<PAGE>
 
EXHIBIT 10.10

                       WALKER INTERACTIVE SYSTEMS, INC.
                          1994 EQUITY INCENTIVE PLAN

                           ADOPTED FEBRUARY 17, 1994
                            AS AMENDED MAY 11, 1994
                   APPROVED BY THE STOCKHOLDERS MAY 23, 1994
                         AS AMENDED FEBRUARY 11, 1998
                   APPROVED BY THE STOCKHOLDERS MAY 21, 1998
                           AS AMENDED AUGUST 5, 1998

     1.   PURPOSES.

          (a)  The purpose of the 1994 Equity Incentive Plan (the "Plan") is to
provide a means by which employees of and consultants to the Company, and its
Affiliates, may be given an opportunity to benefit from increases in value of
the stock of the Company through the granting of (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses, and (iv) rights to
purchase restricted stock, all as defined below.

          (b)  The Company, by means of the Plan, seeks to retain the services
of persons who are now Employees or Directors of or Consultants to the Company,
to secure and retain the services of new Employees, Directors and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.

          (c)  The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to paragraph 6 hereof, including
Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or
rights to purchase restricted stock granted pursuant to paragraph 7 hereof.  All

                                      62
<PAGE>
 
Options shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and in such form as issued pursuant to
section 6, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option.

     2.   DEFINITIONS.

          (a)  "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

          (b)  "BOARD" means the Board of Directors of the Company.

          (c)  "CAUSE" means termination of an Employee's employment with the
Company for any of the following reasons as determined in good faith by the
Company:

               (i)    an intentional act which materially injures the Company;

               (ii)   an intentional refusal or failure to follow lawful and
reasonable directions of the Board or the individual to whom the Employee
reports;

               (iii)  a willful and habitual neglect of duties; or

               (iv)   a conviction of a felony involving moral turpitude which
is reasonably likely to inflict or has inflicted material injury on the Company.

          (d)  "CHANGE IN CONTROL" means:

               (i)    a dissolution, liquidation or sale of substantially all of
the assets of the Company;

               (ii)   a merger or consolidation in which the Company is not the
surviving corporation; or

               (iii)  a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding

                                      63
<PAGE>
 
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise.

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

          (f)  "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.

          (g)  "COMPANY" means Walker Interactive Systems, Inc., a Delaware
corporation.

          (h)  "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

          (i)  "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated by the Company or any Affiliate.  The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board, 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, Affiliates or its successor.

          (j)  "DIRECTOR" means a member of the Board.

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

                                      64
<PAGE>
 
          (l)  "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

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

          (n)  "FAIR MARKET VALUE" means, as of any date, the value of the
common stock of the Company as determined as follows:

               (i)    If the common stock is listed on any established stock
exchange or 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 system or exchange (or the exchange with the
greatest volume of trading in 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 Board deems reliable;

               (ii)   If the common stock is quoted on the Nasdaq System (but
not 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 bid and
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 Board deems reliable;

               (iii)  In the absence of an established market for the common
stock, the Fair Market Value shall be determined in good faith by the Board.

                                      65
<PAGE>
 
          (o)  "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          (p)  "INVOLUNTARY TERMINATION WITHOUT CAUSE" means an Employee's
dismissal or discharge other than for Cause. The termination of an Employee's
employment as a result of the Employee's death or disability will not be deemed
to be an Involuntary Termination Without Cause.

          (q)  "NON-EMPLOYEE DIRECTOR" means a Director of the Company who
either (i) is not a current Employee or Officer of the Company or its parent or
a subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.

          (r)  "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

          (s)  "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (t)  "OPTION" means a stock option granted pursuant to the Plan.

                                      66
<PAGE>
 
          (u)  "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant.  The Option Agreement is subject to the terms and conditions of the Plan.

          (v)  "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.

          (w)  "OUTSIDE DIRECTOR" means a Director who either (A) is not a
current employee of the Company or an affiliated corporation, is not a former
employee of the Company or an affiliated corporation receiving compensation for
prior services (other than benefits under a tax qualified pension plan), was not
an officer of the Company or an affiliated corporation at any time, and is not
currently receiving compensation for personal services in any capacity other
than as a Director, or (B) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

          (x)  "PLAN" means this 1994 Equity Incentive Plan.

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

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

          (aa) "STOCK AWARD" means any right granted under the Plan, including
any Option, any stock bonus and any right to purchase restricted stock.

          (bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. The Stock Award Agreement is subject to the terms
and conditions of the Plan.

                                      67
<PAGE>
 
     3.   ADMINISTRATION.

          (a)  The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, including the Committee, as
provided in subsection 3(c).

          (b)  The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

               (i)    To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how Stock Awards
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which Stock Awards shall be granted to each such person.

               (ii)   To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration.  The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

               (iii)  To amend the Plan as provided in Section 12.

