EXHIBIT 10.2
 
COLDWATER CREEK INC.
1996 STOCK OPTION/STOCK ISSUANCE PLAN
(Amended and Restated as of July 13, 2002)
 
ARTICLE ONE
 
GENERAL
 
I.     PURPOSE OF THE PLAN
 
        This 1996 Stock Option/Stock Issuance Plan (the “Plan”) is intended to
promote the interests of Coldwater Creek Inc., a Delaware corporation (the
“Corporation”), by providing eligible individuals with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service
of the Corporation (or its parent or subsidiary corporations).
 
II.    DEFINITIONS
 
        A.    For purposes of the Plan, the following definitions shall be in
effect:
 
        Board:    the Corporation’s Board of Directors.
 
        Change in Control:    a change in ownership or control of the
Corporation effected through either of the following transactions:
 
                (i)    the acquisition directly or indirectly by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation’s stockholders which
the Board does not recommend such stockholders to accept; or
 
                (ii)    a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board.
 
        Code:    the Internal Revenue Code of 1986, as amended.
 
        Common Stock:    shares of the Corporation’s common stock.

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        Corporate Transaction:    either of the following stockholder-approved
transactions to which the Corporation is a party:
 
        (i)    a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation’s
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
 
        (ii)    the sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation.
 
        Disability:    the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which is expected to result in death or has lasted or can be
expected to last for a continuous period of not less than twelve (12) months.
However, for purposes of the Automatic Option Grant Program, Disability shall
mean the inability of the non-employee Board member to perform his or her usual
duties as a Board member by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of
twelve (12) months or more.
 
        Employee:    an individual who performs services while in the employ of
the Corporation or one or more parent or subsidiary corporations, subject to the
control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
 
        Exercise Date:    the date on which the Corporation shall have received
written notice of the option exercise.
 
        Fair Market Value:    the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:
 
        –    If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
on the date in question, as such price is reported by the National Association
of Securities Dealers on the Nasdaq National Market. If there is no reported
closing selling price for the Common Stock on the date in question, then the
closing selling price on the last preceding date for which such quotation exists
shall be determinative of Fair Market Value.
 
        –    If the Common Stock is at the time listed or admitted to trading on
any national securities exchange, then the Fair Market Value shall be the
closing selling price per share on the date in question on the exchange
determined by the Plan Administrator to be the primary market for the Common
Stock, as

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such price is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such exchange on the
date in question, then the Fair Market Value shall be the closing selling price
on the exchange on the last preceding date for which such quotation exists.
 
        –    If the Common Stock is on the date in question neither listed nor
admitted to trading on any national securities exchange nor traded on the Nasdaq
National Market, then the Fair Market Value of the Common Stock on such date
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
 
        –    For any option granted on the Automatic Option Grant Program
Effective Date, the Fair Market Value per share of Common Stock shall be deemed
equal to the price per share at which the Common Stock is sold in the initial
public offering pursuant to the Underwriting Agreement.
 
        Incentive Option:    a stock option which satisfies the requirements of
Code Section 422.
 
        Involuntary Termination:    the termination of any individual’s Service
which occurs by reason of:
 
        (iii)    such individual’s involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
 
        (iv)    such individual’s voluntary resignation following (A) a change
in his or her position with the Corporation which materially reduces his or her
level of responsibility, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of such individual’s place of employment by
more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual’s consent.
 
        Misconduct:    the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any parent or subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any parent or
subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
parent or subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee, Participant or other person in the Service of the Corporation (or
any parent or subsidiary).
 
        1933 Act:    the Securities Act of 1933, as amended from time to time.
 
        1934 Act:    the Securities Exchange Act of 1934, as amended from time
to time.

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        Non-Statutory Option:    a stock option not intended to meet the
requirements of Code Section 422.
 
        Optionee:    a person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program.
 
        Participant:    a person who is issued Common Stock under the Stock
Issuance Program.
 
        Plan Administrator:    either the Board, the Primary Committee or a
Secondary Committee, to the extent such entity is at the time responsible for
the administration of the Plan in accordance with Section IV of Article One.
 
        Plan Effective Date:    March 4, 1996.
 
        Primary Committee:    the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan with respect to
Section 16 Insiders.
 
