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                                                                   EXHIBIT 10.10

                              PDF SOLUTIONS, INC.

                                2001 STOCK PLAN

            EFFECTIVE AS OF [DATE OF INITIAL PUBLIC OFFERING], 2001



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                               PDF SOLUTIONS, INC.

                                2001 STOCK PLAN

             EFFECTIVE AS OF [DATE OF INITIAL PUBLIC OFFERING], 2001



SECTION 1. INTRODUCTION.

        The Company's Board of Directors adopted the PDF Solutions, Inc. 2001
        Stock Plan on June 12, 2001 (the "Adoption Date"), and the Company's
        stockholders approved the Plan on [APPROVAL DATE]. The Plan is effective
        on the date of our initial public offering.

        The purpose of the Plan is to promote the long-term success of the
        Company and the creation of shareholder value by offering Key Employees
        an opportunity to acquire a proprietary interest in the success of the
        Company, or to increase such interest, and to encourage such selected
        persons to continue to provide services to the Company and to attract
        new individuals with outstanding qualifications.

        The Plan seeks to achieve this purpose by providing for Awards in the
        form of Stock Purchase Rights granting Restricted Stock and Options
        which may be Incentive Stock Options or Nonstatutory Stock Options.

        The Plan shall be governed by, and construed in accordance with, the
        laws of the State of Delaware (except its choice-of-law provisions).
        Capitalized terms shall have the meaning provided in Section 2 unless
        otherwise provided in this Plan or the applicable Stock Option Agreement
        or Restricted Stock Agreement.


SECTION 2. DEFINITIONS.

        (a) "AFFILIATE" means any entity other than a Subsidiary, if the Company
        and/or one or more Subsidiaries own not less than 50% of such entity.
        For purposes of determining an individual's "Service," this definition
        shall include any entity other than a Subsidiary, if the Company, a
        Parent and/or one or more Subsidiaries own not less than 50% of such
        entity.

        (b) "AWARD" means any award of an Option or Stock Purchase Right under
        the Plan.

        (c) "BOARD" means the Board of Directors of the Company, as constituted
        from time to time.

        (d) "CHANGE IN CONTROL" except as may otherwise be provided in a Stock
        Option Agreement or Restricted Stock Agreement, means the occurrence of
        any of the following:


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                        (i) The consummation of a merger or consolidation of the
                Company with or into another entity or any other corporate
                reorganization, if more than 50% of the combined voting power of
                the continuing or surviving entity's securities outstanding
                immediately after such merger, consolidation or other
                reorganization is owned by persons who were not stockholders of
                the Company immediately prior to such merger, consolidation or
                other reorganization;

                        (ii) The sale, transfer or other disposition of all or
                substantially all of the Company's assets;

                        (iii) A change in the composition of the Board, as a
                result of which fewer that one-half of the incumbent directors
                are directors who either (i) had been directors of the Company
                on the date 24 months prior to the date of the event that may
                constitute a Change in Control (the "original directors") or
                (ii) were elected, or nominated for election, to the Board with
                the affirmative votes of at least a majority of the aggregate of
                the original directors who were still in office at the time of
                the election or nomination and the directors whose election or
                nomination was previously so approved;

                        (iv) Any transaction as a result of which any person
                becomes the "beneficial owner" (as defined in Rule 13d-3 under
                the Exchange Act), directly or indirectly, of securities of the
                Company representing at least 20% of the total voting power
                represented by the Company's then outstanding voting securities.
                For purposes of this Paragraph (iii), the term "person" shall
                have the same meaning as when used in sections 13(d) and 14(d)
                of the Exchange Act but shall exclude:

                                (A) A trustee or other fiduciary holding
                        securities under an employee benefit plan of the Company
                        or a subsidiary of the Company;

                                (B) A corporation owned directly or indirectly
                        by the stockholders of the Company in substantially the
                        same proportions as their ownership of the common stock
                        of the Company; and

                                (C) The Company; or

                        (v) A complete liquidation or dissolution of the
                Company.

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

        (f) "COMMITTEE" means a committee consisting of one or more members of
        the Board that is appointed by the Board (as described in Section 3) to
        administer the Plan.

        (g) "COMMON STOCK" means the Company's common stock.

        (h) "COMPANY" means PDF Solutions, Inc.


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        (i) "CONSULTANT" means an individual who performs bona fide services to
        the Company, a Parent, a Subsidiary or an Affiliate other than as an
        Employee or Director or Non-Employee Director.

        (j) "DIRECTOR" means a member of the Board who is also an Employee.

        (k) "DISABILITY" means that the Key Employee is unable to engage in any
        substantial gainful activity by reason of any medically determinable
        physical or mental impairment which can be expected to result in death
        or which has lasted or can be expected to last for a continuous period
        of not less than 12 months.

        (l) "EMPLOYEE" means any individual who is a common-law employee of the
        Company, a Parent, a Subsidiary or an Affiliate.

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

        (n) "EXERCISE PRICE" means, in the case of an Option, the amount for
        which a Share may be purchased upon exercise of such Option, as
        specified in the applicable Stock Option Agreement.

        (o) "FAIR MARKET VALUE" means the market price of Shares, determined by
        the Committee as follows:

                (i) If the Shares were traded on a stock exchange on the date in
        question, then the Fair Market Value shall be equal to the last trading
        price reported by the applicable composite transactions report for such
        date;

                (ii) If the Shares were traded over-the-counter on the date in
        question and were classified as a national market issue, then the Fair
        Market Value shall be equal to the last trading price quoted by the
        NASDAQ system for such date;

                (iii) If the Shares were traded over-the-counter on the date in
        question but were not classified as a national market issue, then the
        Fair Market Value shall be equal to the mean between the last reported
        representative bid and asked prices quoted by the NASDAQ system for such
        date; and

                (iv) If none of the foregoing provisions is applicable, then the
        Fair Market Value shall be determined by the Committee in good faith on
        such basis as it deems appropriate.

        Whenever possible, the determination of Fair Market Value by the
        Committee shall be based on the prices reported in the Wall Street
        Journal. Such determination shall be conclusive and binding on all
        persons.

        (p) "GRANT" means any grant of an Award under the Plan.

        (q) "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock option
        described in Code section 422(b).


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        (r) "KEY EMPLOYEE" means an Employee, Director, Non-Employee Director or
        Consultant who has been selected by the Committee to receive an Award
        under the Plan.

        (s) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not an
        Employee.

        (t) "NONSTATUTORY STOCK OPTION" or "NSO" means a stock option that is
        not an ISO.

        (u) "OPTION" means an ISO or NSO granted under the Plan entitling the
        Optionee to purchase Shares.

        (v) "OPTIONEE" means an individual, estate or other entity that holds an
        Option.

