Document:

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                                                                   EXHIBIT 10.11

                           PLACEMENT AGENCY AGREEMENT

         This Placement Agency Agreement (this "Agreement") is made and entered
into as of August 26, 2003 (the "Effective Date"), by and between Verdisys,
Inc., a California corporation (the "Company"), and Stonegate Securities, Inc.,
a Texas corporation ("Stonegate").

         WHEREAS, the Company desires to retain Stonegate as its non-exclusive
placement agent, and Stonegate is willing to act in such capacity, in each case
subject to the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and Stonegate (each a "Party" and
collectively, the "Parties") hereby agree as follows:

1.       RETENTION OF STONEGATE; SCOPE OF SERVICES.

         (a)   Subject to the terms and conditions set forth herein, the Company
               hereby retains Stonegate to act as the non-exclusive placement
               agent to the Company during the Contract Period (as defined in
               Section 2 below), and Stonegate hereby agrees to be so retained.

         (b)   As the non-exclusive placement agent to the Company, Stonegate
               will have the non-exclusive right during the Contract Period to
               identify for the Company prospective purchasers (collectively,
               the "Purchasers" and each individually, a "Purchaser") in one or
               more placements (each , a "Placement", and collectively, the
               "Placements") of debt and/or equity securities to be issued by
               the Company, the type and dollar amount being as mutually agreed
               to by the Parties (the "Securities"). The Company and Stonegate
               understand that the Company intends to undertake an initial
               "bridge" Placement of up to $3 million of Securities (the "Bridge
               Placement"), which Placement shall only qualify as such if it is
               completed on or prior to September 30, 2003. Thereafter, the
               Company intends to undertake a second Placement. All provisions
               of this Agreement applicable to a Placement shall also be
               applicable to the Bridge Placement, unless otherwise provided
               herein.

         (c)   Terms of the Placements shall be as set forth in subscription
               documents, including any stock purchase or subscription
               agreement, escrow agreement, registration rights agreement,
               warrant agreement and/or other documents to be executed and
               delivered in connection with the Placement (collectively, the
               "Subscription Documents"). The Placements are intended to be
               exempt from the registration requirements of the Securities Act
               of 1933, as amended (the "Securities Act"), pursuant to
               Regulation D ("Regulation D") of the rules and regulations of the
               Securities and Exchange Commission (the "SEC") promulgated under
               the Securities Act.

         (d)   Stonegate will act on a best efforts basis and will have no
               obligation to purchase any of the Securities offered in the
               Placements. During the Contract Period, Stonegate shall have the
               non-exclusive right to arrange for all sales of Securities in the
               Placements, including without limitation the non-exclusive right
               to identify potential buyers for the Securities. All sales of
               Securities in the Placements shall be subject to

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               the approval of the Company, which approval may be withheld in
               the Company's sole discretion.

2.       CONTRACT PERIOD AND TERMINATION.

         (a)   Stonegate shall act as the Company's non-exclusive placement
               agent under this Agreement for a period commencing on the
               Effective Date, and continuing until terminated by either Party
               upon 30 days notice to the other Party (the "Contract Period").

         (b)   Upon termination, neither party will have any further obligation
               under this Agreement, except as provided in Sections 5, 6, 7, 8,
               9 and 10 hereof.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The representations and warranties of the Company made to the
         Purchasers as set forth in the Subscription Documents are hereby
         incorporated by reference as of the date of consummation of the sale of
         the Securities (the "Closing") and all such representations and
         warranties are hereby deemed made by the Company directly to Stonegate
         as though set forth in full herein.

4.       COVENANTS OF THE COMPANY.

         The Company covenants and agrees as follows:

         (a)   Neither the Company nor any affiliate of the Company (as defined
               in Rule 501(b) of Regulation D) will sell, offer for sale or
               solicit offers to buy or otherwise negotiate in respect of any
               security (as defined in the Securities Act) of the Company which
               will be integrated with the sale of the Securities in a manner
               which would require the registration under the Securities Act of
               the Securities.

