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                                                                    EXHIBIT 10.7

                              VLSI TECHNOLOGY, INC.

                                 1992 STOCK PLAN

            (As adopted by the Board of Directors on May 1, 1992 and
         as amended on November 17, 1994, March 12, 1996, March 21, 1997
           and May 4, 1998, and approved by the stockholders on August
             20, 1992, April 27, 1995, May 31, 1996, May 7, 1997 and
                             ________________, 1998)

        1. Purposes of the Plan. The purpose of this 1992 Stock Plan is to
enable the Company to provide an incentive to Employees and Consultants whose
present and potential contributions are important to the continued success of
the Company, to afford these individuals the opportunity to acquire a
proprietary interest in the Company, and to enable the Company to enlist and
retain the best available talent for positions of substantial responsibility. It
is intended that this purpose will be effected through the granting of Incentive
Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Stock
Purchase Rights, Stock Bonus Awards and Long-Term Performance Awards.

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

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

           (b) "Affiliated Company" means a corporation, whether now or
hereafter existing, which is not a Subsidiary but with respect to which the
Company owns, directly or indirectly through one or more Subsidiaries, at least
20% of the total voting power of all classes of stock.

           (c) "Applicable Laws" means the legal requirements relating to the
administration of stock option and equity incentive plans under applicable state
corporate and securities laws and under the Code.

           (d) "Board" means the Board of Directors of the Company.

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

           (f) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.

           (g) "Common Stock" means the Common Stock of the Company.

           (h) "Company" means VLSI Technology, Inc., a Delaware corporation.


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           (i) "Consultant" means (i) any person, including an advisor, who is
engaged by the Company or by a Parent or Subsidiary of the Company to render
consulting services to it and who is compensated for such services, provided
that the term "Consultant" shall not include Directors who are compensated,
through a director's fee or other standard director compensation, only for their
services as Directors of the Company, (ii) any currently authorized
manufacturer's representative or sales representative firm which sells products
of the Company or of a Parent or Subsidiary of the Company, as designated by the
Company in its sole discretion (which designation shall be subject to withdrawal
at any time for any or no reason), whether compensated by the Company for
service as such or not, or (iii) any individual who is employed by such a
manufacturer's representative or sales representative firm to perform services
which include the sale of products of the Company or of a Parent or Subsidiary
of the Company, whether compensated by the Company for such services or not.

           (j) "Continuous Status as an Employee or Consultant" means the
absence of any interruption or termination of service as an Employee or
Consultant, provided, however, that Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Administrator, including sick leave, military leave, or
any other personal leave; provided, however, that for purposes of Incentive
Stock Options, any such leave may not exceed ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract
(including certain Company policies) or statute; or (ii) transfers between
locations of the Company or between the Company, its Parent, its Subsidiaries,
its Affiliated Companies or its successor. In the case of a leave of absence
which extends for more than ninety (90) days and after which there is no
contractual or statutory guaranty of reemployment, the Employee's employment or
Consultant's service as such shall be deemed to have terminated on the
ninety-first (91st) day of such leave of absence.

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

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

           (m) "Employee" means any person, including Officers and Directors,
employed by the Company or by any Parent or Subsidiary of the Company, as such
term is defined under common law and interpreted by the rules and regulations
under the Code. Neither service as a Director nor the payment of a director's
fee by the Company shall be sufficient to constitute "employment" by the
Company.

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

           (o) "Fair Market Value" means, as of a specified date, the value of
Common Stock determined by the Administrator as follows:



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               (i) If the Common Stock is listed on any established stock
exchange or quoted on a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange (or, if listed on
more than one exchange, the exchange with the greatest volume of trading in
Common Stock) or system on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Administrator deems reliable; or

               (ii) If the Common Stock is quoted on the NASDAQ System (but is
not included on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the closing
bid and closing asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Administrator deems reliable; or

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

           (p) "Incentive Stock Option" means an Option that satisfies the
provisions of Section 422 of the Code.

           (q) "Insider" means an Officer or Director.

           (r) "Long-Term Performance Award" means an award granted pursuant to
Section 10 of the Plan.

           (s) "Nonstatutory Stock Option" means an Option that is not an
Incentive Stock Option.

           (t) "Notice of Grant" means a written notice evidencing certain terms
and conditions of an individual Option, Stock Purchase Right, SAR, Long-Term
Performance Award or Stock Bonus Award grant. The Notice of Grant is part of the
Option Agreement, the Restricted Stock Purchase Agreement, the SAR Agreement,
the Long-Term Performance Award agreement or the Stock Bonus Award agreement, as
the case may be.