        Secondary Committee:    a committee of one or more Board members
appointed by the Board to administer the Discretionary Option Grant and Stock
Issuance Programs with respect to eligible persons other than Section 16
Insiders.
 
        Service:    the performance of services on a periodic basis for the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option or stock issuance agreement.
 
        10% Stockholder:    the owner of stock (as determined under Code Section
424(d)) possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation or any parent or subsidiary
corporation.
 
        B.    The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
 
        Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a parent of
the Corporation, provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
 
        Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

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III.  STRUCTURE OF THE PLAN
 
        A.    Stock Programs.    The Plan shall be divided into three (3)
separate components: the Discretionary Option Grant Program specified in Article
Two, the Stock Issuance Program specified in Article Three and the Automatic
Option Grant Program specified in Article Four. Under the Discretionary Option
Grant Program, eligible individuals may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two. Under the Stock Issuance Program,
eligible individuals may be issued shares of Common Stock directly, either
through the immediate purchase of such shares at a price not less than one
hundred percent (100%) of the Fair Market Value of the shares at the time of
issuance or as a bonus for services rendered the Corporation. Under the
Automatic Option Grant Program, each individual serving as a non-employee Board
member on the Automatic Option Grant Program Effective Date and each individual
who first joins the Board as a non-employee director at any time after such
Effective Date shall at periodic intervals receive option grants to purchase
shares of Common Stock in accordance with the provisions of the Automatic Option
Grant Program of Article Four, with the first such grants to be made on the
Automatic Option Grant Program Effective Date.
 
        B.    General Provisions.    Unless the context clearly indicates
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.
 
        IV.  ADMINISTRATION OF THE PLAN
 
        A.    The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Administration of the Discretionary Option Grant
and Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board’s discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.
 
        B.    Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
 
        C.    Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
any option or stock issuance thereunder.

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        D.    Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Four, and the Plan Administrator shall exercise no discretionary functions with
respect to the grant of options pursuant to that program, but may amend such
options in accordance with the provisions of Article Four.
 
V.    OPTION GRANTS AND STOCK ISSUANCES
 
        A.    The persons eligible to participate in the Discretionary Option
Grant Program under Article Two and the Stock Issuance Program under Article
Three shall be limited to the following:
 
        (i)    officers and other key employees of the Corporation (or its
parent or subsidiary corporations) who render services which contribute to the
management, growth and financial success of the Corporation (or its parent or
subsidiary corporations);
 
        (ii)    non-employee members of the Board; and
 
        (iii)    those consultants or other independent advisors who provide
valuable services to the Corporation (or its parent or subsidiary corporations).
 
        B.    A Board member shall not vote as a member of the Board or a member
of a committee concerning any award, or amendment of any award, to such Board
member pursuant to the Discretionary Option Grant Program or the Stock Issuance
Program, other than an award or amendment that applies uniformly to all
non-employee Board members and shall absent himself or herself from the
discussion of any such award.
 
        C.    The Plan Administrator shall have full authority to determine, (i)
with respect to the option grants made under the Discretionary Option Grant
Program, which eligible individuals are to receive option grants, the time or
times when such options are to be granted, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding, and (ii) with respect to stock issuances under the Stock Issuance
Program, the number of shares to be issued to each Participant, the vesting
schedule (if any) to be applicable to the issued shares and the consideration
for which such shares are to be issued.
 
VI.    STOCK SUBJECT TO THE PLAN
 
        A.    The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 1,861,847 shares.
Such authorized share reserve consists of (i) the 1,111,847 shares initially
reserved under the Plan, (ii) an additional 350,000 shares added to the

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Plan as authorized by the Board in February 1998 and subsequently approved by
the stockholders, (iii) an additional 100,000 shares added to the Plan as
authorized by the Board in May 2000 and subsequently approved by the
stockholders plus (iv) an increase of 300,000 shares authorized by the Board in
May 2001 and subsequently approved by the stockholders.
 
        B.    In no event shall the aggregate number of shares of Common Stock
for which any one individual participating in the Plan may be granted stock
options and direct stock issuances exceed 250,793 shares per calendar year.
 