        (w) "PARENT" means any corporation (other than the Company) in an
        unbroken chain of corporations ending with the Company, if each of the
        corporations other than the Company owns 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. A corporation that
        attains the status of a Parent on a date after the adoption of the Plan
        shall be considered a Parent commencing as of such date.

        (x) "PARTICIPANT" means an individual or estate or other entity that
        holds an Award.

        (y) "PLAN" means this PDF Solutions, Inc. 2001 Stock Incentive Plan as
        it may be amended from time to time.

        (z) "RESTRICTED STOCK" means a Share awarded under the Plan pursuant to
        a Stock Purchase Right.

        (aa) "RESTRICTED STOCK AGREEMENT" means the agreement described in
        Section 8 evidencing Restricted Stock that may be purchased following
        the Award of a Stock Purchase Right.

        (bb) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (cc) "SERVICE" means service as an Employee, Director, Non-Employee
        Director or Consultant.

        (dd) "SHARE" means one share of Common Stock.

        (ee) "STOCK OPTION AGREEMENT" means the agreement described in Section 6
        evidencing each Grant of an Option.

        (ff) "STOCK PURCHASE RIGHT" means the right to acquire Restricted Stock
        pursuant to Section 8.

        (gg) "SUBSIDIARY" means any corporation (other than the Company) in an
        unbroken chain of corporations beginning with the Company, if each of
        the corporations other than the last corporation in the unbroken chain
        owns stock possessing fifty percent (50%) or


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        more of the total combined voting power of all classes of stock in one
        of the other corporations in such chain. A corporation that attains the
        status of a Subsidiary on a date after the adoption of the Plan shall be
        considered a Subsidiary commencing as of such date.

        (hh) "10-PERCENT SHAREHOLDER" means an individual who owns more than ten
        percent (10%) of the total combined voting power of all classes of
        outstanding stock of the Company, its Parent or any of its subsidiaries.
        In determining stock ownership, the attribution rules of section 424(d)
        of the Code shall be applied.


SECTION 3. ADMINISTRATION.

        (a) COMMITTEE COMPOSITION. A Committee appointed by the Board shall
        administer the Plan. The Board shall designate one of the members of the
        Committee as chairperson. If no Committee has been approved, the entire
        Board shall constitute the Committee. Members of the Committee shall
        serve for such period of time as the Board may determine and shall be
        subject to removal by the Board at any time. The Board may also at any
        time terminate the functions of the Committee and reassume all powers
        and authority previously delegated to the Committee.

        With respect to officers or directors subject to Section 16 of the
        Exchange Act, the Committee shall consist of those individuals who shall
        satisfy the requirements of Rule 16b-3 (or its successor) under the
        Exchange Act with respect to Awards granted to persons who are officers
        or directors of the Company under Section 16 of the Exchange Act.
        Notwithstanding the previous sentence, failure of the Committee to
        satisfy the requirements of Rule 16b-3 shall not invalidate any Awards
        granted by such Committee.

        The Board may also appoint one or more separate committees of the Board,
        each composed of one or more directors of the Company who need not
        qualify under Rule 16b-3, who may administer the Plan with respect to
        Key Employees who are not considered officers or directors of the
        Company under Section 16 of the Exchange Act, may grant Awards under the
        Plan to such Key Employees and may determine all terms of such Awards.

        Notwithstanding the foregoing, the Board shall constitute the Committee
        and shall administer the Plan with respect to all Awards granted to
        Non-Employee Directors.

        (b) AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
        the Committee shall have full authority and discretion to take any
        actions it deems necessary or advisable for the administration of the
        Plan. Such actions shall include:

                (i) selecting Key Employees who are to receive Awards under the
                Plan;

                (ii) determining the type, number, vesting requirements and
                other features and conditions of such Awards;

                (iii) interpreting the Plan; and

                (iv) making all other decisions relating to the operation of the
                Plan.


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        The Committee may adopt such rules or guidelines, as it deems
        appropriate to implement the Plan. The Committee's determinations under
        the Plan shall be final and binding on all persons.

        (c) INDEMNIFICATION. Each member of the Committee, or of the Board,
        shall be indemnified and held harmless by the Company against and from
        (i) any loss, cost, liability, or expense that may be imposed upon or
        reasonably incurred by him or her in connection with or resulting from
        any claim, action, suit, or proceeding to which he or she may be a party
        or in which he or she may be involved by reason of any action taken or
        failure to act under the Plan or any Stock Option Agreement or
        Restricted Stock Agreement, and (ii) from any and all amounts paid by
        him or her in settlement thereof, with the Company's approval, or paid
        by him or her in satisfaction of any judgment in any such claim, action,
        suit, or proceeding against him or her, provided he or she shall give
        the Company an opportunity, at its own expense, to handle and defend the
        same before he or she undertakes to handle and defend it on his or her
        own behalf. The foregoing right of indemnification shall not be
        exclusive of any other rights of indemnification to which such persons
        may be entitled under the Company's Certificate of Incorporation or
        Bylaws, by contract, as a matter of law, or otherwise, or under any
        power that the Company may have to indemnify them or hold them harmless.


SECTION 4. ELIGIBILITY.

        (a) GENERAL RULES. Only Employees, Directors, Non-Employee Directors and
        Consultants shall be eligible for designation as Key Employees by the
        Committee.

        (b) INCENTIVE STOCK OPTIONS. Only Key Employees who are common-law
        employees of the Company, a Parent or a Subsidiary shall be eligible for
        the grant of ISOs. In addition, a Key Employee who is a 10-Percent
        Shareholder shall not be eligible for the grant of an ISO unless the
        requirements set forth in section 422(c)(5) of the Code are satisfied.

        (c) NON-EMPLOYEE DIRECTOR OPTIONS. Non-Employee Directors shall also be
        eligible to receive Options as described in this Section 4(c) from and
        after the date the Board has determined to implement this provision.

                (i) Each eligible Non-Employee Director elected or appointed
        after the effective date of the Company's initial public offering shall
        automatically be granted an NSO to purchase 30,000 Shares (after giving
        effect to the June 2001 stock split) (subject to adjustment under
        Section 9) as a result of his or her initial election or appointment as
        a Non-Employee Director. Upon the conclusion of each regular annual
        meeting of the Company's stockholders following his or her initial
        appointment, each eligible Non-Employee Director who will continue
        serving as a member of the Board and who received an initial grant
        thereafter shall receive an NSO to purchase 7,500 Shares (after giving
        effect to the June 2001 stock split) (subject to adjustment under
        Section 9). All NSOs granted pursuant to this Section 4 shall vest and
        become exercisable provided the individual is serving as a director of
        the Company as of the vesting date as follows: 25% one year


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        from the date of grant, then in 36 equal monthly installments commencing
        on the date one month and one year after the date of grant.

                (ii) All NSOs granted to Non-Employee Directors under this
        Section 4(c) shall become exercisable in full in the event of Change in
        Control with respect to the Company.