           (u) "Officer" means an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

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

           (w) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
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grant. The Option Agreement is subject to the terms and conditions of the Plan
and the Notice of Grant.

           (x) "Optioned Stock" means the Common Stock subject to an Option or
Right.

           (y) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Right.

           (z) "Option Exchange Program" means a program whereby outstanding
options (whether originally granted under this Plan or under other plans of the
Company) are surrendered in exchange for Options with a lower exercise price.

           (aa) "Outside Director" shall mean a Director who is not an Employee.

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

           (cc) "Plan" means this 1992 Stock Plan.

           (dd) "Restricted Stock" means shares of Common Stock purchased
pursuant to Stock Purchase Rights granted under Section 8 of the Plan.

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

           (ff) "Right" means and includes SARs, Long-Term Performance Awards,
Stock Purchase Rights and Stock Bonus Awards granted pursuant to the Plan.

           (gg) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act
(or any successor to Rule 16b-3), as in effect when discretion is being
exercised with respect to the Plan.

           (hh) "SAR" means a stock appreciation right granted pursuant to
Section 7 of the Plan.

           (ii) "SAR Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The SAR Agreement is subject to the terms and conditions of the Plan and
the Notice of Grant.

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



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           (kk) "Stock Bonus Award" means an award granted pursuant to Section 9
of the Plan.

           (ll) "Stock Purchase Right" means a right to purchase Common Stock
granted pursuant to Section 8 of the Plan.

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

        In addition, the term "waiting period", the term "Performance Period",
the terms "Change in Control" and "Incumbent Directors" and the term "Tax Date"
shall have the meanings set forth in Sections 7, 10, 12 and 13 of the Plan,
respectively.

        3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the total number of Shares reserved and available for distribution
pursuant to awards made under the Plan shall be 11,500,000, subject to
stockholder approval at the 1998 Annual Meeting of Stockholders. The Shares may
be authorized but unissued or reacquired stock.

           If an Option or Right should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for other Options or Rights granted under the Plan.

           Notwithstanding any other provision of the Plan, Shares issued upon
exercise of Options or Rights under the Plan and later repurchased by the
Company shall not become available for future grant or sale under the Plan.

        4. Administration of the Plan.

           (a) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to Outside Directors,
Directors who are Employees, Officers who are not Directors, and Employees and
Consultants who are neither Directors nor Officers.

           (b) Administration With Respect to Directors and Officers. With
respect to grants of Options or Rights to Employees or Consultants who are also
Officers or Directors, the Plan shall be administered by (A) the Board, if the
Board may administer the Plan in compliance with the rules governing a plan
intended to qualify as a discretionary grant or award plan under Rule 16b-3, or
(B) a Committee designated by the Board to administer the Plan, which Committee
shall be constituted (I) in such a manner as to permit the Plan to comply with
the rules governing a plan intended to qualify as a discretionary grant or award
plan under Rule 16b-3 and (II) in such a manner as to satisfy the Applicable
Laws.



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           (c) Administration With Respect to Other Persons. With respect to
grants of Options or Rights or to Employees or Consultants who are neither
Directors nor Officers, the Plan shall be administered by (A) the Board or (B) a
Committee designated by the Board, which Committee shall be constituted in such
a manner as to satisfy the Applicable Laws.

           (d) Committee Composition. Once a Committee has been appointed
pursuant to subsection (b) or (c) of this Section 4, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of any Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies (however caused) or
remove all members of the Committee and thereafter directly administer the Plan,
all to the extent permitted by the Applicable Laws and, in the case of a
Committee appointed under subsection (b), to the extent permitted by Rule 16b-3
as it applies to a plan intended to qualify thereunder as a discretionary grant
or award plan.