        C.    Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the shares subject to the portion of each
option not so exercised shall be available for subsequent option grants under
the Plan. Unvested shares issued under the Plan and subsequently cancelled or
repurchased by the Corporation, at the original issue price paid per share,
pursuant to the Corporation’s repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan. Should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an outstanding option under the Plan or the
vesting of a direct share issuance made under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised or which vest under
the share issuance, and not by the net number of shares of Common Stock actually
issued to the holder of such option or share issuance.
 
        D.    Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options and direct stock issuances in the aggregate per calendar year,
(iii) the number and/or class of securities for which automatic option grants
are to be subsequently made per eligible non-employee Board member under the
Automatic Option Grant Program and (iv) the number and/or class of securities
and price per share in effect under each option outstanding under either the
Discretionary Option Grant or Automatic Option Grant Program. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

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ARTICLE TWO
 
DISCRETIONARY OPTION GRANT PROGRAM
 
I.    TERMS AND CONDITIONS OF OPTIONS
 
        Options granted pursuant to the Discretionary Option Grant Program shall
be authorized by action of the Plan Administrator and may, at the Plan
Administrator’s discretion, be either Incentive Options or Non-Statutory
Options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted Non-Statutory Options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; provided, however, that each such instrument shall comply
with the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
 
        A.    Exercise Price.
 
                1.    The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
 
                (i)    The exercise price per share of Common Stock subject to
an Incentive Option shall in no event be less than one hundred percent (100%) of
the Fair Market Value of such Common Stock on the grant date.
 
                (ii)    The exercise price per share of Common Stock subject to
a Non-Statutory Option shall in no event be less than eighty-five percent (85%)
of the Fair Market Value of such Common Stock on the grant date.
 
                2.    The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Five, be payable as follows:
 
                (i)    in cash or check made payable to the Corporation;
 
                (ii)    in shares of Common Stock held by the Optionee for the
requisite period necessary to avoid a charge to the Corporation’s earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date, or
 
                (iii)    to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions (a) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by

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reason of such purchase and (b) to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm in order to complete
the sale transaction.
 
                3.    Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
 
        B.    Term and Exercise of Options.    Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set forth
in the instrument evidencing the grant. No such option, however, shall have a
maximum term in excess of ten (10) years from the grant date.
 
        During the lifetime of the Optionee, Incentive Options shall be
exercisable only by the Optionee and shall not be assignable or transferable by
the Optionee other than by will or by the laws of descent and distribution
following the Optionee’s death. However, a Non-Statutory Option may, in
connection with the Optionee’s estate plan, be assigned in whole or in part
during the Optionee’s lifetime to one or more members of the Optionee’s
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
 
        C.    Termination of Service.
 
                1.    Except to the extent otherwise provided pursuant to
subsection C.2 below, the following provisions shall govern the exercise period
applicable to any options held by the Optionee at the time of cessation of
Service or death:
 
                (i)    Should the Optionee cease to remain in Service for any
reason other than death or Disability, then the period during which each
outstanding option held by such Optionee is to remain exercisable shall be
limited to the three (3)-month period following the date of such cessation of
Service.
 
                (ii)    Should such Service terminate by reason of Disability,
then the period during which each outstanding option held by the Optionee is to
remain exercisable shall be limited to the twelve (12)-month period following
the date of such cessation of Service.
 
                (iii)    Should the Optionee die while holding one or more
outstanding options, then the period during which each such option is to remain
exercisable shall be limited to the twelve (12)-month period following the date
of the Optionee’s death. During such limited period, the option may be exercised
by the personal representative of the Optionee’s estate or by the person or
persons to

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whom the option is transferred pursuant to the Optionee’s will or in accordance
with the laws of descent and distribution.
 
        (iii)    Should the Optionee’s Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall terminate immediately
and cease to be outstanding.
 
        (iv)    Under no circumstances, however, shall any such option be
exercisable after the specified expiration date of the option term.
 
        (v)    During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the Optionee’s cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be exercisable for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee’s cessation
of Service for any reason, terminate and cease to be outstanding with respect to
any option shares for which the option is not at that time exercisable or in
which the Optionee is not otherwise at that time vested.
 
        (vi)    In the event of an Involuntary Termination following a Corporate
Transaction or a Change in Control, the provisions of Section III of this
Article Two shall govern the period for which the outstanding options are to
remain exercisable following the Optionee’s cessation of Service and shall
supersede any provisions to the contrary in this Section.
 
