Document:

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                                                                   EXHIBIT 10.4

                                                   IT IS UNLAWFUL TO CONSUMMATE
                                                   A SALE OR TRANSFER OF THIS
                                                   SECURITY, OR ANY INTEREST
                                                   THEREIN, OR TO RECEIVE ANY
                                                   CONSIDERATION THEREFOR,
                                                   WITHOUT THE PRIOR WRITTEN
                                                   CONSENT OF THE COMMISSIONER
                                                   OF CORPORATIONS OF THE STATE
                                                   OF CALIFORNIA, EXCEPT AS
                                                   PERMITTED IN THE
                                                   COMMISSIONER'S RULES.

                             INCENTIVE STOCK OPTION

[NAME], OPTIONEE:

         CIPHERGEN BIOSYSTEMS, INC. (the "Company"), pursuant to its 1993 Stock
Option Plan (the "Plan"), has this day granted to you, the optionee named above,
an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").

         The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").

         The details of your option are as follows:

         1. The total number of shares of Common Stock subject to this option is
[SHRSSPELLEDOUT] ([NO-OF-SHARES]). Subject to the limitations contained
herein, One-sixtieth (1/60) of the total number of shares will vest on
[VESTSTART] and an additional (1/60) shall be exercisable each full month
thereafter until all of such shares are exercisable, based upon the Optionee's
continued relationship with the corporation.

                  This option may be exercised only with respect to those shares
which are vested except as permitted under paragraph 3 of this Agreement.

(FORM FOR CASH AND EARLY EXERCISE)

                                      -1-

<PAGE>

         2. (a) The exercise price of this option is __________________________
______ per share, being not less than the fair market value of the Common Stock
on the date of grant of this option.

            (b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:

                (i) Payment of the exercise price per share in cash (including
check) at the time of exercise; or

                (ii) Payment pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of Common Stock.

         3. (a) Subject to the provisions of this option you may elect at any
time during your employment with the Company or an affiliate thereof, to
exercise the option as to any part or all of the shares subject to this option
at any time during the term hereof, including without limitation, a time prior
to the date of earliest exercise ("vesting") stated in paragraph 1 hereof;
PROVIDED, HOWEVER, that:

                (i) a partial exercise of this option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested
shares;

                (ii) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Early Exercise Stock Purchase Agreement
attached hereto;

                (iii) you shall enter into an Early Exercise Stock Purchase
Agreement in the form attached hereto with a vesting schedule that will result
in the same vesting as if no early exercise had occurred; and

                (iv) this option shall not be exercisable under this paragraph 3
to the extent such exercise would cause the aggregate fair market value of any
shares subject to incentive stock options granted you by the Company or any
affiliate (valued as of their grant date) which would become exercisable for the
first time during any calendar year to exceed $100,000.

            (b) The election provided in this paragraph 3 to purchase shares
upon the exercise of this option prior to the vesting dates shall cease upon
termination of your employment with the Company or an affiliate thereof and may
not be exercised after the date thereof.

                                      -2-

<PAGE>

         4. The minimum number of shares with respect to which this option
may be exercised at any one time is 100, except (a) as to an installment
subject to exercise, as set forth in paragraph 1, which amounts to fewer than
100 shares, in which case, as to the exercise of that installment, the number
of such shares in such installment shall be the minimum number of shares, and
(b) with respect to the final exercise of this option this minimum shall not
apply. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.

         5. Notwithstanding anything to the contrary contained herein, this
option may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.

         6. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on
[TERMINATIONDATE] (which date shall be no more than ten (10) years from date
this option is granted). In no event may this option be exercised on or after
the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the termination of
your employment with the Company or an affiliate of the Company (as defined in
the Plan) for any reason or for no reason unless

            (a) such termination of employment is due to your disability, in
which event the option shall terminate on the earlier of the termination date
set forth above or six (6) months following such termination of employment; or

            (b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or six (6) months after your death; or

            (c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of employment; or

            (d) exercise of the option within three (3) months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the termination date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your employment with the Company or an affiliate.

