ELECTRONIC IDENTIFICATION INC
EXHIBIT 10.1 - STOCK OPTION PLAN
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>exhibit10_1.txt
<DESCRIPTION>EXHIBIT 10.1 - STOCK OPTION PLAN
<TEXT>
                                  Exhibit 10.1


                         ELECTRONIC IDENTIFICATION, INC.
                             (A Nevada Corporation)
                    2004 COMBINED INCENTIVE AND NON-QUALIFIED
                                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. Stock Purchase
Rights may also be granted under the Plan.

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

          (a) "Administrator"  means the Board or any of its Committees as shall
     be administering the Plan in accordance with Section 4 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 foreign  country or  jurisdiction  where Options or
     Stock Purchase Rights 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 hereof.

          (f) "Common Stock" means the common stock of the Company.

          (g)  "Company"  means   ELECTRONIC   IDENTIFICATION   INC.,  a  Nevada
     corporation.

          (h) "Consultant" means any person who is engaged by the Company or any
     Parent or  Subsidiary  to render  consulting  or advisory  services to such
     entity.

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

          (j)  "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 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,  on the
     181st day of such leave,  any  Incentive  Stock Option held by the Optionee
     shall cease to be treated as an Incentive Stock Option and shall be treated
     for tax  purposes as a  Nonstatutory  Stock  Option.  Neither  service as a
     Director nor payment of a director's fee by the Company shall be sufficient
     to constitute "employment" by the Company.

                                       1
<PAGE>
2. Definitions - continued

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

          (l) "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  Small Cap  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  for the last
               market  trading  day  prior  to the  time  of  determination,  as
               reported in The Wall Street  Journal or such other  source as the
               Administrator deems reliable;

          (ii) If  the  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 last market  trading day prior
               to 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.

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

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

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

          (p) "Option  Agreement" means a written  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.

          (q) "Option  Exchange  Program"  means a program  whereby  outstanding
     Options are exchanged for Options with a lower exercise price.

          (r) "Optioned  Stock" means the Common Stock subject to an Option or a
     Stock Purchase Right.

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

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

          (u) "Plan" means this 2004 Stock Option Plan.

          (v) "Restricted  Stock" means shares of Common Stock acquired pursuant
     to a grant of a Stock Purchase Right under Section 10 below.

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

                                       2
<PAGE>
2. Definitions - continued

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

          (y) "Stock  Purchase  Right"  means a right to purchase  Common  Stock
     pursuant to Section 10 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 Three Million  (3,000,000)  Shares. The Shares may be
authorized but unissued, or reacquired Common Stock.

     If an Option or Stock  Purchase  Right  expires  or  becomes  unexercisable
without having been  exercised in full, or is surrendered  pursuant to an Option
Exchange Program, the unpurchased Shares 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 either an Option or Stock Purchase  Right,  shall not be returned to
the Plan and shall not become available for future  distribution under the Plan,
except  that if Shares of  Restricted  Stock are  repurchased  by the Company at
their original  purchase  price,  such Shares shall become  available for future
grant under the Plan.

     4. Administration of the Plan.

          (a) The Board shall  administer  the Plan 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;

          (ii) to  select  the  Service  Providers  to whom  Options  and  Stock
               Purchase Rights may from time to time be granted hereunder;


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

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

          (v)  to  determine  the terms and  conditions  of any  Option or Stock
               Purchase  Right  granted  hereunder.  Such  terms and  conditions
               include,  but are not limited to, the exercise price, the time or
               times when  Options  or Stock  Purchase  Rights may be  exercised
               (which  may  be  based  on  performance  criteria),  any  vesting
               acceleration  or  waiver  of  forfeiture  restrictions,  and  any
               restriction or limitation  regarding any Option or Stock Purchase
               Right of the Common Stock relating thereto, based in each case on
               such factors as the Administrator,  in its sole discretion, shall
               determine;

                                       3
<PAGE>
4. Administration of the Plan - continued

          (vi) to determine  whether and under what  circumstances an Option may
               be settled in cash under subsection 9(e) instead of Common Stock;

          (vii)to reduce the  exercise  price of any Option to the then  current
               Fair Market  Value if the Fair Market  Value of the Common  Stock
               covered by such Option has declined since the date the Option was
               granted;

          (viii) to initiate an Option Exchange Program;

          (ix) to prescribe, amend and rescind rules and regulations relating to
               the Plan,  including rules and regulations  relating to sub-plans
               established  for the  purpose of  qualifying  for  preferred  tax
               treatment under foreign tax laws;

          (x)  to allow  Optionees to satisfy  withholding  tax  obligations  by
               electing  to have the  Company  withhold  from the  Shares  to be
               issued upon  exercise of an Option or Stock  Purchase  Right that
               number of Shares  having a Fair Market  Value equal to the amount
               required to be  withheld.  The Fair Market Value of the Shares to
               be withheld  shall be  determined  on the date that the amount of
               tax  to be  withheld  is  to  be  determined.  All  elections  by
               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

          (xi) to  construe  and  interpret  the  terms of the  Plan and  awards
               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.