                (iii) The Exercise Price under all NSOs granted to a
        Non-Employee Director under this Section 4(c) shall be equal to one
        hundred percent (100%) of the Fair Market Value of a Share of Common
        Stock on the date of grant, payable in one of the forms described in
        Section 7.

                (iv) All NSOs granted to a Non-Employee Director under this
        Section 4(c) shall terminate on the earlier of:

                        (1) The 10th anniversary of the date of grant; or

                        (2) The date ninety (90) days after the termination of
                such Non-Employee Director's Service for any reason.


SECTION 5. SHARES SUBJECT TO PLAN.

        (a) BASIC LIMITATION. The stock issuable under the Plan shall be
        authorized but unissued Shares or treasury Shares. The aggregate number
        of Shares reserved for Awards under the Plan shall not exceed 3,000,000
        Shares (after giving effect to the June 2001 stock split).

        (b) ANNUAL ADDITION. Beginning with the first fiscal year of the Company
        beginning after the Effective Date, on the first day of each fiscal
        year, Shares will be added to the Plan equal to the lesser of (i)
        3,000,000 Shares (after giving effect to the June 2001 stock split),
        (ii) five percent (5%) of the outstanding shares in the last day of the
        prior fiscal year, or (iii) such lesser number of Shares as may be
        determined by the Board in its sole discretion.

        (c) ADDITIONAL SHARES. If Awards are forfeited or terminate for any
        other reason before being exercised, then the Shares underlying such
        Awards shall again become available for Awards under the Plan.

        (d) LIMITS ON OPTIONS. No Key Employee shall receive Options to purchase
        Shares during any fiscal year covering in excess of 1,000,000 Shares
        (after giving effect to the June 2001 stock split), or 2,000,000 Shares
        (after giving effect to the June 2001 stock split) in the first fiscal
        year of a Key Employee's employment with Company.

        (e) LIMITS ON STOCK PURCHASE RIGHTS. No Key Employee shall receive an
        Award of Stock Purchase Rights during any fiscal year covering in excess
        of 500,000 Shares (after giving effect to the June 2001 stock split), or


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        1,000,000 Shares (after giving effect to the June 2001 stock split) in
        the first fiscal year of a Key Employee's employment with Company.


SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

        (a) STOCK OPTION AGREEMENT. Each Grant under the Plan shall be evidenced
        by a Stock Option Agreement between the Optionee and the Company. Such
        Option shall be subject to all applicable terms and conditions of the
        Plan and may be subject to any other terms and conditions that are not
        inconsistent with the Plan and that the Committee deems appropriate for
        inclusion in a Stock Option Agreement. The provisions of the various
        Stock Option Agreements entered into under the Plan need not be
        identical. A Stock Option Agreement may provide that new Options will be
        granted automatically to the Optionee when he or she exercises the prior
        Options. The Stock Option Agreement shall also specify whether the
        Option is an ISO or an NSO.

        (b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
        number of Shares that are subject to the Option and shall provide for
        the adjustment of such number in accordance with Section 9.

        (c) EXERCISE PRICE. An Option's Exercise Price shall be established by
        the Committee and set forth in a Stock Option Agreement. The Exercise
        Price of an ISO shall not be less than 100% of the Fair Market Value
        (110% for 10-Percent Shareholders) of a Share on the date of Grant. In
        the case of an NSO, a Stock Option Agreement may specify an Exercise
        Price that varies in accordance with a predetermined formula while the
        NSO is outstanding.

        (d) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
        the date when all or any installment of the Option is to become
        exercisable. The Stock Option Agreement shall also specify the term of
        the Option; provided that the term of an ISO shall in no event exceed
        ten (10) years from the date of Grant. An ISO that is granted to a
        10-Percent Shareholder shall have a maximum term of five (5) years. No
        Option can be exercised after the expiration date provided in the
        applicable Stock Option Agreement. A Stock Option Agreement may provide
        for accelerated exercisability in the event of the Optionee's death,
        disability or retirement or other events and may provide for expiration
        prior to the end of its term in the event of the termination of the
        Optionee's service. A Stock Option Agreement may permit an Optionee to
        exercise an Option before it is vested, subject to the Company's right
        of repurchase over any Shares acquired under the unvested portion of the
        Option (an "early exercise"), which right of repurchase shall lapse at
        the same rate the Option would have vested had there been no early
        exercise. In no event shall the Company be required to issue fractional
        Shares upon the exercise of an Option.

        (e) MODIFICATIONS OR ASSUMPTION OF OPTIONS. Within the limitations of
        the Plan, the Committee may modify, extend or assume outstanding options
        or may accept the cancellation of outstanding options (whether granted
        by the Company or by another issuer) in return for the grant of new
        Options for the same or a different number of Shares


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        and at the same or a different Exercise Price. The foregoing
        notwithstanding, no modification of an Option shall, without the consent
        of the Optionee, alter or impair his or her rights or obligations under
        such Option.

        (f) TRANSFERABILITY OF OPTIONS. Except as otherwise provided in the
        applicable Stock Option Agreement and then only to the extent permitted
        by applicable law, no Option shall be transferable by the Optionee other
        than by will or by the laws of descent and distribution. Except as
        otherwise provided in the applicable Stock Option Agreement, an Option
        may be exercised during the lifetime of the Optionee only or by the
        guardian or legal representative of the Optionee. No Option or interest
        therein may be assigned, pledged or hypothecated by the Optionee during
        his lifetime, whether by operation of law or otherwise, or be made
        subject to execution, attachment or similar process.

        (g) NO RIGHTS AS STOCKHOLDER. An Optionee, or a transferee of an
        Optionee, shall have no rights as a stockholder with respect to any
        Common Stock covered by an Option until such person becomes entitled to
        receive such Common Stock by filing a notice of exercise and paying the
        Exercise Price pursuant to the terms of such Option.

        (h) RESTRICTIONS ON TRANSFER. Any Shares issued upon exercise of an
        Option shall be subject to such rights of repurchase, rights of first
        refusal and other transfer restrictions as the Committee may determine.
        Such restrictions shall apply in addition to any restrictions that may
        apply to holders of Shares generally and shall also comply to the extent
        necessary with applicable law.


SECTION 7. PAYMENT FOR OPTION SHARES.

        (a) GENERAL RULE. The entire Exercise Price of Shares issued upon
        exercise of Options shall be payable in cash at the time when such
        Shares are purchased, except as follows:

                (i) In the case of an ISO granted under the Plan, payment shall
        be made only pursuant to the express provisions of the applicable Stock
        Option Agreement. The Stock Option Agreement may specify that payment
        may be made in any form(s) described in this Section 7.

                (ii) In the case of an NSO granted under the Plan, the Committee
        may in its discretion, at any time accept payment in any form(s)
        described in this Section 7.