               (iv)   Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.

          (c)  The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee").  All of the
members of such

                                      68
<PAGE>
 
Committee may be Non-Employee Directors and/or Outside Directors.  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board (and references in this Plan to the Board shall thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.  Notwithstanding anything in this Section 3 to the
contrary, the Board may delegate to a committee of one or more members of the
Board the authority to grant options to eligible persons who are not then
subject to Section 16 of the Exchange Act and to eligible persons with respect
to whom the Company does not wish to comply with Section 162(m) of the Code.

     4.   SHARES SUBJECT TO THE PLAN.

          (a)  Subject to the provisions of Section 11 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate two million four hundred thousand (2,400,000)
shares of the Company's common stock.  If any Stock Award shall for any reason
expire or otherwise terminate without having been exercised in full, the stock
not purchased under such Stock Award shall again become available for the Plan.

          (b)  The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

     5.   ELIGIBILITY.

          (a)  Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.

                                      69
<PAGE>
 
          (b)  No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.

          (c)  No employee shall be eligible to be granted Options covering more
than five hundred thousand (500,000) shares of the Company's common stock in any
twelve (12) month period.

     6.   OPTION PROVISIONS.

          Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

          (a)  TERM.  No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

          (b)  PRICE.  The exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted.  The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on the
date the Option is granted.

                                      70
<PAGE>
 
          (c)  CONSIDERATION.  The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised, or (ii) at
the discretion of the Board or the duly authorized Committee, either at the time
of the grant or exercise of the Option, (A) by delivery to the Company of other
common stock of the Company, or (B) in any other form of legal consideration
that may be acceptable to the Board.

          (d)  TRANSFERABILITY.  An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person.  A Nonstatutory Stock Option shall
be transferable to the extent provided in the Option Agreement.  If the Option
Agreement for the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the person to whom the Nonstatutory Stock
Option is granted only by such person.

          (e)  VESTING.  The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal).  The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. During the remainder of the term of the Option (if its term
extends beyond the end of the installment periods) the Option may be exercised
from time to time with respect to any shares then remaining subject to the
Option.  The Option may be subject to such other terms and 

                                      71
<PAGE>
 
conditions on the time or times when it may be exercised (which may be based on
performance criteria) as the Board may deem appropriate.  The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.

          (f)  SECURITIES LAW COMPLIANCE.  The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock.  These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act, or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.

          (g)  TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT.  In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board,

                                      72
<PAGE>
 
and only to the extent that the Optionee was entitled to exercise it at the date
of termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement).  In the case of an Incentive Stock
Option, the Board shall determine such period of time (in no event to exceed
three (3) months from the date of termination) when the Option is granted. If,
at the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to the Plan.  If, after termination, the Optionee does not exercise
his or her Option within the time specified in the Option Agreement, the Option
shall terminate, and the shares covered by such Option shall revert to the Plan.

          (h)  DISABILITY OF OPTIONEE.  In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of such termination (or such shorter
period specified in the Option Agreement), and only to the extent that the
Optionee was entitled to exercise it at the date of such termination (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement).  If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to the Plan.

          (i)  DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within eighteen (18) months following the
date of death (or such shorter period specified in the Option Agreement) (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement), by the Optionee's estate or by a

                                      73
<PAGE>
 
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee was entitled to exercise the Option at the
date of death.  If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan.  If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to
the Plan.

          (j)  EARLY EXERCISE.  The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee, Director
or Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option.  Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.

          (k)  WITHHOLDING.  To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.

          (l)  RE-LOAD OPTIONS.  Without in any way limiting the authority of
the Board or duly authorized Committee to make or not to make grants of Options
hereunder, the Board or duly authorized Committee shall have the authority (but
not an obligation) to include as part of any Option Agreement a provision
entitling the Optionee to a further Option (a "Re-Load

                                      74
<PAGE>
 
Option") in the event the Optionee exercises the Option evidenced by the Option
agreement, in whole or in part, by surrendering other shares of common stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option (i) shall be for a number of shares equal to the number
of shares surrendered as part or all of the exercise price of such Option; (ii)
shall have an expiration date which is the same as the expiration date of the
Option the exercise of which gave rise to such Re-Load Option; and (iii) shall
have an exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the common stock subject to the Re-Load Option on the date of
exercise of the original Option or, in the case of a Re-Load Option which is an
Incentive Stock Option and which is granted to a 10% stockholder (as described
in subparagraph 5(b)), shall have an exercise price which is equal to one
hundred ten percent (110%) of the Fair Market Value of the stock subject to the
Re-Load Option on the date of exercise of the original Option.