        2.    The Plan Administrator shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding,
 
–    to extend the period of time for which the option is to remain exercisable
following the Optionee’s cessation of Service or death from the limited period
in effect under subsection C.1 of this Article Two to such greater period of
time as the Plan Administrator shall deem appropriate; provided, that in no
event shall such option be exercisable after the specified expiration date of
the option term; and/or
 
–    to permit one or more options held by the Optionee under this Article Two
to be exercised, during the limited post-Service exercise period applicable
under this paragraph C., not only with respect to the number of vested shares of
Common Stock for which each such option is exercisable at the time of the
Optionee’s cessation of Service but also with respect to one or more subsequent
installments in which the Optionee would otherwise have vested had such
cessation of Service not occurred.

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        D.  Stockholder Rights.  An Optionee shall have no stockholder rights
with respect to any shares covered by the option until such individual shall
have exercised the option, paid the exercise price and become the holder of
record of the purchased shares.
 
        E.  Unvested Shares.    The Plan Administrator shall have the discretion
to authorize the issuance of unvested shares of Common Stock under this
Discretionary Option Grant Program. Should the Optionee cease Service while
holding such unvested shares, the Corporation shall have the right to
repurchase, at the exercise price paid per share any or all of those unvested
shares. The terms and conditions upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the agreement evidencing such repurchase right.
 
II.    INCENTIVE OPTIONS
 
        Incentive Options may only be granted to individuals who are Employees,
and the terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Except as modified by the provisions
of this Section II, all provisions of Articles One, Two and Five shall be
applicable to Incentive Options. Any Options specifically designated as
Non-Statutory shall not be subject to such terms and conditions.
 
        A.  Dollar Limitation.    The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option plan
of the Corporation or its parent or subsidiary corporations) may for the first
time become exercisable as incentive stock options under the Federal tax laws
during any one calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). To the extent the Employee holds two (2) or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as incentive
stock options under the Federal tax laws shall be applied on the basis of the
order in which such options are granted. Should the number of shares of Common
Stock for which any Incentive Option first becomes exercisable in any calendar
year exceed the applicable One Hundred Thousand Dollar ($100,000) limitation,
then that option may nevertheless be exercised in that calendar year for the
excess number of shares as a Non-Statutory Option under the Federal tax laws.
 
        B.  10% Stockholder.    If any individual to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred-ten percent (110%) of the Fair Market Value per share of
Common Stock on the grant date, and the option term shall not exceed five (5)
years measured from the grant date.
 
III.    CORPORATE TRANSACTION/CHANGE IN CONTROL
 
        A.  In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable
with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for any or all of those

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shares as fully-vested shares of Common Stock. However, an outstanding option
shall not so accelerate if and to the extent: (i) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof), (ii) such option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
option shares at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.
 
        B.    All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
 
        C.    Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
 
        D.    Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance under the remaining term of the Plan and (iii) the maximum number
and/or class of securities for which any one person may be granted stock options
and direct stock issuances under the Plan per calendar year.
 
        E.    The Plan Administrator shall have full power and authority to
grant options under the Discretionary Option Grant Program which will
automatically accelerate in the event the Optionee’s Service subsequently
terminates by reason of an Involuntary Termination within a designated period
(not to exceed twelve (12) months) following the effective date of any Corporate
Transaction in which those options are assumed or replaced and do not otherwise
accelerate. Any options so accelerated shall remain exercisable for fully-vested
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may structure one
or more of the Corporation’s outstanding repurchase rights so that those rights
shall immediately terminate with respect to any unvested shares held by the
Optionee at the time of such Involuntary Termination, and the shares subject to
those terminated repurchase rights shall accordingly vest in full upon such
Involuntary Termination.

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        F.    The Plan Administrator shall have full power and authority to
grant options under the Discretionary Option Grant Program which will
automatically accelerate in the event the Optionee’s Service subsequently
terminates by reason of an Involuntary Termination within a designated period
(not to exceed twelve (12) months) following the effective date of any Change in
Control. Each option so accelerated shall remain exercisable for fully-vested
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may structure one
or more of the Corporation’s outstanding repurchase rights so that those rights
shall immediately terminate with respect to any unvested shares held by the
Optionee at the time of such Involuntary Termination, and the shares subject to
those terminated repurchase rights shall accordingly vest in full.
 