         (b)   Any and all filings and documents required to be filed in
               connection with or as a result of the Placement pursuant to
               federal and state securities laws are the responsibility of the
               Company and will be filed by the Company.

         (c)   Any press release to be issued by the Company announcing or
               referring to the Placement shall be subject to the prior review
               of Stonegate, and each such press release shall, at the request
               of Stonegate, identify Stonegate as the placement agent.
               Stonegate shall be permitted to publish a tombstone or similar
               advertisement upon completion of the Placement identifying itself
               as the Company's placement agent with respect thereto. This
               Agreement shall not be filed publicly by the Company without the
               prior written consent of Stonegate, unless required by applicable
               law or regulation.

5.       FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.

         (a)   In connection with Stonegate's activities hereunder on the
               Company's behalf, the Company shall furnish Stonegate with all
               reasonable information concerning the Company and its operations
               that Stonegate deems necessary or appropriate (the

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               "Company Information") and shall provide Stonegate with
               reasonable access to the Company's books, records, officers,
               directors, employees, accountants and counsel. The Company
               acknowledges and agrees that, in rendering its services
               hereunder, Stonegate will be using and relying upon the Company
               Information without independent verification thereof or
               independent appraisal of any of the Company's assets and may, in
               its sole discretion, use additional information contained in
               public reports or other information furnished by the Company or
               third parties.

         (b)   Stonegate agrees that the Company Information will be used solely
               for the purpose of performing its services hereunder. Subject to
               the limitations set forth in subsection (c) below, Stonegate will
               keep the Company Information provided hereunder confidential and
               will not disclose such Company Information or any portion
               thereof, except (i) to a third party contacted by Stonegate on
               behalf of, and with the prior approval of, the Company pursuant
               hereto who has agreed to be bound by a confidentiality agreement
               satisfactory in form and substance to the Company, or (ii) to any
               other person for which the Company's consent to disclose such
               Company Information has been obtained.

         (c)   Stonegate's confidentiality obligations under this Agreement
               shall not apply to any portion of the Company Information which
               (i) at the time of disclosure to Stonegate or thereafter is
               generally available to and known by the public (other than as a
               result of a disclosure directly or indirectly by Stonegate in
               violation of this Agreement); (ii) was available to Stonegate on
               a non-confidential basis from a source other than the Company,
               provided that such source is not and was not bound by a
               confidentiality agreement with the Company; (iii) has been
               independently acquired or developed by Stonegate without
               violating any of its obligations under this Agreement; or (iv)
               the disclosure of which is legally compelled (whether by
               deposition, interrogatory, request for documents, subpoena, civil
               or administrative investigative demand or other similar process).
               In the event that Stonegate becomes legally compelled to disclose
               any of the Company Information, Stonegate shall provide the
               Company with prompt prior written notice of such requirement so
               that the Company may seek a protective order or other appropriate
               remedy and/or waive compliance with the terms of this Agreement.

         (d)   The obligations of the Parties under this Section 5 shall survive
               the termination of this Agreement for 12 months.

6.       FEES AND EXPENSES.

         (a)   As compensation for services rendered by Stonegate in connection
               with the Bridge Placement, the Company agrees to pay Stonegate a
               fee of five percent (5%) of the gross proceeds from the sale of
               Securities sold in the Bridge Placement to any Stonegate Contacts
               (as defined in Section 8 below) (the "Bridge Agency Fee"). The
               Bridge Agency Fee shall be paid immediately upon the closing of
               each sale of Securities by the Company in the Bridge Placement.

         (b)   As compensation for services rendered by Stonegate in connection
               with a Placement (excluding the Bridge Placement), the Company
               agrees to pay Stonegate a fee of

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               eight percent (8%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts in the
               event total gross proceeds are less than $5 million, a fee of
               seven percent (7%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts if total
               gross proceeds are between $5 million and $10 million, and a fee
               of six percent (6%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts in the
               event total gross proceeds are in excess of $10 million (the
               "Agency Fee"). The Agency Fee shall be paid immediately upon the
               closing of each sale of Securities by the Company

         (c)   In order to compensate Stonegate for its initial diligence
               efforts, upon execution of this Agreement by the Parties, the
               Company shall issue and deliver to Stonegate a certificate
               evidencing 20,000 shares of the Company's common stock, no par
               value (the "Shares"). The Shares will not be registered under the
               Securities Act; provided, however, in the event Purchasers in the
               Placements are granted registration rights, the holders of the
               Shares shall automatically be granted identical registration
               rights.