         However, this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.

                                      -3-

<PAGE>

         7. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
6(f) of the Plan.

            (b) By exercising this option you agree that:

                (i) the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise;

                (ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of this option that occurs within two (2) years after the
date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and

                (iii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering
of any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may be requested
by the Company or the representative of the underwriters. For purposes of
this restriction you will be deemed to own securities which (i) are owned
directly or indirectly by you, including securities held for your benefit by
nominees, custodians, brokers or pledgees; (ii) may be acquired by you within
sixty (60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for your brothers or sisters (whether by whole or half
blood) spouse, ancestors and lineal descendants; or (iv) are owned, directly
or indirectly, by or for a corporation, partnership, estate or trust of which
you are a shareholder, partner or beneficiary, but only to the extent of your
proportionate interest therein as a shareholder, partner or beneficiary
thereof. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.

         8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you. By
delivering written notice to the Company, in a form satisfactory to the Company,
you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise this option.

         9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.

                                      -4-

<PAGE>

         10. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.

         11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control. The Company may amend this option; PROVIDED, HOWEVER, that your
rights and obligations under this option shall not be impaired by any such
amendment unless the Company obtains your written consent.

         Dated the ____________________ 2000.

                                           Very truly yours,

                                           CIPHERGEN BIOSYSTEMS, INC.

                                           By:
                                               -------------------------------
                                               William E. Rich,
                                               President and Chief Executive
                                               Officer

         ATTACHMENTS:

                  1993 Stock option Plan
                  Form of Early Exercise Stock Purchase Agreement
                  Notice of Exercise
                  Section 83(b) Election

                                      -5-

<PAGE>

The undersigned:

            (a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and

            (b) Acknowledges that as of the date of grant of this option, it
sets forth the entire understanding between the undersigned optionee and the
Company and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:

         NONE     _______________
                  (Initial)

         OTHER    _______________________________________

                  ________________________________________

                  ________________________________________

         (c) Acknowledges receipt of a copy of Section 260.141.11 of Title 10 of
the California Code of Regulations.

                                     _________________________________________
                                     [NAME], OPTIONEE

                                     Address: ________________________________

                                              ________________________________

                                      -6-

<PAGE>

                     EARLY EXERCISE STOCK PURCHASE AGREEMENT

         THIS AGREEMENT is made by and between CIPHERGEN BIOSYSTEMS, INC., a
California corporation (the "Corporation"), and _____________________________
("Purchaser").

                                   WITNESSETH:

         WHEREAS, Purchaser holds a _________________ stock option to
purchase shares of common stock of the Corporation pursuant to the
Corporation's 1993 Stock Option Plan (the "Plan") which Purchaser desires to
exercise; and

         WHEREAS, Purchaser wishes to take advantage of the early exercise
provision of his option and therefore to enter into this Agreement;

         NOW, THEREFORE, IT IS AGREED between the parties as follows:

         1. Purchaser hereby agrees to purchase from the Corporation, and the
Corporation hereby agrees to sell to Purchaser, an aggregate of ________
shares of the common stock (the "Stock") of the Corporation, for an exercise
price of __________ per share (total exercise price: __________), payable in
cash.

         The closing hereunder shall occur at the offices of the Corporation on
the date of this Agreement or at such other time and place as the parties may
mutually agree upon in writing.

         At the closing, Purchaser shall deliver three (3) stock assignments in
the form of Exhibit B duly endorsed (with date and number of shares left blank),
joint escrow instructions (the "Joint Escrow Instructions") in the form of
Exhibit C, duly executed by Purchaser, and the total exercise price in cash.

(CASH)

                                       1.

<PAGE>

         At the closing or as soon thereafter as practicable, the Corporation
shall deliver to the Escrow Agent (as defined in paragraph 8 below) share
certificates for all of the Stock that is to be subject to the Purchase Option
(as defined in paragraph 2 below), and shall deliver share certificates to
Purchaser for all of the Stock, if any, that is not to be subject to the
Purchase Option.