        G.    The portion of any Incentive Option accelerated in connection with
a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
 
        H.    The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
 
IV.    CANCELLATION AND REGRANT OF OPTIONS
 
        The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under this Article Two and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an exercise price per share not less
than (i) one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the new grant date in the case of a grant of an Incentive Option, (ii)
one hundred ten percent (110%) of such Fair Market Value in the case of a grant
of an Incentive Option to a 10% Stockholder or (iii) eighty-five percent (85%)
of such Fair Market Value in the case of all other grants.

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ARTICLE THREE
 
STOCK ISSUANCE PROGRAM
 
I.    TERMS AND CONDITIONS OF STOCK ISSUANCES
 
        Shares of Common Stock may be issued under the Stock Issuance Program
directly without any intervening option grants. Each such stock issuance shall
be evidenced by a Stock Issuance Agreement which complies with the terms
specified below.
 
        A.    The shares shall be issued for such valid consideration as the
Plan Administrator may deem appropriate, but the value of such consideration as
determined by the Plan Administrator shall not be less than one hundred percent
(100%) of the Fair Market Value of the issued shares of Common Stock on the
issuance date.
 
        B.    The Plan Administrator shall have full power and authority to
issue shares of Common Stock under the Stock Issuance Program as a bonus for
past services rendered to the Corporation (or any parent or subsidiary). All
such bonus shares shall be fully and immediately vested upon issuance.
 
        C.    Subject to the provisions of Section I of Article Five, shares of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance: (i) cash or check made payable to the
Corporation, or (ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
 
        D.    Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant’s period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:
 
        (i)    the Service period to be completed by the Participant or the
performance objectives to be attained,
 
        (ii)    the number of installments in which the shares are to vest,
 
        (iii)    the interval or intervals (if any) which are to lapse between
installments, and
 
        (iv)    the effect which death, Permanent Disability or other event
designated by the Plan Administrator is to have upon the vesting schedule, shall
be determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement.

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        E.    Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant’s
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant’s unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
 
        F.    The Participant shall have full stockholder rights with respect to
any shares of Common Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant’s interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares.
 
        G.    Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one
or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Corporation for cancellation, and the Participant
shall have no further stockholder rights with respect to those shares. To the
extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant’s
purchase-money indebtedness), the Corporation shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to such surrendered shares.
 
        H.    The Plan Administrator shall have full power and authority,
exercisable upon a Participant’s termination of Service, to waive the surrender
and cancellation of any or all unvested shares of Common Stock (or other assets
attributable thereto) at the time held by that Participant, if the Plan
Administrator determines such waiver to be an appropriate severance benefit for
the Participant.
 
II.    CORPORATE TRANSACTION/CHANGE IN CONTROL
 
        A.    All of the Corporation’s outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
in connection with such Corporate Transaction or (ii) such accelerated vesting
is precluded by other limitations imposed in the Stock Issuance Agreement.
 
        B.    The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the Stock
Issuance Program in such manner that those repurchase rights shall automatically
terminate, and all the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event the Participant’s Service should
subsequently terminate by reason of an Involuntary Termination within twelve

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(12) months following the effective date of any Corporate Transaction in which
those repurchase rights are assigned to the successor corporation (or parent
thereof).
 
        C.    The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the Stock
Issuance Program in such manner that those repurchase rights shall automatically
terminate, and all the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event the Participant’s Service should
subsequently terminate by reason of an Involuntary Termination within twelve
(12) months following the effective date of any Change in Control.
 
III.    SHARE ESCROW/LEGENDS
 
Unvested shares may, in the Plan Administrator’s discretion, be held in escrow
by the Corporation until the Participant’s interest in such shares vests or may
be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

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ARTICLE FOUR
 
AUTOMATIC OPTION GRANT PROGRAM
 
I.      ELIGIBILITY
 
        The individuals eligible to receive automatic option grants pursuant to
the provisions of this Article Four program shall be limited to those
individuals who are serving as non-employee Board members or who are first
elected or appointed as non-employee Board members, whether through appointment
by the Board or election by the Corporation’s stockholders.
 