         (d)   In addition, the Company shall also promptly reimburse Stonegate
               for all reasonable out-of-pocket expenses incurred by Stonegate
               and its directors, officers and employees in connection with the
               performance of Stonegate's services under this Agreement. For
               these purposes, "out-of-pocket expenses" shall include, but not
               be limited to, attorney's fees and costs, long distance
               telephone, facsimile, courier, mail, supplies, travel and similar
               expenses. Except for bills for long distance telephone,
               facsimile, federal express, courier, mail and supplies, Stonegate
               will not incur any expenses without the prior consent of the
               Company; and the Parties shall attempt to have the Company direct
               billed as often as possible for such expenses.

         (e)   Upon closing of the Bridge Placement, the Company agrees to issue
               to Stonegate a Securities Purchase Warrant (the "Bridge
               Representative's Warrant") entitling the holder(s) thereof to
               purchase an amount of Securities equal to five percent (5%) of
               the total number of Securities sold in the Bridge Placement to
               Stonegate Contacts for a period of five (5) years at an exercise
               price per share equal to the price at which the Securities are
               sold to Purchasers. The Representative's Warrant shall otherwise
               be substantially in the form of Exhibit A attached hereto.

         (f)   Upon closing of any Placement (excluding the Bridge Placement),
               the Company agrees to issue to Stonegate an additional
               Representative's Warrant entitling the holder(s) thereof to
               purchase an amount of Securities equal to ten percent (10%) of
               the total number of Securities sold in any such Placement to
               Stonegate Contacts for a period of five (5) years at an exercise
               price per share equal to the price at which the Securities are
               sold to Purchasers.

         (g)   The obligations of the Parties under this Section 6 shall survive
               the termination of this Agreement for any reason.

7.       INDEMNIFICATION.

         (a)   The Company agrees to indemnify and hold Stonegate harmless from
               and against any and all losses, claims, damages or liabilities
               (or actions, including securityholder

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               actions, in respect thereof) related to or arising out of
               Stonegate's engagement hereunder or its role in connection
               herewith, and will reimburse Stonegate for all reasonable
               expenses (including reasonable costs, expenses, awards and
               counsel fees and/or judgments) as they are incurred by Stonegate
               in connection with investigating, preparing for or defending any
               such action or claim, whether or not in connection with pending
               or threatened litigation in which Stonegate is a party. The
               Company will not, however, be responsible for any claims,
               liabilities, losses, damages or expenses which are finally
               judicially determined to have resulted primarily from the bad
               faith, gross negligence or willful misconduct of Stonegate. The
               Company also agrees that Stonegate shall not have any liability
               to the Company for or in connection with such engagement, except
               for any such liability for losses, claims, damages, liabilities
               or expenses incurred by the Company that result primarily from
               the bad faith, gross negligence or willful misconduct of
               Stonegate. In the event that the foregoing indemnity is
               unavailable (except by reason of the bad faith or gross
               negligence of Stonegate), then the Company shall contribute to
               amounts paid or payable by Stonegate in respect of its losses,
               claims, damages and liabilities in such proportion as
               appropriately reflects the relative benefits received by, and
               fault of, the Company and Stonegate in connection with the
               matters as to which such losses, claims, damages or liabilities
               relate, and other equitable considerations. The foregoing shall
               be in addition to any rights that Stonegate may have at common
               law or otherwise and shall extend upon the same terms to and
               inure to the benefit of any director, officer, employee, agent or
               controlling person of Stonegate. The Company hereby consents to
               personal jurisdiction, service and venue in any court in which
               any claim which is subject to this agreement is brought against
               Stonegate or any other person entitled to indemnification or
               contribution under this subsection (a).