         2. In accordance with the provisions of section 408(b) of the
California General Corporation Law, the Stock to be purchased by Purchaser
pursuant to this Agreement shall be subject to the following option ("Purchase
Option"):

            (a) In the event that Purchaser shall cease to be an employee of the
Corporation for any reason (including his death), or no reason, with or without
cause, the Purchase Option may be exercised. The Corporation shall have the
right at any time within ninety (90) days after such cessation of employment to
purchase from Purchaser or his personal representative, as the case may be, at
the price per share paid by Purchaser pursuant to this Agreement ("Option
Price"), up to but not exceeding the number of shares of the Stock shown on
Exhibit A hereto which is incorporated herein by this reference. Notwithstanding
the foregoing, however, if the expiration of the aforesaid ninety (90) day
period will occur prior to the date that is twenty-seven (27) months following
the date of this Agreement, the Corporation shall be entitled to extend the
period during which it shall be entitled to exercise such option to such date
that is twenty-seven (27) months following the date of this Agreement.

            (b) In addition, and without limiting the foregoing Purchase Option,
if at any time during the term of the Purchase Option, there occurs: (a) a
dissolution or liquidation of the Corporation; (b) a merger or consolidation
involving the Corporation in which the Corporation is not the surviving
corporation; (c) a reverse merger in which the Corporation is the surviving
corporation but the shares of the Corporation's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of other securities, cash or otherwise; or
(d) any other capital reorganization in which more than fifty percent (50%) of
the shares of the Corporation entitled to vote are exchanged, then: (i) if there
will be no successor to the Corporation, the Corporation shall have the right to
exercise its Purchase Option as to all or any portion of the Stock then subject
to the Purchase Option set forth above to the same extent as if Purchaser's
employment by the Corporation had ceased on the date preceding the date of
consummation of said event or transaction, or (ii) the Purchase Option may be
assigned to any successor of the Corporation, and the Purchase Option shall
apply if Purchaser shall cease for any reason to be an employee of such
successor on the same basis as set forth above. In that case, references herein
to the "Corporation" shall be deemed to refer to such successor.

            (c) The Corporation shall be entitled to pay for any shares
purchased pursuant to its Purchase Option at the Corporation's option in cash,
by offset against any indebtedness owing to the Corporation and given in payment
for the Stock by Purchaser, or a combination of both.

            (d) As used herein, employment with the Corporation shall include
employment with an affiliate of the Corporation.

                                       2.

<PAGE>

            (e) This Agreement is not an employment contract and nothing in this
Agreement shall be deemed to create in any way whatsoever any obligation on the
part of the Purchaser to continue in the employ of the Corporation, or of the
Corporation to continue Purchaser in the employ of the Corporation.

            (f) In the event that the Stock's Fair Market Value (as defined in
the Plan) is equal to or exceeds the Option Price on the date that the Purchaser
ceases to be employed, the Company shall exercise its purchase option to the
extent permitted by law.

         3. The Purchase Option may be exercised by giving written notice of
exercise delivered or mailed as provided in paragraph 14. Upon providing such
notice and payment or tender of the purchase price, the Corporation shall become
the legal and beneficial owner of the Stock being purchased and all rights and
interests therein or related thereto.

         4. If from time to time during the term of the Purchase Option there is
any stock dividend or liquidating dividend or distribution of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Corporation, then, in such event, any and all new,
substituted or additional securities or other property to which Purchaser is
entitled by reason of his ownership of Stock will be immediately subject to the
Purchase Option and be included in the word "Stock" for all purposes of the
Purchase Option with the same force and effect as the shares of Stock then
subject to the Purchase Option. While the total Option Price shall remain the
same after each such event, the Option Price per share of Stock upon exercise of
the Purchase Option shall be appropriately adjusted.