           (e) 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, the Administrator shall have the authority, in its
discretion:

               (i) to grant Incentive Stock Options, Nonstatutory Stock Options,
SARs, Stock Purchase Rights, Stock Bonus Awards and Long-Term Performance
Awards;

               (ii) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(o) of the Plan;

               (iii) to select the Employees and Consultants to whom Options and
Rights may from time to time be granted hereunder;

               (iv) to determine whether and to what extent Options and Rights,
or any combination thereof, are granted hereunder;

               (v) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

               (vi) to approve forms of agreements for use under the Plan;

               (vii) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder and of the Options or
Rights so awarded (including, but not limited to, the exercise or purchase price
and any restriction or limitation regarding any Option or Right and/or the
shares of Common Stock relating thereto, based in each case on such factors as
the Administrator shall determine, in its sole discretion);



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               (viii) to determine whether and under what circumstances an
Option or Right may be settled in cash instead of Common Stock;

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

               (x) to modify or amend the terms and conditions of any Option or
Right, subject to Section 15 of the Plan (including, but not limited to,
accelerating vesting or waiving forfeiture restrictions);

               (xi) to institute an Option Exchange Program;

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

               (xiii) to interpret the Plan and to prescribe, amend and rescind
rules and regulations relating to the Plan; and

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

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

           (g) Suspension or Termination of Option or Right. If the Chief
Executive Officer or his or her designee reasonably believes that an Optionee
has committed an act of misconduct, the Chief Executive Officer may suspend the
Optionee's right to exercise any Option or Right or to receive any benefits
relating thereto pending a determination by the Administrator. If the
Administrator determines that an Optionee has committed an act of embezzlement,
fraud, dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company's rules resulting in loss,
damage or injury to the Company, or if an Optionee makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition, induces any Company customer to
breach a contract with the Company or induces any principal for whom the Company
acts as agent to terminate such agency relationship, neither the Optionee nor
his or her estate shall be entitled to exercise any Option or Right or to
receive any benefits relating to Options or Rights whatsoever. In making such
determination, the Administrator shall act fairly and shall give the Optionee an
opportunity to appear and present evidence on Optionee's behalf at a hearing
before the Administrator.

        5. Eligibility. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. 



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An Employee or Consultant who has been granted an Option or Right may, if he or
she is otherwise eligible, be granted additional Options or Rights.

        6. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the stockholders of the Company as described in Section 19. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.

        7. Options and SARs.

           (a) Options. The Administrator, in its discretion, may grant Options
to eligible participants and shall determine whether such Options shall be
Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a Notice of Grant, which shall expressly identify the Options as
either Incentive Stock Options or as Nonstatutory Stock Options and which shall
be in such form and contain such provisions as the Administrator shall from time
to time deem appropriate. Without limiting the foregoing, the Administrator may,
at any time, or from time to time, authorize the Company, with the consent of
the respective holders of outstanding options or rights, to issue Options or
Rights in exchange for the surrender and cancellation of any or all outstanding
options or rights held by such person. Option agreements shall contain the
following terms and conditions:

               (i) Exercise Price; Number of Shares. The Notice of Grant shall
specify the per Share exercise price for the Shares issuable pursuant to an
Option, which shall be such price as is determined by the Administrator. The
Notice of Grant shall also specify the number of Shares which are subject to the
Option.

               (ii) Waiting Period, Exercise Dates and Term. At the time an
Option is granted, the Administrator will determine the terms and conditions to
be satisfied before Shares may be purchased upon exercise of the Option,
including the date or dates on which Shares subject to the Option first become
available for purchase. The Administrator may specify that an Option may not be
exercised until the completion of a specified service period or until certain
Company, Subsidiary, Affiliated Company or individual performance objectives are
met. Any such period is referred to herein as the "waiting period". At the time
an Option is granted, the Administrator shall fix the period within which the
Option may be exercised, which shall not be earlier than the end of the waiting
period, if any, nor, in the case of an Incentive Stock Option, later than ten
(10) years, from the date of grant. The Notice of Grant shall specify the term
of the Option.

               (iii) Form of Payment. The form of payment acceptable to the
Company in payment by an Optionee of the exercise price of Shares to be issued
upon exercise of an Option shall be determined by the Administrator (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant)
and, subject to compliance with the Delaware General Corporation Law, may
consist entirely of:



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                    (a) cash;

                    (b) check (personal, cashier's or certified) or money order;

                    (c) promissory note;

                    (d) other Shares which (I) 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 (II) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option is being exercised;

                    (e) delivery to the Company of (I) a properly executed
exercise notice, (II) irrevocable instructions to a broker to sell a sufficient
number of the Shares being exercised to cover the exercise price and to promptly
deliver to the Company the amount of sale proceeds required to pay the exercise
price and any required tax withholding relating to the exercise, and (III) such
other documentation as the Administrator and the broker shall require to effect
a same-day exercise and sale;