        (b) SURRENDER OF STOCK. To the extent that this Section 7(b) is
        applicable, payment for all or any part of the Exercise Price may be
        made with Shares which have already been owned by the Optionee for such
        duration as shall be specified by the Committee. Such Shares shall be
        valued at their Fair Market Value on the date when the new Shares are
        purchased under the Plan.

        (c) PROMISSORY NOTE. To the extent that this Section 7(c) is applicable,
        payment for all or any part of the Exercise Price may be made with a
        full-recourse promissory note.


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        (d) OTHER FORMS OF PAYMENT. To the extent that this Section 7(d) is
        applicable, payment may be made in any other form that is consistent
        with applicable laws, regulations and rules.


SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF STOCK PURCHASE RIGHTS.

        (a) TIME, AMOUNT AND FORM OF AWARDS. Awards under this Section 8 may be
        granted in the form of Stock Purchase Rights pursuant to which
        Restricted Stock will be awarded to a Key Employee. Such Rights may also
        be awarded in combination with NSOs, and such an Award may provide that
        the Restricted Stock will be forfeited in the event that the related
        NSOs is exercised.

        (b) AGREEMENTS. Each Award of a Stock Purchase Right under the Plan
        shall be evidenced by a Restricted Stock Agreement between the
        Participant and the Company. Such Awards shall be subject to all
        applicable terms and conditions of the Plan and may be subject to any
        other terms and conditions that are not inconsistent with the Plan and
        that the Committee deems appropriate for inclusion in the applicable
        Agreement. The provisions of the various Agreements entered into under
        the Plan need not be identical.

        (c) PAYMENT FOR RESTRICTED STOCK. Restricted Stock may be issued
        pursuant to the Award of a Stock Purchase Right with or without cash
        consideration under the Plan.

        (d) VESTING CONDITIONS. Each Award of Restricted Stock shall become
        vested, in full or in installments, upon satisfaction of the conditions
        specified in the applicable Agreement. An Agreement may provide for
        accelerated vesting in the event of the Participant's death, Disability
        or retirement or other events.

        (e) ASSIGNMENT OR TRANSFER OF RESTRICTED STOCK. Except as provided in
        Section 13, or in a Restricted Stock Agreement, or as required by
        applicable law, an Award granted under this Section 8 shall not be
        anticipated, assigned, attached, garnished, optioned, transferred or
        made subject to any creditor's process, whether voluntarily,
        involuntarily or by operation of law. Any act in violation of this
        Section 8(e) shall be void. However, this Section 8(e) shall not
        preclude a Participant from designating a beneficiary who will receive
        any outstanding Restricted Stock in the event of the Participant's
        death, nor shall it preclude a transfer of Restricted Stock by will or
        by the laws of descent and distribution.

        (f) TRUSTS. Neither this Section 8 nor any other provision of the Plan
        shall preclude a Participant from transferring or assigning Restricted
        Stock to (a) the trustee of a trust that is revocable by such
        Participant alone, both at the time of the transfer or assignment and at
        all times thereafter prior to such Participant's death, or (b) the
        trustee of any other trust to the extent approved in advance by the
        Committee in writing. A transfer or assignment of Restricted Stock from
        such trustee to any person other than such Participant shall be
        permitted only to the extent approved in advance by the Committee in
        writing, and Restricted Stock held by such trustee shall be subject to
        all of the conditions and


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        restrictions set forth in the Plan and in the applicable Restricted
        Stock Agreement, as if such trustee were a party to such Agreement.

        (g) VOTING AND DIVIDEND RIGHTS. The holders of Restricted Stock acquired
        pursuant to a Stock Purchase Right awarded under the Plan shall have the
        same voting, dividend and other rights as the Company's other
        stockholders. A Restricted Stock Agreement, however, may require that
        the holders of Restricted Stock invest any cash dividends received in
        additional Restricted Stock. Such additional Restricted Stock shall be
        subject to the same conditions and restrictions as the Award with
        respect to which the dividends were paid. Such additional Restricted
        Stock shall not reduce the number of Shares available under Section 5.


SECTION 9. PROTECTION AGAINST DILUTION.

        (a) ADJUSTMENTS. In the event of a subdivision of the outstanding
        Shares, a declaration of a dividend payable in Shares, a declaration of
        a dividend payable in a form other than Shares in an amount that has a
        material effect on the price of Shares, a combination or consolidation
        of the outstanding Shares (by reclassification or otherwise) into a
        lesser number of Shares, a recapitalization, reorganization, merger,
        liquidation, spin-off or a similar occurrence, the Committee shall make
        such adjustments as it, in its reasonable discretion, deems appropriate
        in order to prevent the dilution or enlargement of rights hereunder in
        one or more of:

                (i) the number of Shares available for future Awards and the per
        person Share limits under Section 5;

                (ii) the number of Shares covered by each outstanding Award; or

                (iii) the Exercise Price under each outstanding Option.

        (b) PARTICIPANT RIGHTS. Except as provided in this Section 9, a
        Participant shall have no rights by reason of any issue by the Company
        of stock of any class or securities convertible into stock of any class,
        any subdivision or consolidation of shares of stock of any class, the
        payment of any stock dividend or any other increase or decrease in the
        number of shares of stock of any class.


SECTION 10. EFFECT OF A CHANGE IN CONTROL.

        (a) MERGER OR REORGANIZATION. In the event that the Company is a party
        to a merger or other reorganization, outstanding Awards shall be subject
        to the agreement of merger or reorganization. Such agreement may
        provide, without limitation, for the assumption of outstanding Awards by
        the surviving corporation or its parent, for their continuation by the
        Company (if the Company is a surviving corporation), for accelerated
        vesting or for their cancellation with or without consideration.


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        (b) ACCELERATION. Except as otherwise provided in the applicable Stock
        Option Agreement or Restricted Stock Agreement, in the event that a
        Change in Control occurs with respect to the Company and the applicable
        agreement of merger or reorganization provides for assumption or
        continuation of Awards pursuant to Section 10(a), no acceleration of
        vesting shall occur. In the event that a Change in Control occurs with
        respect to the Company and there is no assumption or continuation of
        Awards pursuant to Section 10(a), all Awards shall vest and become
        immediately exercisable.


SECTION 11. LIMITATIONS ON RIGHTS.

        (a) RETENTION RIGHTS. Neither the Plan nor any Award granted under the
        Plan shall be deemed to give any individual a right to remain an
        employee, consultant or director of the Company, a Parent, a Subsidiary
        or an Affiliate. The Company and its Parents and Subsidiaries and
        Affiliates reserve the right to terminate the Service of any person at
        any time, and for any reason, subject to applicable laws, the Company's
        Certificate of Incorporation and Bylaws and a written employment
        agreement (if any).

        (b) STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
        voting rights or other rights as a stockholder with respect to any
        Shares covered by his or her Award prior to the issuance of a stock
        certificate for such Shares. No adjustment shall be made for cash
        dividends or other rights for which the record date is prior to the date
        when such certificate is issued, except as expressly provided in Section
        9.