         5. All certificates representing any shares of Stock of the Corporation
subject to the provisions of this Agreement shall have endorsed thereon legends
in substantially the following form:

                (i) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN OPTION SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED
HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS CORPORATION. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY
SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT
OF THE ISSUER OF THESE SHARES."

                (ii) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."

                (iii) Any legend required to be placed thereon by the California
Commissioner of Corporations.

         6. Purchaser acknowledges that he is aware that the Stock to be issued
to him by the Corporation pursuant to this Agreement has not been registered
under the Securities Act of 1933, as amended (the "Act"), on the basis that no
distribution or public offering of the Stock is to be

                                       3.

<PAGE>

effected, and in this connection acknowledges that the Corporation is relying on
the following representations: Purchaser warrants and represents to the
Corporation that he is acquiring the Stock for investment and not with a view to
or for sale in connection with any distribution of the Stock or with any present
intention of distributing or selling the Stock and he does not presently have
reason to anticipate any change in circumstances or any particular occasion or
event which would cause him to sell the Stock. Purchaser recognizes that the
Stock must be held indefinitely unless it is subsequently registered under the
Act or an exemption from such registration is available and, further, recognizes
that the Corporation is under no obligation to register the Stock or to comply
with any exemption from such registration.

         7. Purchaser is aware that the Stock may not be sold pursuant to Rule
144 adopted under the Act unless certain conditions are met and until Purchaser
has held the Stock for at least two (2) years. Among the conditions for use of
Rule 144 is the availability of specified current public information about the
Corporation. Purchaser recognizes that the Corporation presently has no plans to
make such information available to the public.

         Whether or not the Purchase Option is exercised or has lapsed,
Purchaser further agrees not to make any disposition of any of the Stock in any
event unless and until:

            (a) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or

            (b)   (i)   Purchaser shall have notified the Corporation of the
proposed disposition and shall have furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
Purchaser shall have given the Corporation an opinion of counsel, which opinion
and counsel shall be satisfactory to the Corporation, to the effect that such
disposition will not require registration of the Stock under the Act.

         8. As security for his faithful performance of the terms of this
Agreement and to insure the availability for delivery of Purchaser's Stock upon
exercise of the Purchase Option herein provided for, Purchaser agrees, at the
closing hereunder (or as soon thereafter as practicable) to deliver (or have the
Corporation deliver on the Purchaser's behalf) to and deposit with the Secretary
of the Corporation, as escrow agent in this transaction (the "Escrow Agent"),
three (3) stock assignments duly endorsed (with date and number of shares left
blank) in the form attached hereto as Exhibit B, together with a certificate or
certificates evidencing all of the Stock subject to the Purchase Option; said
documents are to be held by the Escrow Agent and delivered by said Escrow Agent
pursuant to the Joint Escrow Instructions of the Corporation and Purchaser set
forth in Exhibit C attached hereto and incorporated herein by this reference,
which instructions shall also be delivered to the Escrow Agent at the closing
hereunder (or as soon thereafter as practicable).

         9. Purchaser shall not sell or transfer any of the Stock subject to the
Purchase Option or any interest therein so long as such Stock is subject to the
Purchase Option.

         10. The Corporation shall not be required (i) to transfer on its books
any shares of Stock of the Corporation which shall have been sold or transferred
in violation of any of the provisions set

                                       4.

<PAGE>

forth in this Agreement or (ii) to treat as owner of such shares or to accord
the right to vote as such owner or to pay dividends to any transferee to whom
such shares shall have been so transferred.

         11. Subject to the provisions of paragraphs 9 and 10 above, Purchaser
(but not any unapproved transferee) shall, during the term of this Agreement,
exercise all rights and privileges of a stockholder of the Corporation with
respect to the Stock.

         12. Purchaser acknowledges receipt of a copy of Section 260.141.11 of
Title 10 of the California Administrative Code, attached hereto as Exhibit D.

         13. The parties agree to execute such further instruments and to take
such further action as reasonably may be necessary to carry out the intent of
this Agreement.