                    (f) delivery to the Company of (I) a properly executed
exercise notice, (II) irrevocable instructions to a broker or other third party
acceptable to the Company to hold the Shares being exercised as collateral for a
loan to the Optionee of an amount sufficient to cover the exercise price and to
promptly deliver to the Company the amount of loan proceeds required to pay the
exercise price and any required tax withholding relating to the exercise and
(III) such other documentation as the Administrator and the broker or other
third party shall require to effect the transaction;

                    (g) delivery of an irrevocable subscription agreement for
the Shares which irrevocably obligates the Optionee to take and pay for the
Shares not more than twelve months after the date of delivery of such
subscription agreement;

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

                    (i) such other method of payment for the issuance of Shares
as is permitted by the Applicable Laws.

               (iv) Special Incentive Stock Option Provisions. In addition to
the foregoing, Options granted under the Plan which are intended to be Incentive
Stock Options under Section 422 of the Code shall be subject to the following
terms and conditions:

                    (a) Exercise Price. The per share exercise price of an
Incentive Stock Option shall be no less than 100% of the Fair Market Value per
Share on the date of grant.



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                    (b) Dollar Limitation. If an Option granted hereunder to an
Optionee is intended to be an Incentive Stock Option, then to the extent that
such Option, when considered together with all other incentive stock options
held by Optionee (whether granted hereunder or under other plans of the Company
or its Parent or Subsidiaries), would cause the Fair Market Value of all shares
of stock of the Company, its Parent and Subsidiaries first becoming exercisable
by the Optionee during any calendar year to exceed $100,000, such Option shall
be treated as a Nonstatutory Stock Option. For purposes of the preceding
sentence, (1) options shall be taken into account in the order in which they
were granted, and (2) the Fair Market Value of the shares subject to the option
shall be determined as of the time the Option or other incentive stock option is
granted.

                    (c) 10% Stockholder. If any Optionee to whom an Incentive
Stock Option is to be granted pursuant to the provisions of the Plan is, on the
date of grant, the owner (as determined under Section 424(d) of the Code) of
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of a Parent or Subsidiary of the Company, then the
following special provisions shall be applicable to the Incentive Stock Option
granted to such individual:

                        (1) The per Share Option price of Shares subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
Common Stock on the date of grant; and

                        (2) The Option shall not have a term in excess of five
(5) years from the date of grant.

Except as modified by the preceding provisions of this subsection 7(a)(iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions of
the Plan shall be applicable to the Incentive Stock Options granted hereunder.

               (v) Other Provisions. Each Option granted under the Plan may
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator.

               (vi) Buy-out Provisions. The Administrator may at any time offer
on behalf of the Company 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, provided, however, that buy-out offers made to Insiders may only be
payable in cash. Any such cash offer made to an Officer or Director shall comply
with the applicable provisions of Rule 16b-3, if any.

           (b) SARs.

               (i) In Connection with Options. At the sole discretion of the
Administrator, SARs may be granted in connection with all or any part of an
Option, either concurrently with the grant of the Option or at any time
thereafter during the term of the 



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Option. The following provisions apply to SARs that are granted in connection
with Options:

                        (a) The SAR shall entitle the Optionee to exercise the 
SAR by surrendering to the Company unexercised a portion of the related Option.
The Optionee shall receive in exchange from the Company an amount equal to the
excess of (1) the Fair Market Value, on the date of exercise of the SAR, of the
Common Stock covered by the surrendered portion of the related Option over (2)
the exercise price of the Common Stock covered by the surrendered portion of the
related Option. Notwithstanding the foregoing, the Administrator may place
limits on the amount that may be paid upon exercise of an SAR; provided,
however, that such limit shall not restrict the exercisability of the related
Option.

                        (b) When an SAR is exercised, the related Option, to the
extent surrendered, shall be cancelled and shall cease to be exercisable.

                        (c) An SAR shall be exercisable only when and to the 
extent that the related Option is exercisable and shall expire no later than the
date on which the related Option expires. 

                        (d) An SAR may only be exercised at a time when the Fair
Market Value of the Common Stock covered by the related Option exceeds the
exercise price of the Common Stock covered by the related Option.

                    (ii) Independent of Options. At the sole discretion of the
Administrator, SARs may be granted independently without related Options. The
following provisions apply to SARs that are not granted in connection with
Options:

                        (a) The SAR shall entitle the Optionee, by exercising
the SAR, to receive from the Company an amount equal to the excess of (1) the
Fair Market Value of the Common Stock covered by the exercised portion of the
SAR, as of the date of such exercise, over (2) the Fair Market Value of the
Common Stock covered by the exercised portion of the SAR, as of the date on
which the SAR was granted; provided, however, that the Administrator may place
limits on the aggregate amount that may be paid upon exercise of an SAR.