          (a)  Nonstatutory  Stock  Options  and Stock  Purchase  Rights  may be
     granted to Service  Providers.  Incentive Stock Options may be granted only
     to Employees.

          (b) 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 5(b),  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.

          (c)  Neither  the Plan nor any Option or Stock  Purchase  Right  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.

                                       4
<PAGE>
5. Eligibility - continued

     6. 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 sooner terminated under Section 14 of the Plan.

     7. 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 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.

     8. Option Exercise Price and Consideration.

          (a) 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 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,  the  per  Share
               exercise price shall be determined by the Administrator.

          (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.

          (b) 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: (i)
     cash, (ii) check, (iii) promissory note, (iv) other Shares which (A) in the
     case of Shares acquired upon exercise of an Option,  have been owned by the
     Optionee for more than six months on the date of surrender,  and (B) have a
     Fair Market Value on the date of surrender equal to the aggregate  exercise
     price of the  Shares  as to which  such  Option  shall  be  exercised,  (v)
     consideration  received by the Company  under a cashless  exercise  program
     implemented  by the  Company  in  connection  with  the  Plan,  or (vi) 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.

     9. Exercise of Option.

          (a)  Procedure  for  Exercise;  Rights as a  Shareholder.  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


                                       5
<PAGE>
9. Exercise of Option - continued

     set  forth in the  Option  Agreement.  Unless  the  Administrator  provides
     otherwise,  vesting of Options granted hereunder shall be tolled during any
     unpaid leave of absence. An Option may not be exercised for a fraction of a
     Share.

     An Option shall be deemed exercised when the Company receives:  (i) written
or electronic  notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is  exercised.  Full payment may consist of any
consideration  and  method  of  payment  authorized  by  the  Administrator  and
permitted by the Option  Agreement and the Plan.  Shares issued upon exercise of
an Option  shall be issued in the name of the  Optionee  or, if requested by the
Optionee,  in the name of the Optionee  and his or her spouse.  Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a  shareholder  shall exist with respect to the
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.

          (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 such period of time as is specified in the Option  Agreement
     (of at least 30 days) 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).  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 total and permanent  disability,  as
     defined in Section  22(e)(3) of the Code,  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  within such period of time as is specified in


                                       6
<PAGE>
9. Exercise of Option - continued

     the Option Agreement (but in no event later than the expiration of the term
     of such  Option as set forth in the  Notice of  Grant),  by the  Optionee's
     estate or by a person  who  acquires  the right to  exercise  the Option by
     bequest or inheritance, but only to the extent that the Option is vested on
     the  date of  death.  In the  absence  of a  specified  time in the  Option
     Agreement,  the Option  shall  remain  exercisable  for twelve  (12) months
     following  the  Optionee's  termination.  If,  at the  time of  death,  the
     Optionee is not vested as to his or her entire  Option,  the Shares covered
     by the unvested portion of the Option shall immediately revert to the Plan.
     The  Option  may be  exercised  by the  executor  or  administrator  of the
     Optionee's  estate or, if none, by the  person(s)  entitled to exercise the
     Option under the Optionee's will or the laws of descent or distribution. If
     the Option is not so exercised within the time specified herein, the Option
     shall terminate,  and the Shares covered by such Option shall revert to the
     Plan.

          (e) Buyout Provisions.  The Administrator may at any time offer to buy
     out for a payment in cash or Shares, an Option previously granted, based on
     such  terms  and  conditions  as  the  Administrator  shall  establish  and
     communicate to the Optionee at the time that such offer is made.

     10. Stock Purchase Rights.

          (a) Rights to Purchase.  Stock  Purchase  Rights may be issued  either
     alone,  in addition  to, or in tandem with other awards  granted  under the
     Plan and/or cash awards made outside of the Plan.  After the  Administrator
     determines  that it will offer Stock  Purchase  Rights  under the Plan,  it
     shall  advise  the  offeree  in  writing  or  electronically  of the terms,
     conditions and restrictions  related to the offer,  including the number of
     Shares that such person  shall be  entitled  to  purchase,  the price to be
     paid,  and the time within  which such  person must accept such offer.  The
     offer  shall be  accepted  by  execution  of a  Restricted  Stock  Purchase
     Agreement in the form determined by the Administrator.

          (b) Repurchase Option. Unless the Administrator  determines otherwise,
     the  Restricted  Stock  Purchase   Agreement  shall  grant  the  Company  a
     repurchase option exercisable upon the voluntary or involuntary termination
     of the purchaser's service with the Company for any reason (including death
     or disability).  The purchase price for Shares repurchased  pursuant to the
     Restricted Stock Purchase Agreement shall be the original price paid by the
     purchaser  and may be  paid  by  cancellation  of any  indebtedness  of the
     purchaser to the Company. The repurchase option shall lapse at such rate as
     the Administrator may determine.