         (b)   Stonegate agrees to indemnify and hold the Company harmless from
               and against any and all losses, claims, damages or liabilities
               (or actions, including securityholder actions, in respect
               thereof) which are finally judicially determined to have resulted
               primarily from the bad faith, gross negligence or willful
               misconduct of Stonegate, and will reimburse the Company for all
               reasonable expenses (including reasonable costs, expenses, awards
               and counsel fees and/or judgments) as they are incurred by the
               Company in connection with investigating, preparing for or
               defending any such action or claim, whether or not in connection
               with pending or threatened litigation in which the Company is a
               party. In the event that the foregoing indemnity is unavailable,
               then Stonegate shall contribute to amounts paid or payable by the
               Company in respect of its losses, claims, damages and liabilities
               in such proportion as appropriately reflects the relative
               benefits received by, and fault of, the Company and Stonegate in
               connection with the matters as to which such losses, claims,
               damages or liabilities relate, and other equitable
               considerations. The foregoing shall be in addition to any rights
               that the Company may have at common law or otherwise and shall
               extend upon the same terms to and inure to the benefit of any
               director, officer, employee, agent or controlling person of the
               Company. Stonegate hereby consents to personal jurisdiction,
               service and venue in any court in which any claim, which is
               subject to this agreement, is brought against the Company or any
               other person entitled to indemnification or contribution under
               this subsection (b).

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         (c)   The obligations of the Parties under this Section 7 shall survive
               the termination of this Agreement.

8.       NON-CIRCUMVENTION.

         The Company hereby agrees that, for a period of one year from the end
         of the Contract Period or other termination of this Agreement, the
         Company will not enter into any agreement, transaction or arrangement
         with any of the institutions (including their agents, principals and
         affiliates and the accounts and funds which they manage or advise)
         which Stonegate has introduced, directly or indirectly, to the Company
         as prospective purchasers of the Securities in the Placements
         (collectively, the "Stonegate Contacts"), regardless of whether a
         transaction is consummated with such prospective purchasers, unless the
         Company notifies Stonegate in writing of the agreement, transaction or
         arrangement, and pays Stonegate a fee equal to the Agency Fee for
         securities of the Company sold to Stonegate Contacts.

9.       GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
         THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT
         OF LAWS PROVISIONS THEREOF.

10.      ARBITRATION.

         Stonegate and the Company will attempt to settle any claim or
         controversy arising out of this Agreement through consultation and
         negotiation in good faith and a spirit of mutual cooperation. Any
         dispute which the parties cannot resolve may then be submitted by
         either party to binding arbitration in Dallas, Texas under the rules of
         the American Arbitration Association for resolution. Nothing in this
         paragraph will prevent either party from resorting to judicial
         proceedings if (a) good faith efforts to resolve the dispute under
         these procedures have been unsuccessful or (b) interim relief from a
         court is necessary to prevent serious and irreparable injury.

11.      NO WAIVER.

         The failure or neglect of any party hereto to insist, in any one or
         more instances, upon the strict performance of any of the terms or
         conditions of this Agreement, or waiver by any party of strict
         performance of any of the terms or conditions of this Agreement, shall
         not be construed as a waiver or relinquishment in the future of such
         term or condition, but the same shall continue in full force and
         effect.

12.      SUCCESSORS AND ASSIGNS.

         The benefits of this Agreement shall inure to the benefit of the
         Parties, their respective successors, assigns and representatives, and
         the obligations and liabilities assumed in this Agreement by the
         Parties shall be binding upon their respective successors and assigns.
         This Agreement may not be assigned by either Party without the express
         written consent of the other Party, which consent shall not be
         unreasonably withheld.

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13.      NOTICES.