II.    TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
 
        A.    Grant Dates.    Option grants shall be made under this Article
Four on the dates specified below:
 
                1.    Initial Grant.    Each individual who is first elected or
appointed as a non-employee Board member after the Automatic Option Grant
Program Effective Date shall automatically be granted, on the date of such
initial election or appointment, a Non-Statutory Option to purchase 13,376
shares of Common Stock upon the terms and conditions of this Article Four. In no
event, however, shall a non-employee Board member be eligible to receive such an
initial option grant if such individual has at any time been in the prior employ
of the Corporation (or any parent or subsidiary corporation).
 
                2.    Annual Grant.    On the date of each Annual Stockholders
Meeting (beginning with the 2002 Annual Stockholders Meeting), each individual
who will continue to serve as a non-employee Board member shall automatically be
granted, whether or not such individual is standing for re-election as a Board
member at that Annual Meeting, a Non-Statutory Option to purchase an additional
2,500 shares of Common Stock upon the terms and conditions of this Article Four,
provided he or she has served as a non-employee Board member for at least six
(6) months prior to the date of such Annual Meeting. Non-employee Board members
who have previously been in the employ of the Corporation (or any parent or
subsidiary) shall be eligible to receive such annual option grants over their
continued period of Board service.
 
        There shall be no limit on the number of shares for which any one
non-employee Board member may be granted stock options under this Article Four
over his or her period of Board service.
 
        B.    Exercise Price.    The exercise price per share of Common Stock
subject to each automatic option grant made under this Article Four shall be
equal to one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the automatic grant date.

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        C.    Payment.    The exercise price shall be payable in one of the
alternative forms specified below:
 
        (i)    full payment in cash or check drawn to the Corporation’s order;
 
        (ii)    full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation’s earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date (as such
term is defined below);
 
        (iii)    full payment in a combination of shares of Common Stock held
for the requisite period necessary to avoid a charge to the Corporation’s
earnings for financial reporting purposes and valued at Fair Market Value on the
Exercise Date and cash or check drawn to the Corporation’s order; or
 
        (iv)    to the extent the option is exercised for vested shares, full
payment through a sale and remittance procedure pursuant to which the Optionee
shall provide irrevocable written instructions to (I) a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
shares and (II) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.
 
        Except to the extent the sale and remittance procedure specified above
is used for the exercise of the option for vested shares, payment of the
exercise price for the purchased shares must accompany the exercise notice.
 
        D.    Option Term.    Each automatic grant under this Article Four shall
have a maximum term of ten (10) years measured from the automatic grant date.
 
        E.    Exercisability/Vesting.    Each automatic grant shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee’s cessation of Board
service prior to vesting in those shares in accordance with the applicable
schedule below:
 
        Initial Grant.    Each initial 13,376-share automatic grant shall vest,
and the Corporation’s repurchase right shall lapse, in a series of three (3)
equal and successive annual installments over the Optionee’s period of continued
service as a Board member, with the first such installment to vest upon
Optionee’s completion of one (1) year of Board service measured from the
automatic grant date.

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        Annual Grant.    Each additional 2,500-share automatic grant shall vest,
and the Corporation’s repurchase right shall lapse, upon the Optionee’s
completion of one (1) year of Board service measured from the automatic grant
date.
 
        F.    Limited Transferability.    Each automatic option grant may, in
connection with the Optionee’s estate plan, be assigned in whole or in part
during the Optionee’s lifetime to one or more members of the Optionee’s
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
 
        G.    Effect of Termination of Board Membership.    The following
provisions shall govern the exercise of any outstanding options held by the
Optionee under this Article Four at the time the Optionee ceases to serve as a
Board member:
 
        (i)    The Optionee (or, in the event of Optionee’s death, the personal
representative of the Optionee’s estate or the person or persons to whom the
option is transferred pursuant to the Optionee’s will or in accordance with the
laws of descent and distribution) shall have a two (2)-year period following the
date of such cessation of Board service in which to exercise each such option.
However, each option shall, immediately upon the Optionee’s cessation of Board
service, terminate and cease to remain outstanding with respect to any option
shares in which the Optionee is not otherwise vested on the date of such
cessation of Board service.
 
        (ii)    During the two (2)-year period, the option may not be exercised
in the aggregate for more than the number of vested shares for which the option
is exercisable at the time of the Optionee’s cessation of Board service.
However, should the Optionee cease to serve as a Board member by reason of death
or Disability, then all shares at the time subject to the option shall
immediately vest so that such option may, during the two (2)-year exercise
period following such cessation of Board service, be exercised for all or any
portion of such shares as fully-vested shares.
 