         14. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Office Box, by registered or certified mail
with postage and fees prepaid, addressed to the other party hereto as his
address hereinafter shown below his signature or at such other address as such
party may designate by ten (10) days' advance written notice to the other party
hereto.

                                       5.

<PAGE>

         15. This Agreement shall bind and inure to the benefit of the
successors and assigns of the Corporation and, subject to the restrictions on
transfer herein set forth, inure to the benefit of and be binding upon
Purchaser, his heirs, executors, administrators, successors, and assigns.
Without limiting the generality of the foregoing, the Purchase Option of the
Corporation hereunder shall be assignable by the Corporation at any time or from
time to time, in whole or in part. Should the right of repurchase be assigned by
the Corporation, the assignee shall pay to the Corporation cash equal to the
excess, if any, of the Stock's Fair Market Value (as defined in the Plan) over
the Option Price.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ___________________________.

                                      CIPHERGEN BIOSYSTEMS, INC.

                                      By:______________________________________
                                          William E. Rich,
                                          President and Chief Executive Officer

                                      Address:
                                      490 San Antonio Road
                                      Palo Alto, CA 94306

                                      PURCHASER

                                      ________________________________________
                                      Signature Of Optionee

                                      ________________________________________
                                      Printed Name

                                      Address:
                                      ________________________________________

                                      ________________________________________

ATTACHMENTS:

Exhibit A             Vesting Schedule
Exhibit B             Assignment Separate from Certificate
Exhibit C             Joint Escrow Instructions
Exhibit D             Cal. Admin. Code, Title 10, Section 260.141.11

                                       6.

<PAGE>

                                    EXHIBIT A

                                VESTING SCHEDULE

                                                   NUMBER OF SHARES
                                                   SUBJECT TO
IF CESSATION OF EMPLOYMENT OCCURS:                 PURCHASE OPTION:

         Before _________________ ,19__            ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

         After___________________ ,19__
           but before__________________,19__       ____________________shares

<PAGE>

                                    EXHIBIT B

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR VALUE RECEIVED and pursuant to that certain Early Exercise Stock
Purchase Agreement dated as of _________________, _________________ hereby
sells, assigns and transfers unto CIPHERGEN BIOSYSTEMS, INC.
__________________________ (_______________________) shares of common stock of
Ciphergen Biosystems, Inc., a California corporation, standing in the
undersigned's name on the books of said corporation represented by Certificate
No. __________________ herewith, and does hereby irrevocably constitute and
appoint Wilson Sonsini Goodrich & Rosati attorney to transfer the said stock on
the books of the said corporation with full power of substitution in the
premises. This Assignment may be used only in accordance with and subject to the
terms and conditions of the Agreement, in connection with the repurchase of
shares of Common Stock issued to the undersigned pursuant to the Agreement, and
only to the extent that such shares remain subject to the Company's Purchase
Option under the Agreement.

Dated:     ____________________________

                                             Signature   _____________________

<PAGE>

                                    EXHIBIT C

                            JOINT ESCROW INSTRUCTIONS

Michael J. O'Donnell, Secretary
Ciphergen Biosystems, Inc.
c/o Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050

Dear Mr. O'Donnell:

         As Escrow Agent for both CIPHERGEN BIOSYSTEMS, INC., a California
corporation ("Corporation"), and the undersigned purchaser of stock of the
Corporation ("Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Early Exercise
Stock Purchase Agreement ("Agreement"), dated _____________________, to which a
copy of these Joint Escrow Instructions is attached as Exhibit C, in accordance
with the following instructions:

         1. In the event the Corporation or an assignee shall elect to exercise
the Purchase Option set forth in the Agreement, the Corporation or its assignee
will give to Purchaser and you a written notice specifying the number of shares
of stock to be purchased, the purchase price, and the time for a closing
hereunder at the principal office of the Corporation. Purchaser and the
Corporation hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.