                        (b) To the extent that an SAR is exercised, it shall be
cancelled and shall cease to be exercisable.

                        (c) SARs shall be exercisable, in whole or in part, at 
such times as the Administrator shall specify in the Optionee's SAR Agreement.

                        (d) An SAR may only be exercised at a time when the
Fair Market Value of the Common Stock on the exercise date exceeds the Fair
Market Value of the Common Stock on the date of grant of the SAR.



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                    (iii) Form of Payment. Unless otherwise specified in the SAR
Agreement, the Company's obligation arising upon the exercise of an SAR may be
paid in Common Stock or in cash, or in any combination of Common Stock and cash,
as the Administrator, in its sole discretion, may determine. Shares issued upon
the exercise of an SAR shall be valued at their Fair Market Value as of the date
of exercise.

                    (iv) Rule 16b-3. SARs granted to Insiders shall be subject
to any additional restrictions of Rule 16b-3 applicable to SARs granted to such
persons. An Insider may only exercise an SAR during such time or times as are
permitted by Rule 16b-3.

           (c) Exercise of Options and SARs.

                    (i) Right to Exercise. Any Option or SAR granted hereunder
shall be exercisable at such times and under such conditions as are determined
by the Administrator and as shall be permissible under the terms of the Plan.

                    (ii) No Fractional Shares. An Option or SAR may not be
exercised for a fraction of a Share.

                    (iii) Procedure for Exercise. An Option or SAR shall be
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Option or SAR by the person
entitled to exercise the Option or SAR and full payment for the Shares with
respect to which the Option or SAR is being exercised has been received by the
Company. Full payment may, as authorized by the Administrator (and, in the case
of an Incentive Stock Option, determined at the time of grant) and permitted by
the Option Agreement, consist of any consideration and method of payment
allowable under the Plan.

                    (iv) Rights as a Stockholder. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 12 of the Plan.

                    (v) Effect of Exercise. Exercise of an Option in any manner
shall result in a decrease in the number of Shares which thereafter shall be
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. Exercise of an SAR in any
manner shall, to the extent the SAR is exercised, result in a decrease in the
number of Shares which thereafter shall be available for purposes of the Plan,
and the SAR (and the related Option, if any) shall cease to be exercisable to
the extent it has been exercised.



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                    (vi) Leave of Absence. Options and SARs held by an Optionee
shall not be exercisable during the Optionee's leave of absence from his or her
employment or consulting relationship with the Company, any Parent or Subsidiary
or any Affiliated Company, regardless of the length of such leave, except as
otherwise required by law. With respect to an Optionee's leave of absence which
is ninety (90) days or less in duration, vesting of all Options and SARs held by
the Optionee shall continue uninterrupted during such leave unless otherwise
provided in the Option or SAR Agreement. With respect to an Optionee's leave of
absence which is more than ninety (90) days in duration, vesting of any or all
Options and SARs held by such Optionee shall be suspended until the end of such
leave unless (i) otherwise expressly provided in the Option or SAR Agreement or
(ii) prohibited by an applicable law or regulation. The employment of an
Optionee who takes a leave of absence of more than 90 days after which such
Optionee is not guaranteed re-employment by contract or statute shall be deemed
to have terminated for purposes of the Plan on the ninety-first (91st) day of
such leave of absence.

               (d) Rule 16b-3. Options and SARs granted to Insiders must comply
with the applicable provisions of Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.

               (e) Effect of Termination.

                    (i) Termination of Employment or Consulting Relationship. In
the event an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), such Optionee
may exercise his or her Option or SAR, but (A) only to the extent that the
Optionee was entitled to exercise it at the date of such termination, unless
otherwise permitted by the Administrator, and (B) only within such period of
time following the date of such termination not exceeding five (5) years as is
determined by the Administrator (with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option and not
exceeding three (3) months) and in no event later than the expiration of the
term of such Option or SAR as set forth in the Option or SAR Agreement. To the
extent that Optionee was not entitled to exercise an Option or SAR at the date
of such termination, and to the extent that the Optionee does not exercise such
Option or SAR (to the extent otherwise so entitled) within the time specified
herein, the Option or SAR shall terminate.