         All notices and other communications required or permitted to be given
         under this Agreement shall be in writing and shall be delivered
         personally or sent by certified mail, return receipt requested,
         recognized overnight delivery service, or facsimile as follows:

                   If to the Company:

                   Verdisys, Inc.
                   201 Tipperary Lane
                   Alameda, CA 94502
                   Facsimile: (408) 873-0550
                   Attention: Andrew Wilson, Chief Financial Officer

                   If to Stonegate:

                   Stonegate Securities, Inc.
                   5950 Sherry Lane, Suite 410
                   Dallas, Texas  75225
                   Facsimile: (214) 987-1981
                   Attention: Scott Griffith, President

         Either Party may change its address or facsimile number set forth above
         by giving the other Party notice of such change in accordance with the
         provisions of this Section 13. A notice shall be deemed given (a) if by
         personal delivery, on the date of such delivery, (b) if by certified
         mail, on the date shown on the applicable return receipt, (c) if by
         overnight delivery service, on the day after the date delivered to the
         service, or (d) if by facsimile, on the date of transmission.

14.      NATURE OF RELATIONSHIP.

         The Parties intend that Stonegate's relationship to the Company and the
         relationship of each director, officer, employee or agent of Stonegate
         to the Company shall be that of an independent contractor and not as an
         employee of the Company or an affiliate thereof. Nothing contained in
         this Agreement shall constitute or be construed to be or create a
         partnership or joint venture between Stonegate and the Company or their
         respective successors or assigns. Neither Stonegate nor any director,
         officer, employee or agent of Stonegate shall be considered to be an
         employee of the Company by virtue of the services provided hereunder.

15.      MISCELLANEOUS.

         Stonegate's obligations under this Agreement are subject to the
         following general conditions:

         (a)   All relevant terms, conditions, and circumstances relating to the
               Placement will be reasonably satisfactory to Stonegate and its
               counsel.

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         (b)   Stonegate reserves the right to solicit the assistance of outside
               dealers ("Dealers") to assist in the offer and sale of the
               Placements; provided, however, that any such Dealers agree in
               writing to be bound by the terms of the Placement. It is
               understood that Stonegate, in its sole discretion, shall be
               entitled to pay over to any such Dealers any portion of the
               compensation received by Stonegate hereunder. The Company shall
               have no financial liability for any fees or expenses of any such
               Dealers.

16.      CAPTIONS.

         The Section titles herein are for reference purposes only and do not
         control or affect the meaning or interpretation of any term or
         provision hereof.

17.      AMENDMENTS.

         No alteration, amendment, change or addition hereto shall be binding or
         effective unless the same is set forth in a writing signed by a duly
         authorized representative of each Party.

18.      PARTIAL INVALIDITY.

         If it is finally determined that any term or provision hereof is
         invalid or unenforceable, (a) the remaining terms and provisions hereof
         shall be unimpaired, and (b) the invalid or unenforceable term or
         provision shall be replaced by a term or provision that is valid and
         enforceable and that comes as close as possible to expressing the
         intention of the invalid or unenforceable term or provision.

19.      ENTIRE AGREEMENT.

         This Agreement embodies the entire agreement and understanding of the
         Parties and supersedes any and all prior agreements, arrangements and
         understandings relating to the matters provided for herein.

20.      COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
         which shall be an original, but all of which together shall be
         considered one and the same agreement.

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         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above by duly authorized representatives of the Company and
Stonegate.

                                             VERDISYS, INC.

                                             By: /s/ Andrew Wilson
                                             Title: Chief Financial Officer

                                             STONEGATE SECURITIES, INC.

                                             By: /s/ Scott Griffith
                                             Title: President

                                       9<PAGE>
                                                                   EXHIBIT 10.12

                                 VERDISYS, INC.

                             2003 STOCK OPTION PLAN

      1. PURPOSES OF THE PLAN. The purposes of this Stock Option 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 hereof.

            (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) "Cause" means a termination of employment for good cause, as
      determined by the Administrator in its sole and absolute discretion.
      Examples include, but are not limited to, poor performance, dishonesty,
      violation of Company policy, procedures or rules, excessive absenteeism,
      excessive tardiness, insubordination, misconduct, or the unauthorized use
      or disclosure of confidential information or trade secrets of the Company.