        (c) REGULATORY REQUIREMENTS. Any other provision of the Plan
        notwithstanding, the obligation of the Company to issue Shares under the
        Plan shall be subject to all applicable laws, rules and regulations and
        such approval by any regulatory body as may be required. The Company
        reserves the right to restrict, in whole or in part, the delivery of
        Shares pursuant to any Award prior to the satisfaction of all legal
        requirements relating to the issuance of such Shares, to their
        registration, qualification or listing or to an exemption from
        registration, qualification or listing.


SECTION 12. WITHHOLDING TAXES.

        (a) GENERAL. A Participant shall make arrangements satisfactory to the
        Company for the satisfaction of any withholding tax obligations that
        arise in connection with his or her Award. The Company shall not be
        required to issue any Shares or make any cash payment under the Plan
        until such obligations are satisfied.

        (b) SHARE WITHHOLDING. If a public market for the Company's Shares
        exists, the Committee may permit a Participant to satisfy all or part of
        his or her withholding or income tax obligations by having the Company
        withhold all or a portion of any Shares that otherwise would be issued
        to him or her or by surrendering all or a portion of any Shares that he
        or she previously acquired. Such Shares shall be valued at their Fair
        Market Value on the date when taxes otherwise would be withheld in cash.
        In no event may the Company allow Shares to be withheld in an amount
        that exceeds the minimum statutory withholding rates for federal and
        state tax purposes, including payroll taxes. Any payment of taxes by
        assigning Shares to the Company may be subject to restrictions,
        including, but


                                       12
<PAGE>   14

        not limited to, any restrictions required by rules of the Securities and
        Exchange Commission.


SECTION 13. DURATION AND AMENDMENTS.

        (a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
        effective on the date of its adoption by the Board, subject to the
        approval of the Company's stockholders. No Options shall be exercisable
        until such stockholder approval is obtained. In the event that the
        stockholders fail to approve the Plan within twelve (12) months after
        its adoption by the Board, any Awards made shall be null and void and no
        additional Awards shall be made. The Plan shall terminate on the date
        that is ten (10) years after its adoption by the Board and may be
        terminated on any earlier date pursuant to Section 13(b).

        (b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or
        terminate the Plan at any time and for any reason. The termination of
        the Plan, or any amendment thereof, shall not affect any Award
        previously granted under the Plan. No Awards shall be granted under the
        Plan after the Plan's termination. An amendment of the Plan shall be
        subject to the approval of the Company's stockholders only to the extent
        required by applicable laws, regulations or rules.




                                       13
<PAGE>   15
                                                              GRANT NO. ________

                               PDF SOLUTIONS, INC.

                                 2001 STOCK PLAN

                        INCENTIVE STOCK OPTION AGREEMENT


        PDF Solutions, Inc. (the "Company"), hereby grants an Option to purchase
shares of its common stock (the "Shares") to the Optionee named below. The terms
and conditions of the Option are set forth in this cover sheet, in the
attachment and in the Company's 2001 Stock Plan (the "Plan").

Date of Option Grant:  __________________, 2001

Name of Optionee:  _________________________________________________

Optionee's Social Security Number:  _____-____-_____

Number of Shares Covered by Option:  ______________

Exercise Price per Share:  $_____.___

Vesting Start Date:  _____________, 2001

Vesting Schedule:

        Subject to all the terms of the attached Agreement, your right to
purchase Shares under this Option vests as to ONE-FOURTH (1/4) of the total
number of Shares covered by this Option, as shown above, on the one-year
anniversary of the Vesting Start Date. Thereafter, the number of Shares which
you may purchase under this Option shall vest at the rate of ONE-FORTY-EIGHTH
(1/48) per month on the 1st day of each of the THIRTY-SIX (36) MONTHS following
the month of the one-year anniversary of the Vesting Start Date. The resulting
aggregate number of vested Shares will be rounded to the nearest whole number.
No additional Shares will vest after your Service has terminated for any reason.

        BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH
IS ALSO ENCLOSED.


Optionee:_______________________________________________________
                             (Signature)

Company:________________________________________________________
                             (Signature)

        Title:__________________________________________________


Attachment
<PAGE>   16
                               PDF SOLUTIONS, INC.

                                 2001 STOCK PLAN

                             STOCK OPTION AGREEMENT


THE PLAN AND                      The text of the Plan is incorporated in this
OTHER AGREEMENTS                  Agreement by reference. Certain capitalized
                                  terms used in this Agreement are defined in
                                  the Plan.

                                  This Agreement and the Plan constitute the
                                  entire understanding between you and the
                                  Company regarding this Option. Any prior
                                  agreements, commitments or negotiations
                                  concerning this Option are superseded.

INCENTIVE STOCK OPTION            This Option is intended to be an Incentive
                                  Stock Option under section 422 of the Internal
                                  Revenue Code and will be interpreted
                                  accordingly. If you cease to be an employee of
                                  the Company, a Subsidiary or of a Parent but
                                  continue to provide Service, this Option will
                                  be deemed a Nonstatutory Stock Option on the
                                  90th day after you cease to be an employee. In
                                  addition, to the extent that all or part of
                                  this Option exceeds the $100,000 rule of
                                  section 422(d) of the Code, this Option or the
                                  lesser excess part will be treated as a
                                  Nonstatutory Stock Option.

VESTING                           This Option is only exercisable before it
                                  expires and then only with respect to the
                                  vested portion of the Option. This Option will
                                  vest according to the Vesting Schedule on the
                                  attached cover sheet.

TERM                              Your Option will expire in any event at the
                                  close of business at Company headquarters on
                                  the day before the 10th anniversary of the
                                  Date of Option Grant, as shown on the cover
                                  sheet. Your Option will expire earlier if your
                                  Service terminates, as described below.

REGULAR TERMINATION               If your Service terminates for any reason,
                                  other than death, Disability or Cause, as
                                  defined below, then your Option will expire at
                                  the close of business at Company headquarters
                                  on the 90th day after your termination date.

TERMINATION FOR                   If your Service is terminated for Cause,
CAUSE                             as determined by the Board in its sole
                                  discretion, then you shall immediately forfeit
                                  all rights to your Option and the Option shall
                                  immediately expire. For purposes of this
                                  Agreement, "Cause" shall mean the termination
                                  of your Service due to your commission of any
                                  act of fraud, embezzlement or dishonesty; any
                                  unauthorized use


                                       2
<PAGE>   17

                                  or disclosure of confidential information or
                                  trade secrets of the Company (or any Parent,
                                  Subsidiary or Affiliate); or any other
                                  intentional misconduct adversely affecting the
                                  business or affairs of the Company (or any
                                  Parent, Subsidiary or Affiliate) in a material
                                  manner. This definition shall not restrict in
                                  any way the Company's or any Parent's,
                                  Subsidiary's or Affiliate's right to discharge
                                  you for any other reason, nor shall this
                                  definition be deemed to be inclusive of all
                                  the acts or omissions which constitute "cause"
                                  for purposes other than this Agreement.