        (iii)    In no event shall the option remain exercisable after the
expiration of the option term.
 
        H.    Stockholder Rights.    The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option, paid the exercise price and become the holder of record of
the purchased shares.

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        I.    Remaining Terms.    The remaining terms and conditions of each
automatic option grant shall be the same as the terms for option grants made
under the Discretionary Option Grant Program.
 
        III.    CORPORATE TRANSACTION/CHANGE IN CONTROL
 
        A.    In the event of any Corporate Transaction, the shares of Common
Stock at the time subject to each outstanding option under this Article Four but
not otherwise vested shall automatically vest in full so that each such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for all or any portion of
those shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, all automatic option grants under
this Article Four shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation or parent thereof.
 
        B.    Each outstanding option under this Article Four which is assumed
in connection with a Corporate Transaction outstanding shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply and pertain to
the number and class of securities which would have been issuable to the
Optionee in the consummation of such Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to (i) the class and number of securities
available for issuance under the Plan following the consummation of such
Corporate Transaction, and (ii) the exercise price payable per share, provided
the aggregate exercise price payable for such securities shall remain the same.
 
        C.    In connection with any Change in Control of the Corporation, the
shares of Common Stock at the time subject to each outstanding option under this
Article Four but not otherwise vested shall automatically vest in full so that
each such option shall, immediately prior to the specified effective date for
the Change in Control, become fully exercisable for all of the shares of Common
Stock at the time subject to that option and may be exercised for all or any
portion of those shares as fully-vested shares of Common Stock. Each such option
shall remain so exercisable for all the option shares following the Change in
Control, until the expiration or sooner termination of the option term.
 
        D.    The automatic option grants outstanding under this Article Four
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

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ARTICLE FIVE
MISCELLANEOUS
 
I.    LOANS OR INSTALLMENT PAYMENTS
 
        A.    The Plan Administrator may, in its discretion, assist any Optionee
or Participant (including an Optionee or Participant who is an officer of the
Corporation) in the exercise of one or more options granted to such Optionee
under the Discretionary Option Grant Program or the purchase of one or more
shares issued to such Participant under the Stock Issuance Program, including
the satisfaction of any Federal, state and local income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan from
the Corporation to such Optionee or Participant or (ii) permitting the Optionee
or Participant to pay the exercise price or purchase price for the purchased
Common Stock in installments over a period of years. The terms of any loan or
installment method of payment (including the interest rate and terms of
repayment) shall be upon such terms as the Plan Administrator specifies in the
applicable option or issuance agreement or otherwise deems appropriate at the
time such exercise price or purchase price becomes due and payable. Loans or
installment payments may be authorized with or without security or collateral.
In all events, the maximum credit available to the Optionee or Participant may
not exceed the option or purchase price of the acquired shares (less the par
value of such shares) plus any Federal, state and local income and employment
tax liability incurred by the Optionee or Participant in connection with the
acquisition of such shares.
 
        B.    The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness in whole or in part upon such terms and conditions as the
Plan Administrator may deem appropriate.
 
II.    AMENDMENT OF THE PLAN AND AWARDS
 
        A.    The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
 
        B.    (i)    Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and (ii) shares of Common Stock may
be issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option Grant
Program or the Stock Issuance Program are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess option grants or excess
share issuances are made, then (I) any

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unexercised excess options shall terminate and cease to be exercisable and (II)
the Corporation shall promptly refund the purchase price paid for any excess
shares actually issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow.
 
III.    TAX WITHHOLDING
 
        A.    The Corporation’s obligation to deliver shares of Common Stock
upon the exercise of stock options for such shares or the vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income tax and employment tax withholding requirements.
 