                    (ii) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option or SAR, but
(A) only to the extent that the Optionee was entitled to exercise it at the date
of such termination, unless otherwise permitted by the Administrator, and (B)
only within such period of time following the date of termination due to
Disability not exceeding ten (10) years as is determined by the Administrator
(with such determination being made at the time of grant of the Option in the
case of an Incentive Stock Option and not exceeding one (1) year) and in no
event later than the expiration of the term of such Option or SAR as set forth
in the Option or SAR




                                       13
<PAGE>   14

Agreement. To the extent that Optionee was not entitled to exercise an
Option or SAR at the date of such termination, and to the extent that the
Optionee does not exercise such Option or SAR (to the extent otherwise so
entitled) within the time specified herein, the Option or SAR shall terminate.

                    (iii) Death of Optionee. In the event of an Optionee's death
during the term of an Option or SAR, the Optionee's estate or a person who
acquired the right to exercise the deceased Optionee's Option or SAR by bequest
or inheritance may exercise the Option or SAR, but (A) only to the extent that
the Optionee was entitled to exercise it at the date of death, unless otherwise
permitted by the Administrator and (B) only within such period of time following
the date of death not exceeding ten (10) years as is determined by the
Administrator, and in no event later than the expiration of the term of such
Option or SAR as set forth in the Option or SAR Agreement. To the extent that
Optionee was not entitled to exercise an Option or SAR at the date of death, and
to the extent that the Optionee's estate or a person who acquired the right to
exercise such Option does not exercise such Option or SAR (to the extent
otherwise so entitled) within the time specified herein, the Option or SAR shall
terminate.

        8. 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 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 a written Notice of Grant of the terms, conditions and restrictions related
to the offer, including the number of Shares that the offeree shall be entitled
to purchase, the price to be paid, the form of payment that is acceptable (which
may, in the discretion of the Administrator, include any form of payment
enumerated in Section 7(a)(iii) hereof), and the time within which the offeree
must accept such offer, which shall in no event exceed sixty (60) days from the
date upon which the Administrator made the determination to grant the Stock
Purchase Right. The offer shall be accepted by execution of a Restricted Stock
Purchase Agreement in the form determined by the Administrator and payment of
the purchase price. Shares purchased pursuant to a Stock Purchase Right shall be
referred to herein as "Restricted Stock".

           (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 Continuous Status as an Employee or Consultant for any reason
(including death or Disability). The purchase price for Shares repurchased by
the Company pursuant to the provisions of 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, whether or not
such indebtedness is related to the original purchase of the Shares being
repurchased by the Company. The repurchase option shall lapse at such rate as
the Administrator may determine.



                                       14
<PAGE>   15

           (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. The
provisions of Restricted Stock Purchase Agreements need not be the same with
respect to each purchaser.

           (d) Rule 16b-3. Stock Purchase Rights granted to Insiders, and Shares
purchased by Insiders pursuant to Stock Purchase Rights, shall be subject to
such additional conditions or restrictions of Rule 16b-3 as may be applicable
thereto in order to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.

           (e) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will 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.

        9. Stock Bonus Awards. Stock Bonus Awards may be granted either alone,
in addition to or in tandem with other awards granted under the Plan and/or
awards made outside of the Plan. Stock Bonus Awards shall not require payment by
the Optionee of any consideration for the Shares covered by the Stock Bonus
Award. The Administrator shall determine, in its sole discretion, the terms,
conditions and restrictions relating to each Stock Bonus Award and shall
determine any performance or employment-related factors to be considered in the
granting of Stock Bonus Awards and the extent to which such Stock Bonus Awards
have been earned. Shares issued pursuant to a Stock Bonus Award may be made
subject to various conditions, including vesting or forfeiture provisions. Stock
Bonus Awards may vary from participant to participant and between groups of
participants. Each Stock Bonus Award shall be confirmed by, and be subject to
the terms of, a Stock Bonus Award agreement.