     Any such Re-Load Option may be an Incentive Stock Option or a Nonqualified
Stock Option, as the Board or duly authorized Committee may designate at the
time of the grant of the original Option, provided, however, that the
designation of any Re-Load Option as an Incentive Stock Option shall be subject
to the one hundred thousand dollars ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subparagraph 10(d) of the
Plan and in Section 422(d) of the Code.  There shall be no Re-Load Options on a
Re-Load Option.  Any such Re-Load Option shall be subject to the availability of
sufficient shares under subparagraph 4(a) and shall be subject to such other
terms and conditions as the Board or duly authorized Committee may determine.

                                      75
<PAGE>
 
     7.   TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

          Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the duly
authorized Committee shall deem appropriate.  The terms and conditions of stock
bonus or restricted stock purchase agreements may change from time to time, and
the terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:

          (a)  PURCHASE PRICE.  The purchase price under each stock purchase
agreement shall be such amount as the Board or Committee shall determine and
designate in such agreement.  Notwithstanding the foregoing, the Board or the
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.

          (b)  TRANSFERABILITY.  No rights under a stock bonus or restricted
stock purchase agreement shall be assignable by any participant under the Plan,
either voluntarily or by operation of law, except where such assignment is
required by law or expressly authorized by the terms of the applicable stock
bonus or restricted stock purchase agreement.

          (c)  CONSIDERATION.  The purchase price of stock acquired pursuant to
a stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; or (ii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in their discretion.  Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.

                                      76
<PAGE>
 
          (d)  VESTING.  Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.

          (e)  TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.

     8.   COVENANTS OF THE COMPANY.

          (a)  During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards up to the number of shares of stock authorized under the Plan.

          (b)  The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock under the Stock Awards; provided, however, that
this undertaking shall not require the Company to register under the Securities
Act either the Plan, any Stock Award or any stock issued or issuable pursuant to
any such Stock Award.  If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel
for the Company deems necessary for the lawful issuance and sale of stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell stock under such Stock Awards unless and until such authority is
obtained.

                                      77
<PAGE>
 
     9.   USE OF PROCEEDS FROM STOCK.

          Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

     10.  MISCELLANEOUS.

          (a)  The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

          (b)  Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.

          (c)  Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant,
Optionee, or other holder of Stock Awards any right to continue in the employ of
the Company or any Affiliate (or to continue acting as a Director or Consultant)
or shall affect the right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant of any Employee,
Director, Consultant or Optionee with or without cause.

          (d)  To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed 

                                      78
<PAGE>
 
such limit (according to the order in which they were granted) shall be treated
as Nonstatutory Stock Options.

     11.  ADJUSTMENTS UPON CHANGES IN STOCK.

          (a)  If any change is made in the stock subject to the Plan, or
subject to any Stock Award, without the receipt of any consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a) and the maximum number of securities subject to award to any
person pursuant to subsection 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of stock subject to such outstanding Stock Awards.  Such adjustments shall
be made by the Board, the determination of which shall be final, binding and
conclusive.  (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)

          (b)  In the event of a Change in Control then, to the extent permitted
by applicable law: (i) any surviving corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar Stock Awards for those
outstanding under the Plan; or (ii) such Stock Awards shall continue in full
force and effect. In the event any surviving corporation refuses to assume or
continue such Stock Awards or to substitute similar Stock Awards for those
outstanding under the Plan, then, with respect to such Stock Awards held by
persons then performing services as employees, consultants or directors for the
Company, the

                                      79
<PAGE>
 
time during which such Stock Awards become vested or may be exercised shall be
accelerated and any outstanding unexercised rights under any Stock Awards
terminated if not exercised prior to such event.

          (c)  In the event an Employee's employment is terminated due to an
Involuntary Termination Without Cause within twenty-four (24) months after the
effective date of a Change in Control, then all Stock Awards issued and
outstanding under the Plan and held by the Employee shall accelerate and become
immediately vested and exercisable.  Notwithstanding the foregoing, if the
Change in Control was a transaction that was accounted for as a pooling of
interests for financial reporting purposes, then the unvested portion of such
Stock Awards shall not accelerate unless the Company receives reasonable
assurances from the Company's independent public accountants (and from the
acquiring party's independent public accountants) that in their good faith
judgment such acceleration will not adversely affect the pooling of interests
accounting treatment of such Change in Control transaction.

     12.  AMENDMENT OF THE PLAN.

          (a)  The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, to the extent stockholder approval is necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.

          (b)  The Board may in its sole discretion submit any other amendment
to the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the Code
and the regulations promulgated

                                      80
<PAGE>
 
thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to certain executive
officers.

          (c)  It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.

          (d)  Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.

     13.  TERMINATION OR SUSPENSION OF THE PLAN.

          (a)  The Board may suspend or terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on February 16, 2004.  No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

          (b)  Rights and obligations under any Stock Award granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the Stock Award was
granted.

     14.  EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no Stock Awards
granted under the Plan shall be exercisable unless and until the Plan has been
approved by the stockholders of the Company.

                                      81