         2. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Corporation against the
simultaneous delivery to you of the purchase price (which may include suitable
acknowledgment of cancellation of indebtedness) of the number of shares of stock
being purchased pursuant to the exercise of the Purchase Option.

         3. Purchaser irrevocably authorizes the Corporation to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.

         4. This escrow shall terminate upon expiration or exercise in full of
the Purchase Option, whichever occurs first.

                                       1.

<PAGE>

         5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged of all
further obligations hereunder; PROVIDED, HOWEVER, that if at the time of
termination of this escrow you are advised by the Corporation that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Corporation.

         6. Except at otherwise provided in these Joint Escrow Instructions,
your duties hereunder may be altered, amended, modified or revoked only by a
writing signed by all of the parties hereto.

         7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.

         8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.

         9. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

         10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

         11. You shall be entitled to employ such legal counsel (including
without limitation the firm of Wilson Sonsini Goodrich & Rosati) and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

         12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Corporation or if you shall resign by
written notice to each party. In the event of any such termination, the
Corporation may appoint any officer or assistant officer of the Corporation as
successor Escrow Agent and Purchaser hereby confirms the appointment of such
successor or successors as his attorney-in-fact and agent to the full extent of
your appointment.

                                       2.

<PAGE>

         13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

         14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you may (but are not obligated to) retain in your possession without
liability to anyone all or any part of said securities until such dispute shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction after
the time for appeal has expired and no appeal has been perfected, but you shall
be under no duty whatsoever to institute or defend any such proceedings.

         15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Box, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties hereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' written notice to each of the other parties hereto:

         CORPORATION:             CIPHERGEN BIOSYSTEMS, INC.
                                  490 San Antonio Road
                                  Palo Alto, CA 94306

         PURCHASER:

                                  ______________________________________

                                  ______________________________________

         SECRETARY:               MICHAEL J. O'DONNELL
                                  Ciphergen Biosystems, Inc.
                                  c/o Wilson Sonsini Goodrich & Rosati
                                  650 Page Mill Road
                                  Palo Alto, CA 94304-1050

         16. By signing these Joint Escrow Instructions you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.

                                       3.

<PAGE>

         17. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Corporation may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.

                                     Very truly yours,

                                     CIPHERGEN BIOSYSTEMS, INC.

                                     By: _____________________________________
                                         William E. Rich,
                                         President and Chief Executive Officer

                                     PURCHASER:

                                     _________________________________________

ESCROW AGENT:

_____________________________________
Michael J. O'Donnell, Secretary

                                       4.

<PAGE>

                                    EXHIBIT D

              STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
         TITLE 10. INVESTMENT - CHAPTER 3. COMMISSIONER OF CORPORATIONS

         260.141.11: RESTRICTION ON TRANSFER. (a) The issuer of any security
upon which a restriction on transfer has been imposed pursuant to Sections
260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.

         (b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

                  (1) to the issuer;
                  (2) pursuant to the order or process of any court;
                  (3) to any person described in Subdivision (i) of Section
         25102 of the Code or Section 260.105.14 of these rules;
                  (4) to the transferor's ancestors, descendants or spouse, or
         any custodian or trustee for the account of the transferror or the
         transferor's ancestors, descendants, or spouse; or to a transferee by a
         trustee or custodian for the account of the transferee or the
         transferee's ancestors, descendants or spouse;
                  (5) to holders of securities of the same class of the same
         issuer;
                  (6) by way of gift or donation inter vivos or on death;
                  (7) by or through a broker-dealer licensed under the Code
         (either acting as such or as a finder) to a resident of a foreign
         state, territory or country who is neither domiciled in this state to
         the knowledge of the broker-dealer, nor actually present in this state
         if the sale of such securities is not in violation of any securities
         law of the foreign state, territory or country concerned;
                  (8) to a broker-dealer licensed under the Code in a principal
         transaction, or as an underwriter or member of an underwriting
         syndicate or selling group;
                  (9) if the interest sold or transferred is a pledge or other
         lien given by the purchase to the seller upon a sale of the security
         for which the Commissioner's written consent is obtained or under this
         rule not required;
                  (10) by way of a sale qualified under Sections 25111, 25112,
         25113 or 25121 of the Code, of the securities to be transferred,
         provided that no order under Section 25140 or subdivision (a) of
         Section 25143 is in effect with respect to such qualification;
                  (11) by a corporation to a wholly owned subsidiary of such
         corporation, or by a wholly owned subsidiary of a corporation to such
         corporation;
                  (12) by way of an exchange qualified under Section 25111,
         25112 or 25113 of the Code, provided that no order under Section 25140
         or subdivision (a) of Section 25143 is in effect with respect to such
         qualification;
                  (13) between residents of foreign states, territories or
         countries who are neither domiciled nor actually present in this state;