DEATH                             If your Service terminates because of your
                                  death, then your Option will expire at the
                                  close of business at Company headquarters on
                                  the date twelve (12) months after the date of
                                  death. During that twelve (12) month period,
                                  your estate or heirs may exercise the vested
                                  portion of your Option.

DISABILITY                        If your Service terminates because of your
                                  Disability, then your Option will expire at
                                  the close of business at Company headquarters
                                  on the date twelve (12) months after your
                                  termination date.

LEAVES OF ABSENCE                 For purposes of this Option, your Service does
                                  not terminate when you go on a bona fide leave
                                  of absence that was approved by the Company in
                                  writing, if the terms of the leave provide for
                                  continued Service crediting, or when continued
                                  Service crediting is required by applicable
                                  law. However, your Service will be treated as
                                  terminating ninety (90) days after you went on
                                  leave, unless your right to return to active
                                  work is guaranteed by law or by a contract.
                                  Your Service terminates in any event when the
                                  approved leave ends unless you immediately
                                  return to active work.

                                  The Company determines which leaves count for
                                  this purpose, and when your Service terminates
                                  for all purposes under the Plan.

NOTICE OF EXERCISE                When you wish to exercise this Option, you
                                  must notify the Company by filing the proper
                                  "Notice of Exercise" form at the address given
                                  on the form. Your notice must specify how many
                                  Shares you wish to purchase. Your notice must
                                  also specify how your Shares should be
                                  registered (in your name only or in your and
                                  your spouse's names as community property or
                                  as joint tenants with right of survivorship).
                                  The notice will be effective when it is
                                  received by the Company.

                                  If someone else wants to exercise this Option
                                  after your death,



                                       3
<PAGE>   18

                                  that person must prove to the Company's
                                  satisfaction that he or she is entitled to do
                                  so.

Form of Payment                   When you submit your notice of exercise, you
                                  must include payment of the Exercise Price for
                                  the Shares you are purchasing. Payment may be
                                  made in one (or a combination) of the
                                  following forms:

                                  -   Cash, your personal check, a cashier's
                                      check or a money order.

                                  -   Shares which have already been owned by
                                      you for more than six months and which are
                                      surrendered to the Company. The value of
                                      the Shares, determined as of the effective
                                      date of the Option exercise, will be
                                      applied to the Exercise Price.

                                  -   To the extent a public market for the
                                      Shares exists as determined by the
                                      Company, by delivery (on a form prescribed
                                      by the Company) of an irrevocable
                                      direction to a securities broker to sell
                                      Shares and to deliver all or part of the
                                      sale proceeds to the Company in payment of
                                      the aggregate Exercise Price.

Withholding Taxes                 You will not be allowed to exercise this
                                  Option unless you make acceptable arrangements
                                  to pay any withholding or other taxes that may
                                  be due as a result of the Option exercise or
                                  sale of Shares acquired under this Option.

Restrictions on Exercise and      By signing this Agreement, you agree not to
Resale                            exercise this Option or sell any Shares
                                  acquired under this Option at a time when
                                  applicable laws, regulations or Company or
                                  underwriter trading policies prohibit
                                  exercise, sale or issuance of Shares. The
                                  Company will not permit you to exercise this
                                  Option if the issuance of Shares at that time
                                  would violate any law or regulation. The
                                  Company shall have the right to designate one
                                  or more periods of time, each of which shall
                                  not exceed one hundred eighty (180) days in
                                  length, during which this Option shall not be
                                  exercisable if the Company determines (in its
                                  sole discretion) that such limitation on
                                  exercise could in any way facilitate a
                                  lessening of any restriction on transfer
                                  pursuant to the Securities Act or any state
                                  securities laws with respect to any issuance
                                  of securities by the Company, facilitate the
                                  registration or qualification of any
                                  securities by the Company under the Securities
                                  Act or any state securities laws, or
                                  facilitate the perfection of any exemption
                                  from the registration or qualification
                                  requirements of the Securities Act or any
                                  applicable state securities laws for the
                                  issuance or transfer of



                                       4
<PAGE>   19
                                  any securities. Such limitation on exercise
                                  shall not alter the vesting schedule set forth
                                  in this Agreement other than to limit the
                                  periods during which this Option shall be
                                  exercisable.

                                  If the sale of Shares under the Plan is not
                                  registered under the Securities Act, but an
                                  exemption is available which requires an
                                  investment or other representation, you shall
                                  represent and agree at the time of exercise
                                  that the Shares being acquired upon exercise
                                  of this Option are being acquired for
                                  investment, and not with a view to the sale or
                                  distribution thereof, and shall make such
                                  other representations as are deemed necessary
                                  or appropriate by the Company and its counsel.




                                       5
<PAGE>   20

Transfer of Option                Prior to your death, only you may exercise
                                  this Option. You cannot transfer or assign
                                  this Option. For instance, you may not sell
                                  this Option or use it as security for a loan.
                                  If you attempt to do any of these things, this
                                  Option will immediately become invalid. You
                                  may, however, dispose of this Option in your
                                  will.

                                  Regardless of any marital property settlement
                                  agreement, the Company is not obligated to
                                  honor a notice of exercise from your spouse,
                                  nor is the Company obligated to recognize your
                                  spouse's interest in your Option in any other
                                  way.

Retention Rights                  Your Option or this Agreement does not
                                  give you the right to be retained by the
                                  Company (or any Parent or any Subsidiaries or
                                  Affiliates) in any capacity. The Company (or
                                  any Parent and



                                       6
<PAGE>   21

                                  any Subsidiaries or Affiliates) reserves the
                                  right to terminate your Service at any time
                                  and for any reason.

Stockholder Rights                You, or your estate or heirs, have no rights
                                  as a stockholder of the Company until a
                                  certificate for your Option's Shares has been
                                  issued. No adjustments are made for dividends
                                  or other rights if the applicable record date
                                  occurs before your stock certificate is
                                  issued, except as described in the Plan.

Adjustments                       In the event of a stock split, a stock
                                  dividend or a similar change in the Company
                                  stock, the number of Shares covered by this
                                  Option and the exercise price per Share may be
                                  adjusted (and rounded down to the nearest
                                  whole number) pursuant to the Plan. Your
                                  Option shall be subject to the terms of the
                                  agreement of merger, liquidation or
                                  reorganization in the event the Company is
                                  subject to such corporate activity.