       10. Long-Term Performance Awards.

           (a) Awards. Long-Term Performance Awards are cash or stock bonus
awards that may be granted either alone, in addition to or in tandem with other
awards granted under the Plan and/or awards made outside of the Plan. Long-Term
Performance Awards shall not require payment by the Optionee of any
consideration for the Long-Term Performance Award or for the Shares covered by
such award. The Administrator shall determine the nature, length and starting
date of any performance period (the "Performance Period") for each Long-Term
Performance Award and shall determine the performance or employment factors, if
any, to be used in the determination of the value of Long-Term Performance
Awards and the extent to which such Long-Term Performance Awards have been
earned. Shares issued pursuant to a Long-Term Performance Award may be made
subject to various conditions, including vesting or forfeiture provisions.
Long-Term Performance Awards may vary from participant to participant and
between 



                                       15
<PAGE>   16

groups of participants and shall be based upon the achievement of Company,
Subsidiary, Parent, Affiliated Company and/or individual performance factors or
upon such other criteria as the Administrator may deem appropriate. Performance
Periods may overlap and participants may participate simultaneously with respect
to Long-Term Performance Awards that are subject to different Performance
Periods and different performance factors and criteria. Long-Term Performance
Awards shall be confirmed by, and be subject to the terms of, a Long-Term
Performance Award agreement.

           (b) Value of Awards. At the beginning of each Performance Period, the
Administrator may determine for each Long-Term Performance Award subject to such
Performance Period the range of dollar values and/or numbers of shares of Common
Stock to be awarded to the participant at the end of the Performance Period if
and to the extent that the relevant measures of performance for such Long-Term
Performance Award are met. Such dollar values or numbers of shares of Common
Stock may be fixed or may vary in accordance with such performance or other
criteria as may be determined by the Administrator.

           (c) Adjustment of Awards. Notwithstanding the provisions of Section
15 hereof, the Administrator may, after the grant of Long-Term Performance
Awards, adjust the performance factors applicable to such Long-Term Performance
Awards to take into account changes in the law or in accounting or tax rules and
to make such adjustments as the Administrator deems necessary or appropriate to
reflect the inclusion or exclusion of the impact of extraordinary or unusual
items, events or circumstances in order to avoid windfalls or hardships.

       11. Non-Transferability of Options. Options and Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option or Right may be exercised, during the lifetime of the Optionee, only by
the Optionee or by a transferee permitted by this Section 11.

       12. Adjustments Upon Changes in Capitalization, Dissolution, Merger,
Asset Sale or Change of Control.

           (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and 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 Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right, as well as the price per
share of Common Stock covered by each such outstanding Option or 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



                                       16
<PAGE>   17

increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator, whose determination in that respect shall be final,
binding and conclusive.

           (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Right
has not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Administrator may, in the exercise of
its sole discretion in such instances, declare that all Options and Rights shall
terminate as of a date fixed by the Administrator and give each Optionee the
right to exercise his or her Option or Right as to all or any part of the
Optioned Stock, including Shares as to which the Option or Right would not
otherwise be exercisable.

           (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 Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. However, the Administrator may, in
lieu of such assumption or substitution, provide for the Optionee to have the
right to exercise the Option or Right in full, including Shares as to which such
Options or Rights would not otherwise be exercisable. If the Administrator makes
an Option or Right fully exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee that the Option or Right shall be fully exercisable for a period of
time determined by the Administrator from the date of such notice, and the
Option or Right will terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Right shall be considered assumed if,
immediately following the merger or sale of assets, the option or right confers
the right to purchase, for each Share of Optioned Stock subject to the Option or
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 such 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 was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation and the participant, provide for the consideration to be
received upon the exercise of the Option or Right, for each Share of Optioned
Stock subject to the Option or 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.

           (d) Change in Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, unless otherwise determined by the
Administrator prior to the occurrence of such Change in Control, any Options and
Rights 



                                       17
<PAGE>   18

outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested.

           (e) Definition of "Change in Control". For purposes of this Section
12, a "Change in Control" means the happening of any of the following:

               (i) When any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities; or

               (ii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve an agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets; or

               (iii) A change in the composition of the Board of Directors of
the Company, as a result of which fewer than a majority of the directors in
office are Incumbent Directors. "Incumbent Directors" shall mean directors who
either (A) are directors of the Company as of the date the Plan is approved by
the stockholders, or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).

           (f) No Other Adjustments. Except as expressly provided or authorized
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into or exercisable for 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 Right.