                                       1.

<PAGE>

                  (14) to the State Controller pursuant to the Unclaimed
         Property Law or to the administrator of the unclaimed property law of
         another state; or
                  (15) by the State Controller pursuant to the Unclaimed
         Property Law or by the administrator of the unclaimed property law of
         another state if, in either such case, such person (i) discloses to
         potential purchasers at the sale that transfer of the securities is
         restricted under this rule, (ii) delivers to each purchaser a copy of
         this rule, and (iii) advises the Commissioner of the name of each
         purchaser;
                  (16) by a trustee to a successor trustee when such transfer
         does not involve a change in the beneficial ownership of the
         securities;
                  (17) by way of an offer and sale of outstanding securities in
         an issuer transaction that is subject to the qualification requirement
         of Section 25110 of the Code but exempt from that qualification
         requirement by subdivision (f) of Section 25102;

provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.

         (c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 1O-point size, reading as follows:

         "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
         ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
         THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
         STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

                                       2.

<PAGE>

                               NOTICE OF EXERCISE

Ciphergen Biosystems, Inc.
490 San Antonio Road
Palo Alto, CA 94306                              Date of Exercise:
                                                                  -------------

Ladies and Gentlemen:

         This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.

<TABLE>
<CAPTION>

         Type of option (check one):       Incentive / /        Nonstatutory / /

         <S>                               <C>                  <C>
         Stock option dated:               __________________

         Number of shares as
         to which option is
         exercised:                        __________________

         Certificates to be
         issued in name of:                __________________

         Total exercise price:             $_________________

         Cash payment delivered
         herewith:                         $_________________
</TABLE>

         By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the 1993 Stock Option Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and
(iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any shares
of Common Stock issued upon exercise of this option that occurs within two (2)
years after the date of grant of this option or within one (1) year after such
shares of Common Stock are issued upon exercise of this option.

                                       1.

<PAGE>

         I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:

         I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.

         I further acknowledge that I will not be able to resell the Shares for
at least ninety days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.

         I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.

         I further agree that, if required by the Company (or a representative
of the underwriters) in connection with the first underwritten registration of
the offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Act (the "Effective Date") as may be requested by the Company or the
representative of the underwriters. For purposes of this restriction I will be
deemed to own securities that (i) are owned directly or indirectly by me,
including securities held for my benefit by nominees, custodians, brokers or
pledges; (ii) may be acquired by me within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for my brothers or sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which I am a shareholder, partner or beneficiary, but only to
the extent of my proportionate interest therein as a shareholder, partner or
beneficiary thereof. I further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.

                                         Very truly yours,

                                         _____________________________________

                                       2.<PAGE>
                                                               Exhibit 10.5

                          CIPHERGEN BIOSYSTEMS, INC.

                               2000 STOCK PLAN

    1.   PURPOSES OF THE PLAN. The purposes of this 2000 Stock Plan are:

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

         -    to provide additional incentive to Employees, Directors and
              Consultants, and

         -    to promote the success of the Company's business.

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

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

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

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

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

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

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

         (f)  "COMMON STOCK" means the common stock of the Company.

         (g)  "COMPANY" means Ciphergen Biosystems, Inc., a Delaware
corporation.