Legends                           All certificates representing the Shares
                                  issued upon exercise of this Option shall,
                                  where applicable, have endorsed thereon the
                                  following legends:

                                     "THE SHARES REPRESENTED BY THIS CERTIFICATE
                                     ARE SUBJECT TO CERTAIN RESTRICTIONS ON
                                     TRANSFER AND OPTIONS TO PURCHASE SUCH
                                     SHARES SET FORTH IN AN AGREEMENT BETWEEN
                                     THE COMPANY AND THE REGISTERED HOLDER, OR
                                     HIS OR HER PREDECESSOR IN INTEREST. A COPY
                                     OF SUCH AGREEMENT IS ON FILE AT THE
                                     PRINCIPAL OFFICE OF THE COMPANY AND WILL BE
                                     FURNISHED UPON WRITTEN REQUEST TO THE
                                     SECRETARY OF THE COMPANY BY THE HOLDER OF
                                     RECORD OF THE SHARES REPRESENTED BY THIS
                                     CERTIFICATE."

                                     "THE SHARES REPRESENTED HEREBY HAVE NOT
                                     BEEN REGISTERED UNDER THE SECURITIES ACT OF
                                     1933, AS AMENDED, AND MAY NOT BE SOLD,
                                     PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
                                     AN EFFECTIVE REGISTRATION THEREOF UNDER
                                     SUCH ACT OR AN OPINION OF COUNSEL,
                                     SATISFACTORY TO THE COMPANY AND ITS
                                     COUNSEL, THAT SUCH REGISTRATION IS NOT
                                     REQUIRED."



                                       7
<PAGE>   22

Applicable Law                    This Agreement will be interpreted and
                                  enforced under the laws of the State of
                                  California.

           By signing the cover sheet of this Agreement, you agree to all of the
           terms and conditions described above and in the Plan.



                                       8



<PAGE>   23
                                                              GRANT NO. ________

                               PDF SOLUTIONS, INC.

                                 2001 STOCK PLAN


                       NONSTATUTORY STOCK OPTION AGREEMENT


        PDF Solutions, Inc. (the "Company"), hereby grants an Option to purchase
shares of its common stock (the "Shares") to the Optionee named below. The terms
and conditions of the Option are set forth in this cover sheet, in the
attachment and in the Company's 2001 Stock Plan (the "Plan").

Date of Option Grant:  __________________, 2001

Name of Optionee:  _________________________________________________

Optionee's Social Security Number:  _____-____-_____

Number of Shares Covered by Option:  ______________

Exercise Price per Share:  $_____.___

Vesting Start Date:  _____________, 2001

Vesting Schedule:

        Subject to all the terms of the attached Agreement, your right to
purchase Shares under this Option vests as to one-fourth (1/4) of the total
number of Shares covered by this Option, as shown above, on the one-year
anniversary of the Vesting Start Date. Thereafter, the number of Shares which
you may purchase under this Option shall vest at the rate of one-forty-eighth
(1/48) per month on the 1st day of each of the thirty-six (36) months following
the month of the one-year anniversary of the Vesting Start Date. The resulting
aggregate number of vested Shares will be rounded to the nearest whole number.
No additional Shares will vest after your Service has terminated for any reason.

        BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH
IS ALSO ENCLOSED.


Optionee:_______________________________________________________
                             (Signature)

Company:________________________________________________________
                             (Signature)

        Title:__________________________________________________



<PAGE>   24
                               PDF SOLUTIONS, INC.

                                 2001 STOCK PLAN


                       NONSTATUTORY STOCK OPTION AGREEMENT


THE PLAN AND                      The text of the Plan is incorporated in this
OTHER AGREEMENTS                  Agreement by reference. Certain capitalized
                                  terms used in this Agreement are defined in
                                  the Plan.

                                  This Agreement and the Plan constitute the
                                  entire understanding between you and the
                                  Company regarding this Option. Any prior
                                  agreements, commitments or negotiations
                                  concerning this Option are superseded.

NONSTATUTORY STOCK OPTION         This Option is not intended to be an Incentive
                                  Stock Option under section 422 of the Internal
                                  Revenue Code and will be interpreted
                                  accordingly.

VESTING                           This Option is only exercisable before it
                                  expires and then only with respect to the
                                  vested portion of the Option. This Option will
                                  vest according to the Vesting Schedule on the
                                  attached cover sheet.

TERM                              Your Option will expire in any event at the
                                  close of business at Company headquarters on
                                  the day before the 10th anniversary of the
                                  Date of Option Grant, as shown on the cover
                                  sheet. Your Option will expire earlier if your
                                  Service terminates, as described below.

REGULAR TERMINATION               If your Service terminates for any reason,
                                  other than death, Disability or Cause, as
                                  defined below, then your Option will expire at
                                  the close of business at Company headquarters
                                  on the 90th day after your termination date.

TERMINATION FOR                   If your Service is terminated for Cause, as
CAUSE                             determined by the Board in its sole
                                  discretion, then you shall immediately forfeit
                                  all rights to your Option and the Option shall
                                  immediately expire. For purposes of this
                                  Agreement, "Cause" shall mean the termination
                                  of your Service due to your commission of any
                                  act of fraud, embezzlement or dishonesty; any
                                  unauthorized use or disclosure of confidential
                                  information or trade secrets of the Company
                                  (or any Parent, Subsidiary or Affiliate); or
                                  any other intentional misconduct adversely
                                  affecting the business or affairs of the
                                  Company (or any Parent, Subsidiary or
                                  Affiliate) in a material manner. This
                                  definition shall not restrict in any way the
                                  Company's or any Parent's, Subsidiary's or
                                  Affiliate's



                                       2
<PAGE>   25

                                  right to discharge you for any other reason,
                                  nor shall this definition be deemed to be
                                  inclusive of all the acts or omissions which
                                  constitute "cause" for purposes other than
                                  this Agreement.

DEATH                             If your Service terminates because of your
                                  death, then your Option will expire at the
                                  close of business at Company headquarters on
                                  the date twelve (12) months after the date of
                                  death. During that twelve (12) month period,
                                  your estate or heirs may exercise the vested
                                  portion of your Option.

DISABILITY                        If your Service terminates because of your
                                  Disability, then your Option will expire at
                                  the close of business at Company headquarters
                                  on the date twelve (12) months after your
                                  termination date.

LEAVES OF ABSENCE                 For purposes of this Option, your Service does
                                  not terminate when you go on a bona fide leave
                                  of absence that was approved by the Company in
                                  writing, if the terms of the leave provide for
                                  continued Service crediting, or when continued
                                  Service crediting is required by applicable
                                  law. Your Service terminates in any event when
                                  the approved leave ends unless you immediately
                                  return to active work.

                                  The Company determines which leaves count for
                                  this purpose, and when your Service terminates
                                  for all purposes under the Plan.

