the Board. It shall continue in effect for a term of ten (10) years
unless terminated earlier under Section 14 of the Plan.

14.           Amendment
and Termination of the Plan.

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

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

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

 14
 

15.           Conditions
Upon Issuance of Shares.

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

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

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

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

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

 15

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