        13. Stock Withholding to Satisfy Withholding Tax Obligations.

           (a) Ability to Use Stock to Satisfy Withholding. At the discretion of
the Administrator, Optionees may satisfy withholding obligations as provided in
this Section 13. When an Optionee incurs tax liability in connection with the
award, vesting or exercise of an Option or Right, which tax liability is subject
to tax withholding under applicable tax laws (including federal, state and local
laws), and the Optionee is obligated to pay the Company 



                                       18
<PAGE>   19

an amount required to be withheld under such applicable tax laws, the Optionee
may satisfy the withholding tax obligation (up to an amount calculated by
applying such Optionee's maximum marginal tax rate) by electing to have the
Company withhold from the Shares to be issued upon award, vesting or exercise of
the Option or Right that number of Shares, or by delivering to the Company that
number of previously owned Shares, having a Fair Market Value equal to the
amount required to be withheld. The Fair Market Value of the Shares to be
withheld or delivered, as the case may be, shall be determined on the date that
the amount of tax to be withheld is determined (the "Tax Date").

           (b) Election to Have Stock Withheld. All elections by an Optionee to
have Shares withheld or to deliver previously owned Shares pursuant to this
Section 13 shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:

               (i) the election must be made on or prior to the applicable Tax
Date;

               (ii) all elections shall be subject to the consent or disapproval
of the Administrator; and

               (iii) if the Optionee is an Insider, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

           (c) Section 83(b) Elections. In the event that an election to have
Shares withheld is made by an Optionee, no election is filed under Section 83(b)
of the Code by such Optionee and the Tax Date is deferred under Section 83 of
the Code, the Optionee shall receive the full number of Shares with respect to
which the Option or Right has been awarded, has vested or has been exercised, as
the case may be, but such Optionee shall be unconditionally obligated to tender
back to the Company the proper number of Shares on the Tax Date.

       14. Time of Granting Options and Rights. The date of grant of an Option
or Right shall, for all purposes, be the date on which the Administrator makes
the determination granting such Option or Right or such future date as is
specified in the resolutions of the Administrator grating such Option or Right.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option or Right is so granted within a reasonable time after the date of
such grant.

       15. Amendment and Termination of the Plan.

           (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan, but no amendment, alteration, suspension
or 



                                       19
<PAGE>   20

termination shall be made which would impair the rights of any Optionee under
any Option or Right theretofore granted without his or her consent.

           (b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor statute or
rule or other applicable law, rule or regulation, including the requirements of
any exchange or quotation system on which the Common Stock is listed or quoted).
Such stockholder approval, if required, shall be obtained in such a manner and
to such a degree as is required by the applicable law, rule or regulation.

           (c) Effect of Amendment or Termination. Any such amendment,
alteration, suspension or termination of the Plan shall not adversely affect
Options or Rights already granted and such Options and Rights shall remain in
full force and effect as if this Plan had not been amended, altered, suspended
or terminated, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.

       16. Conditions Upon Issuance of Shares.

           (a) Legal Compliance. Shares shall not be issued pursuant to the
award, vesting or exercise of an Option or Right unless the award, vesting or
exercise of such Option or Right, as the case may be, and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
applicable state securities laws and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.

           (b) Investment Representation. As a condition to the receipt of
Shares upon the award, vesting or exercise of an Option or Right, the Company
may require the person receiving such Shares to represent and warrant at the
time of any such award, vesting or exercise that the Shares are being acquired
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 by any of the aforementioned relevant provisions of law.

           (c) Regulatory 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.



                                       20
<PAGE>   21

           (d) Grants Exceeding Allotted Shares. If the Optioned Stock covered
by an Option or Right exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional stockholder approval, such
Option or Right shall be void with respect to such excess Optioned Stock, unless
stockholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 15(b)
of the Plan.

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

       18. Agreements. Options and Rights shall be evidenced by written
agreements in such form as the Administrator shall approve from time to time.

       19. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted as provided in Section 6. Such stockholder
approval shall be obtained in the degree and manner required under applicable
state and federal law.

       20. No Employment or Consulting Agreement. Neither the Plan nor any
Option or Right nor any agreement evidencing such awards nor the vesting thereof
shall confer upon an Optionee any right with respect to continuing the
Optionee's employment or consulting relationship with the Company, nor shall
they interfere in any way with the Optionee's right or the Company's right to
terminate such employment or consulting relationship at any time, with or
without cause.

       21. Performance-Based Plan Limitation. The following limitations shall
apply to grants of Options to Employees:

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

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

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

           (iv) If an Option is cancelled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction described
in Section 12), the cancelled Option will be counted against the limit set forth
in this Section 21. For this purpose, if the exercise price of an Option is
reduced, the transaction will be treated as a cancellation of the Option and the
grant of a new Option.



                                       21