NOTICE OF EXERCISE                When you wish to exercise this Option, you
                                  must notify the Company by filing the proper
                                  "Notice of Exercise" form at the address given
                                  on the form. Your notice must specify how many
                                  Shares you wish to purchase. Your notice must
                                  also specify how your Shares should be
                                  registered (in your name only or in your and
                                  your spouse's names as community property or
                                  as joint tenants with right of survivorship).
                                  The notice will be effective when it is
                                  received by the Company.

                                  If someone else wants to exercise this Option
                                  after your death, that person must prove to
                                  the Company's satisfaction that he or she is
                                  entitled to do so.

FORM OF PAYMENT                   When you submit your notice of exercise, you
                                  must include payment of the Exercise Price for
                                  the Shares you are purchasing. Payment may be
                                  made in one (or a combination) of the
                                  following forms:

                                  -   Cash, your personal check, a cashier's
                                      check or a money



                                       3
<PAGE>   26
                                  order.

                                  -   Shares which have already been owned by
                                      you for more than six months and which are
                                      surrendered to the Company. The value of
                                      the Shares, determined as of the effective
                                      date of the Option exercise, will be
                                      applied to the Exercise Price.

                                  -   To the extent a public market for the
                                      Shares exists as determined by the
                                      Company, by delivery (on a form prescribed
                                      by the Company) of an irrevocable
                                      direction to a securities broker to sell
                                      Shares and to deliver all or part of the
                                      sale proceeds to the Company in payment of
                                      the aggregate exercise price.

WITHHOLDING TAXES                 You will not be allowed to exercise this
                                  Option unless you make acceptable arrangements
                                  to pay any withholding or other taxes that may
                                  be due as a result of the Option exercise or
                                  sale of Shares acquired under this Option.

RESTRICTIONS ON EXERCISE AND      By signing this Agreement, you agree not to
RESALE                            exercise this Option or sell any Shares
                                  acquired under this Option at a time when
                                  applicable laws, regulations or Company or
                                  underwriter trading policies prohibit
                                  exercise, sale or issuance of Shares. The
                                  Company will not permit you to exercise this
                                  Option if the issuance of Shares at that time
                                  would violate any law or regulation. The
                                  Company shall have the right to designate one
                                  or more periods of time, each of which shall
                                  not exceed one hundred eighty (180) days in
                                  length, during which this Option shall not be
                                  exercisable if the Company determines (in its
                                  sole discretion) that such limitation on
                                  exercise could in any way facilitate a
                                  lessening of any restriction on transfer
                                  pursuant to the Securities Act or any state
                                  securities laws with respect to any issuance
                                  of securities by the Company, facilitate the
                                  registration or qualification of any
                                  securities by the Company under the Securities
                                  Act or any state securities laws, or
                                  facilitate the perfection of any exemption
                                  from the registration or qualification
                                  requirements of the Securities Act or any
                                  applicable state securities laws for the
                                  issuance or transfer of any securities. Such
                                  limitation on exercise shall not alter the
                                  vesting schedule set forth in this Agreement
                                  other than to limit the periods during which
                                  this Option shall be exercisable.

                                  If the sale of Shares under the Plan is not
                                  registered under the Securities Act, but an
                                  exemption is available which requires an
                                  investment or other representation, you shall
                                  represent and agree at the time of exercise
                                  that the Shares being acquired upon exercise
                                  of this Option are being acquired for
                                  investment,



                                       4
<PAGE>   27

                                  and not with a view to the sale or
                                  distribution thereof, and shall make such
                                  other representations as are deemed necessary
                                  or appropriate by the Company and its counsel.



                                       5
<PAGE>   28

TRANSFER OF OPTION                Prior to your death, only you may exercise
                                  this Option. You cannot transfer or assign
                                  this Option. For instance, you may not sell
                                  this Option or use it as security for a loan.
                                  If you attempt to do any of these things, this
                                  Option will immediately become invalid. You
                                  may, however, dispose of this Option in your
                                  will. Regardless of any marital property
                                  settlement agreement, the Company is not
                                  obligated to honor a notice of exercise from
                                  your spouse, nor is the Company obligated to
                                  recognize your spouse's interest in your
                                  Option in any other way.

RETENTION RIGHTS                  Your Option or this Agreement does not give
                                  you the right to be retained by the Company
                                  (or any Parent or any Subsidiaries or

                                  Affiliates) in any capacity. The Company (or
                                  any Parent and any Subsidiaries or Affiliates)
                                  reserves the right to terminate your Service
                                  at any time and for any reason.

STOCKHOLDER RIGHTS                You, or your estate or heirs, have no rights
                                  as a stockholder of the Company until a
                                  certificate for your Option's Shares has been
                                  issued. No adjustments are made for dividends
                                  or other rights if the applicable record date
                                  occurs before your stock certificate is
                                  issued, except as described in the Plan.

ADJUSTMENTS                       In the event of a stock split, a stock
                                  dividend or a similar



                                       6
<PAGE>   29

                                  change in the Company stock, the number of
                                  Shares covered by this Option and the exercise
                                  price per Share may be adjusted (and rounded
                                  down to the nearest whole number) pursuant to
                                  the Plan. Your Option shall be subject to the
                                  terms of the agreement of merger, liquidation
                                  or reorganization in the event the Company is
                                  subject to such corporate activity.

LEGENDS                           All certificates representing the Shares
                                  issued upon exercise of this Option shall,
                                  where applicable, have endorsed thereon the
                                  following legends:

                                     "THE SHARES REPRESENTED BY THIS CERTIFICATE
                                     ARE SUBJECT TO CERTAIN RESTRICTIONS ON
                                     TRANSFER AND OPTIONS TO PURCHASE SUCH
                                     SHARES SET FORTH IN AN AGREEMENT BETWEEN
                                     THE COMPANY AND THE REGISTERED HOLDER, OR
                                     HIS OR HER PREDECESSOR IN INTEREST. A COPY
                                     OF SUCH AGREEMENT IS ON FILE AT THE
                                     PRINCIPAL OFFICE OF THE COMPANY AND WILL BE
                                     FURNISHED UPON WRITTEN REQUEST TO THE
                                     SECRETARY OF THE COMPANY BY THE HOLDER OF
                                     RECORD OF THE SHARES REPRESENTED BY THIS
                                     CERTIFICATE."

                                     "THE SHARES REPRESENTED HEREBY HAVE NOT
                                     BEEN REGISTERED UNDER THE SECURITIES ACT OF
                                     1933, AS AMENDED, AND MAY NOT BE SOLD,
                                     PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
                                     AN EFFECTIVE REGISTRATION THEREOF UNDER
                                     SUCH ACT OR AN OPINION OF COUNSEL,
                                     SATISFACTORY TO THE COMPANY AND ITS
                                     COUNSEL, THAT SUCH REGISTRATION IS NOT
                                     REQUIRED."

APPLICABLE LAW                    This Agreement will be interpreted and
                                  enforced under the laws of the State of
                                  California.

           BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
           TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.



                                       7