            (e) "Change in Control" means the occurrence of any of the following
      events:

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

                  (ii) The consummation of a merger or consolidation of the
            Company with any other corporation or business entity, 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.

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

            (g) "Committee" means a committee of Directors appointed by the
      Board in accordance with Section 4 hereof.
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            (h) "Common Stock" means the Common Stock of the Company.

            (i) "Company" means Verdisys, Inc., a California corporation.

            (j) "Consultant" means any natural person who is engaged by the
      Company or any Parent or Subsidiary to render consulting or advisory
      services to such entity and who satisfies the requirements of subsection
      (c)(1) of Rule 701 under the Securities Act of 1933, as amended.

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

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

            (m) "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.

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

            (o) "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, its Fair
            Market Value shall be the mean between the high bid and low asked
            prices for the Common Stock on the day of determination; or

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

            (p) "Incentive Stock Option" means an Option intended to qualify as
      an incentive stock option within the meaning of Section 422 of the Code.

                                      -2-
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            (q) "Nonstatutory Stock Option" means an Option not intended to
      qualify as an Incentive Stock Option.

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

            (s) "Option Agreement" means a written or electronic 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 2003 Stock Option Plan.

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

            (y) "Share" means a share of the Common Stock, as adjusted in
      accordance with Section 12 below.

            (z) "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 subject to option
and sold under the Plan is 8,000,000 Shares. 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). However, 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 Shares of
restricted stock issued pursuant to an Option are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

      4. ADMINISTRATION OF THE PLAN.

            (a) Administrator. The Plan shall be administered by the Board or a
      Committee appointed by the Board, which Committee shall be constituted to
      comply with Applicable Laws.

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

                  (i) to determine the Fair Market Value;

                                      -3-
<PAGE>
                  (ii) to select the Service Providers to whom Options may from
            time to time be granted hereunder;

                  (iii) to determine the number of Shares to be covered by each
            such Option granted hereunder;

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

                  (v) to determine the terms and conditions 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 Common Stock
            relating thereto, based in each case on such factors as the
            Administrator, in its sole discretion, shall determine;

                  (vi) 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;

                  (vii) 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 Optionees 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; and

                  (viii) to construe and interpret the terms of the Plan and
            Options granted pursuant to the Plan.

            (c) Effect of Administrator's Decision. All decisions,
      determinations and interpretations of the Administrator shall be final and
      binding on all Optionees.

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

      6. LIMITATIONS.

            (a) Incentive Stock Option Limit. 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.

                                      -4-
<PAGE>
            (b) At-Will Employment. Neither the Plan nor any Option shall confer
      upon any Optionee any right with respect to continuing the Optionee's
      relationship as a Service Provider with the Company, nor shall it
      interfere in any way with his or her right or the Company's right to
      terminate such relationship at any time, with or without cause, and with
      or without notice.

      7. TERM OF PLAN. Subject to stockholder approval in accordance with
Section 18, the Plan shall become effective upon its adoption by the Board.
Unless sooner terminated under Section 14, it shall continue in effect for a
term of ten (10) years from the later of (i) the effective date of the Plan, or
(ii) the date of the most recent Board approval of an increase in the number of
shares reserved for issuance under the Plan.

      8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the 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 term of the 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 upon exercise of an Option shall be such price as is determined
      by the Administrator, but shall be subject to the following:

                  (i) In the case of an Incentive Stock Option

                        (A) granted to an Employee who, at the time of grant of
                  such Option, 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 exercise price shall
                  be no less than 110% of the Fair Market Value per Share on the
                  date of grant.

                        (B) granted to any other Employee, 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

                        (A) granted to a Service Provider who, at the time of
                  grant of such Option, 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 exercise price
                  shall be no less than 110% of the Fair Market Value per Share
                  on the date of grant.

                        (B) granted to any other Service Provider, the per Share
                  exercise price shall be no less than 85% 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 other than as required above
            pursuant to a merger or other corporate transaction.