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

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

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

<PAGE>

         (k)  "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety
days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, 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.

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

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

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

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

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

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

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

         (p)  "NOTICE OF GRANT" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.

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

                                      -2-

<PAGE>

         (r)  "OPTION" means a stock option granted pursuant to the Plan.

         (s)  "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.

         (t)  "OPTIONED STOCK" means the Common Stock subject to an Option.

         (u)  "OPTIONEE" means the holder of an outstanding Option granted
under the Plan.

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

         (w)  "PLAN" means this 2000 Stock Plan.

         (x)  "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.

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

         (z)  "SERVICE PROVIDER" means an Employee, Director or Consultant.

         (aa) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

         (bb) "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 12
of the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is 2,500,000 Shares, plus an annual increase to be added
on the first day of the Company's fiscal year, beginning fiscal year 2001,
equal to the lesser of (i) 5,000,000 Shares, (ii) 5% of the outstanding
Shares of Common Stock on the last day of the immediately preceding fiscal
year or (iii) an amount determined by the Board. The Shares may be
authorized, but unissued, or reacquired Common Stock.

         If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, however, that Shares that have actually been issued
under the Plan upon exercise of an Option shall not be returned to the Plan
and shall not become available for future distribution under the Plan, except
that if unvested Shares are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

                                      -3-

<PAGE>

    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 Options may be
granted hereunder;

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

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

              (v)   to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or 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 construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;

              (vii) 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;

                                      -4-

<PAGE>

              (viii) to modify or amend each Option (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;

              (ix)   to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option 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;

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

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

         (c)  EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Optionees and any other holders of Options or Shares issued under the
Plan.

    5.   ELIGIBILITY. Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

    6.   LIMITATIONS.

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

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

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

              (i)   No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 1,500,000 Shares.

                                      -5-

<PAGE>

              (ii)  In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 1,500,000
Shares, which shall not count against the limit set forth in subsection (i)
above.

              (iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 12.

    7.   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.

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

    9.   OPTION EXERCISE PRICE AND CONSIDERATION.

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

              (i)   In the case of an Incentive Stock Option

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

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

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

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

                                      -6-

<PAGE>

         (b)  WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions that must be satisfied before
the Option may be exercised.

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

              (i)    cash;

              (ii)   check;

              (iii)  promissory note;

              (iv)   other Shares which, 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;

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

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

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

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

Notwithstanding the foregoing, the Administrator may permit an Option to be
exercised by delivery of a full-recourse promissory note secured by the
purchased shares. All other terms of such promissory note shall be determined
by the Administrator in its sole discretion.

    10.  EXERCISE OF OPTION.

         (a)  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 Option 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 Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is

                                      -7-

<PAGE>

exercised. Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option Agreement
and the Plan. Shares issued upon exercise of an Option shall be issued in the
name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a 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 12 of the Plan.

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

         (b)  TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's
death or Disability, the Optionee may exercise his or her Option within such
period of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.

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

         (d)  DEATH OF OPTIONEE. If an Optionee dies while a Service
Provider, the Option may be exercised following Optionee's death within such
period of time as is specified in the Option 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 Option Agreement) by the Optionee's designated beneficiary, provided
such beneficiary has been designated prior to Optionee's death in a form
acceptable by 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

                                      -8-

<PAGE>

will or in accordance with the laws of descent and distribution. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following Optionee's death. If, at the
time of death, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall immediately revert
to the Plan. 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.

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

    12.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

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

         (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
Option shall lapse as to all such Shares, provided the proposed dissolution
or liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.

                                      -9-

<PAGE>

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

    13.  DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination
granting such Option, 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.

    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
Options granted under the Plan prior to the date of such termination.

                                     -10-

<PAGE>

    15.  CONDITIONS UPON ISSUANCE OF SHARES.

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

         (b)  INVESTMENT REPRESENTATIONS. As a condition to the exercise of
an Option, the Company may require the person exercising such Option 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.

                                     -11-

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