        B.    The Plan Administrator may, in its discretion and in accordance
with the provisions of this Section III and such supplemental rules as the Plan
Administrator may from time to time adopt (including the applicable safe-harbor
provisions of Rule 16b-3 of the Securities and Exchange Commission), provide any
or all holders of Non-Statutory Options (other than the automatic grants made
pursuant to Article Four of the Plan) or unvested shares under the Plan with the
right to use shares of Common Stock in satisfaction of all or part of the
Federal, state and local income and employment withholding tax liabilities
incurred by such holders in connection with the exercise of their options or the
vesting of their shares (the “Taxes”). Such right may be provided to any such
holder in either or both of the following formats:
 
        –    The holder of the Non-Statutory Option or unvested shares may be
provided with the election to have the Corporation withhold, from the shares of
Common Stock otherwise issuable upon the exercise of such Non-Statutory Option
or the vesting of such shares, a portion of those shares with an aggregate Fair
Market Value equal to the percentage of the applicable Taxes (not to exceed one
hundred percent (100%)) designated by the holder.
 
        –    The Plan Administrator may, in its discretion, provide the holder
of the Non-Statutory Option or the unvested shares with the election to deliver
to the Corporation, at the time the Non-Statutory Option is exercised or the
shares vest, one or more shares of Common Stock previously acquired by such
individual (other than in connection with the option exercise or share vesting
triggering the Taxes) with an aggregate Fair Market Value equal to the
percentage of the Taxes incurred in connection with such option exercise or
share vesting (not to exceed one hundred percent (100%)) designated by the
holder.
 
IV.    EFFECTIVE DATE AND TERM OF PLAN
 
        A.    The Discretionary Option Grant and Stock Issuance Programs of the
Plan became effective on March 4, 1996, upon the adoption of the Plan by the
Corporation’s Board of Directors. Such date is hereby designated the “Plan
Effective Date.” In addition, the Corporation’s stockholders approved the Plan
on the Plan Effective Date. The Automatic Option

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Grant Program became effective on January 28, 1997, in connection with the
initial public offering of the Common Stock.
 
        B.    The Plan was amended in February 1998 to increase the number of
shares of Common Stock reserved for issuance under the Plan by an additional
350,000 shares. The Corporation’s stockholders subsequently approved the
February 1998 amendment at the 1998 Annual Stockholders Meeting.
 
        C.    The Plan was amended by the Board on May 20, 2000 to increase the
number of shares of Common Stock reserved for issuance under the Plan by an
additional 100,000 shares. The Corporation’s stockholders subsequently approved
the May 2000 amendment at the 2000 Annual Stockholders Meeting.
 
        D.    The Plan was amended by the Board on May 12, 2001 to increase the
number of shares of Common Stock reserved for issuance under the Plan by an
additional 300,000 shares. The Corporation’s stockholders approved the May 2001
amendment at the 2001 Annual Stockholders Meeting.
 
        E.    The Plan was amended by the Board on July 14, 2001 to increase of
the number of shares subject to the annual option grants automatically made to
the non-Employee Board members from 1,672 to 2,500, subject to the Corporation’s
stockholder approval at the 2002 Annual Stockholders Meeting. If the
Corporation’s stockholders do not approve the July 2001 amendment, then the
provisions of the Plan as in effect immediately prior to the time the Board
approved the July 2001 amendment shall remain in effect, and option grants and
direct stock issuances may continue to be made pursuant to those provisions of
the Plan.
 
        F.    The Plan shall terminate upon the earlier of (i) March 3, 2006 or
(ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to the exercise of the options granted under the Plan
or the issuance of shares (whether vested or unvested) under the Stock Issuance
Program. If the date of termination is determined under clause (i) above, then
all option grants and unvested share issuances outstanding on such date shall
thereafter continue to have force and effect in accordance with the provisions
of the instruments evidencing such grants or issuance.
 
V.    REGULATORY APPROVALS
 
        The implementation of the Plan and the granting of any option or
issuance of shares under the Plan shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it, and the Common
Stock issued pursuant to it.
 
VI.    USE OF PROCEEDS
 
        Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes.

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VII.    NO EMPLOYMENT/SERVICE RIGHTS
 
        Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual’s employment or service at any time and for any reason, with or
without cause.
 
VIII.    MISCELLANEOUS PROVISIONS
 
        A.    Except as otherwise expressly provided under the Plan, the right
to acquire Common Stock or other assets under the Plan may not be assigned,
encumbered or otherwise transferred by any Optionee or Participant.
 
        B.    The provisions of the Plan relating to the exercise of options and
the vesting of shares shall be governed by the laws of the State of Delaware
without resort to that State’s conflict-of-laws rules.
 
        C.    The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.

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