                                      -5-
<PAGE>
            (b) Forms of Consideration. The consideration to be paid for the
      Shares to be issued upon exercise of an Option, including the method of
      payment, shall be determined by the Administrator (and, in the case of an
      Incentive Stock Option, shall be determined at the time of grant). Such
      consideration may consist of, without limitation, (1) cash, (2) check, (3)
      promissory note, or (4) any combination of the foregoing methods of
      payment. In making its determination as to the type of consideration to
      accept, the Administrator shall consider if acceptance of such
      consideration may be reasonably expected to benefit the Company.
      Notwithstanding the foregoing, the Administrator may permit an Optionee to
      exercise his or her Option by delivery of a full-recourse promissory note
      secured by the purchased Shares. The 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 hereof at
      such times and under such conditions as determined by the Administrator
      and set forth in the Option Agreement. Except in the case of Options
      granted to officers, Directors and Consultants, Options shall become
      exercisable at a rate of no less than 20% per year over five (5) years
      from the date the Options are granted. Unless the Administrator provides
      otherwise, vesting of Options granted hereunder to officers and Directors
      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 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 Shares,
      notwithstanding the exercise of the Option. The Company shall issue (or
      cause to be issued) such Shares promptly after the Option is exercised. No
      adjustment will be made for a dividend or other right for which the record
      date is prior to the date the Shares are issued, except as provided in
      Section 12 of the Plan.

            Exercise of an Option in any manner shall result in a decrease in
      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.

                                      -6-
<PAGE>
            (b) Termination of Relationship as a Service Provider. If an
      Optionee ceases to be a Service Provider, such Optionee may exercise his
      or her Option within thirty (30) days of termination, or such longer
      period of time as 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 the Option as set forth in the Option
      Agreement). 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 six (6) months of termination, or such
      longer period of time as 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). If, on the date of termination, the Optionee is not vested as
      to his or her entire Option, the Shares covered by the unvested portion of
      the Option shall revert to the Plan. If, after termination, the Optionee
      does not exercise his or her Option within the time specified herein, the
      Option shall terminate, and the Shares covered by such Option shall revert
      to the Plan.

            (d) Death of Optionee. If an Optionee dies while a Service Provider,
      the Option may be exercised within six (6) months following Optionee's
      death, or such longer period of time as specified in the Option Agreement,
      to the extent that the Option is vested on the date of death (but in no
      event 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 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. 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, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee, only by the Optionee. If the Administrator in its sole discretion
makes an Option transferable, such Option may only be transferred by (i) will,
(ii) the laws of descent and distribution, (iii) instrument to an inter vivos or
testamentary trust in which the Option is to be passed to beneficiaries upon the
death of the Optionee, or (iv) gift to a member of Optionee's immediate family
(as such term is defined in Rule 16a-1(e) of the Exchange Act). In addition, any
transferable Option shall contain additional terms and conditions as the
Administrator deems appropriate.

                                      -7-
<PAGE>
      12. 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 and type of Shares 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, and the number and type of Shares covered by each
      outstanding Option, as well as the price per Share covered by each such
      outstanding Option, shall be proportionately adjusted for any increase or
      decrease in the number or type of issued Shares 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. The 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, type or price of Shares 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 fifteen
      (15) 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.

            (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 Option shall be assumed or an equivalent option substituted by
      the successor corporation or a Parent or Subsidiary of the successor
      corporation. If, in such event, the Option is not assumed or substituted,
      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 Change in Control, 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 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

                                      -8-
<PAGE>
      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 Change
      in Control. If an Optionee is terminated (other than a voluntary
      termination or a termination for Cause) within two (2) months prior to or
      twenty-four (24) months following a merger or Change in Control, 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. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such later date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option is so granted 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 Board 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.

      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 Administrator 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.

                                      -9-
<PAGE>
      17. RESERVATION OF SHARES. The Company, during the term of this Plan,
shall 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. Any stockholder approval shall be obtained in
the degree and manner required under applicable laws.

      19. INFORMATION TO OPTIONEES. The Company shall provide informationin the
degree and manner required under applicable laws..

                                      -10-

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