          (c) Other  Provisions.  The Restricted Stock Purchase  Agreement shall
     contain such other terms,  provisions and conditions not inconsistent  with
     the Plan as may be determined by the Administrator in its sole discretion.

          (d)  Rights  as a  Shareholder.  Once  the  Stock  Purchase  Right  is
     exercised,  the  purchaser  shall  have  rights  equivalent  to  those of a
     shareholder and shall be a shareholder  when his or her purchase is entered
     upon the records of the duly authorized  transfer agent of the Company.  No
     adjustment shall be made for a dividend or other right for which the record
     date is prior to the date the Stock Purchase Right is exercised,  except as
     provided in Section 12 of the Plan.

     11.  Non-Transferability  of  Options  and Stock  Purchase  Rights.  Unless
determined otherwise by the Administrator, Options and Stock Purchase Rights may


                                       7
<PAGE>
11. Non-Transferability  of  Options  and Stock  Purchase  Rights - continued

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

     12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

          (a) Changes in  Capitalization.  Subject to any required action by the
     shareholders  of the Company,  the number of shares of Common Stock covered
     by each  outstanding  Option or Stock  Purchase  Right,  and the  number of
     shares of Common Stock which have been  authorized  for issuance  under the
     Plan but as to which no  Options  or Stock  Purchase  Rights  have yet been
     granted  or which  have  been  returned  to the Plan upon  cancellation  or
     expiration of an Option or Stock Purchase  Right,  as well as the price per
     share of Common  Stock  covered  by each such  outstanding  Option or Stock
     Purchase  Right,  shall be  proportionately  adjusted  for any  increase or
     decrease in the number of issued  shares 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. 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 or price of shares of Common  Stock  subject to
     an Option or Stock Purchase Right.

          (b)  Dissolution  or  Liquidation.   In  the  event  of  the  proposed
     dissolution or liquidation of the Company,  the Administrator  shall notify
     each Optionee as soon as  practicable  prior to the effective  date of such
     proposed  transaction.  The Administrator in its discretion may provide for
     an Optionee to have the right to exercise his or her Option  until  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 or Stock Purchase Right shall lapse as to all such Shares,  provided
     the proposed  dissolution or liquidation takes place at the time and in the
     manner contemplated. To the extent it has not been previously exercised, an
     Option or Stock  Purchase  Right will  terminate  immediately  prior to the
     consummation of such proposed action.

          (c) Merger or Asset Sale. In the event of a merger of the Company with
     or into another corporation, or the sale of substantially all of the assets
     of the Company,  each outstanding  Option and Stock Purchase Right shall be
     assumed  or an  equivalent  option or right  substituted  by the  successor
     corporation or a Parent or Subsidiary of the successor corporation.  In the
     event that the successor  corporation  refuses to assume or substitute  for
     the Option or Stock  Purchase  Right,  the Optionee shall fully vest in and
     have the right to exercise the Option or Stock  Purchase Right as to all of
     the Optioned Stock,  including Shares as to which it would not otherwise be
     vested or  exercisable.  If an Option or Stock Purchase Right becomes fully
     vested and  exercisable in lieu of assumption or  substitution in the event


                                       8
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12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale - continued

     of a merger or sale of assets, the Administrator  shall notify the Optionee
     in  writing,  by  facsimile,  or  electronically,  that the Option or Stock
     Purchase Right shall be fully exercisable for a period of fifteen (15) days
     from the date of such notice,  and the Option or Stock Purchase Right shall
     terminate  upon the  expiration  of such  period.  For the purposes of this
     paragraph,  the Option or Stock Purchase Right shall be considered  assumed
     if, following the merger or sale of assets, the option or right confers the
     right to purchase or receive,  for each Share of Optioned  Stock subject to
     the Option or Stock Purchase Right  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 or Stock  Purchase  Right,  for each Share of Optioned  Stock
     subject to the Option or Stock Purchase Right, 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. Time of Granting Options and Stock Purchase  Rights.  The date of grant
of an Option or Stock  Purchase  Right shall,  for all purposes,  be the date on
which the Administrator  makes the  determination  granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the  determination  shall be given to each Service Provider to whom an Option
or Stock Purchase Right 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) Shareholder Approval.  The Board shall obtain shareholder approval
     of any Plan amendment to the extent  necessary and desirable to comply with
     Applicable Laws.

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

     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.

                                       9
<PAGE>
15. Conditions Upon Issuance of Shares - continued

          (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.

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


                                       10
<PAGE>


</TEXT>
</DOCUMENT>
