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                                                                    EXHIBIT 10.2

                        BENCHMARQ MICROELECTRONICS, INC.

                        1995 FLEXIBLE STOCK OPTION PLAN
                  (Amended and Restated as of March 11, 1997)

                                       I
                        Purpose of Plan; Administration
                        -------------------------------

  1.1  Purpose.  The purpose of the BENCHMARQ Microelectronics, Inc. 1995
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Flexible Stock Option Plan (the "Plan") is to strengthen BENCHMARQ
Microelectronics, Inc. (the "Company") by providing a means of retaining and
attracting competent personnel by extending to participating officers,
employees, directors and consultants (as defined in Section 1.3) of the Company,
or of a Parent or Subsidiary (as defined herein) of the Company, added long-term
incentives for high levels of performance and for unusual efforts designed to
improve the financial performance of the Company.  It is intended that this
purpose be achieved through the opportunity for ownership of shares of the
common stock, par value $.001 per share, of the Company (the "Stock") and the
benefits of stock appreciation offered under the Plan.  It is further intended
that pursuant to this Plan the Committee (as defined in Section 1.2) may grant
either incentive stock options as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or nonqualified stock options.  As used
herein, the term "Parent" will be deemed to have the meaning set forth in
Section 424(e) of the Code and the term "Subsidiary" will be deemed to have the
meaning set forth in Section 424(f) of the Code.

  1.2  Administration.  The Plan shall be administered by the Compensation
       --------------                                                     
Committee (the "Committee") established by the Board of Directors of the Company
(the "Board").  Such Committee shall be comprised of two (2) or more directors,
each of whom shall be "non-employee directors," as defined in Rule 16b-3,
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

  Subject to the express provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan, to define the terms used in the
Plan, to prescribe, amend and rescind rules and regulations relating to the
administration of the Plan, to determine the duration and purposes of leaves of
absence which may be granted to participants without constituting a termination
of their employment or other service for purposes of the Plan to amend or modify
any outstanding option (with the consent of the Optionee (as defined herein)),
to accelerate or defer the exercise date of any outstanding option (with the
consent of the Optionee), and to make all other determinations necessary or
advisable for the administration of the Plan.  The determinations of the
Committee on all matters referred to in this Plan shall be conclusive.  No
member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to the Plan or
any transaction under the Plan.

  Subject to the express provisions of the Plan, the Committee shall determine
from the eligible class those individuals to whom incentive stock options or
nonqualified stock options under the Plan shall be granted (the "Optionees"),
the terms and provisions (which need not be identical) of the respective
agreements (the "Option Agreements") evidencing such options, the time at which
options shall be granted, and the number of shares of Stock subject to each
option.

  1.3  Participation.  Officers, employees, directors and consultants of the
       -------------                                                        
Company or any Parent or Subsidiary of the Company shall be eligible for
selection to participate in the Plan upon approval by the Committee; provided,
however, that only those individuals who are employed by the Company or a Parent

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or Subsidiary of the Company shall be eligible to receive incentive stock
options.  For purposes of the Plan, the term "consultant" shall mean any person
or entity who or which is engaged by the Company or a Parent or Subsidiary of
the Company to render consulting services and is compensated for such consulting
services.

  1.4  Stock Subject to the Plan.  Subject to adjustment as provided in Section
       -------------------------                                               
3.1 hereof, the shares to be offered under the Plan shall be treasury shares or
shares of the Company's authorized but unissued Stock.  The aggregate number of
shares of Stock to be issued upon exercise of all options granted under the Plan
shall not exceed 1,247,576 shares (after giving effect to all exercises of
options prior to March 11, 1997), subject to adjustment as set forth in Sections
3.1 hereof.  The aggregate number of shares of Stock to be issued to any
individual within any calendar year shall not exceed 100,000 shares.  If any
option granted hereunder shall lapse or terminate for any reason without having
been fully exercised, the shares subject thereto shall again be available for
purposes of the Plan.

  1.5  Restrictions on Exercise.  No options granted hereunder may be exercised
       ------------------------                                                
and no shares of Stock issuable upon exercise of such options may be transferred
unless and until the Committee determines that such exercise/transfer will be
made in compliance with all applicable laws, rules and regulations, including,
without limitation, applicable securities laws, rules and regulations and the
rules and regulations of any securities exchange or automated transaction
reporting system on which the securities of the Company are listed or admitted
to trading.  The Company does not have any obligation to take any action to
register or qualify shares of Stock pursuant to applicable securities laws or to
perfect an exemption from such registration/qualification requirements.  As a
condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise
that the shares of Stock are being purchased only for investment and without any
present intention to sell or distribute such shares of Stock if, in the opinion
of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

                                       II
                                 Stock Options
                                 -------------

  2.1  Grant and Option Price.   The Committee may grant one or more options to
       ----------------------                                                  
any eligible individual.  Options granted under the Plan shall be granted within
ten (10) years from the earlier of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, and such options may be intended to
qualify as Incentive Stock Options (as hereinafter defined), or the Committee
may in its discretion grant nonqualified stock options under the Plan.  All
options shall be subject to the terms and conditions set forth in the Plan and
such other terms and conditions established by the Committee as are not
inconsistent with the purposes and provisions of the Plan.

  Except as otherwise provided herein, the purchase price of the Stock covered
by each option shall be determined by the Committee and set forth in the Option
Agreement, but as to Stock covered by an Incentive Stock Option the purchase
price shall not be less than 100% of the Fair Market Value (as such term is
defined in this Section 2.1) of such Stock on the date of the grant of the
option.  Notwithstanding the foregoing, the purchase price of Stock covered by
an Incentive Stock Option granted to any individual who owns or is deemed to own
more than 10% of the total combined voting power and value of all classes of
stock of the Company, its Parent, if any, or a Subsidiary, shall not be less
than 110% of the Fair Market Value (as such term is defined in this Section 2.1)
of such Stock on the date of the grant of the option.  For purposes of the Plan,
the term "Fair Market Value" on any date shall mean (i) if the Stock is listed
or admitted to trade on a national securities exchange, the closing price of the
Stock on the Composite Tape, as published in the Wall Street Journal, of the
principal national securities exchange on which the Stock is so listed or
admitted to trade, on such date or, if there is no trading of the Stock on

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such date, then the closing price of the Stock as quoted on such Composite Tape
on the next preceding date on which there was trading in such shares; (ii) if
the Stock is not listed or admitted to trade or a national securities exchange,
then the closing price of the Stock as quoted on the National Market System of
the National Association of Securities Dealers, Inc. ("NASD"); (iii) if the
Stock is not listed or admitted to trade on a national securities exchange or
the National Market System of the NASD, the mean between the bid and asked price
for the Stock on such date, as furnished by the NASD through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information; or (iv) if the
Stock is not listed or admitted to trade on a national securities exchange or
the National Market System of the NASD and if bid and asked prices for the Stock
are not so furnished  by the NASD or a similar organization, the values
established by the Committee for purposes of granting options under the Plan.
In addition to the above rules, Fair Market Value shall be determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse.

  2.2  Stock Option Agreement.  Subject to the provisions of Section 1.2 hereof,
       ----------------------                                                   
each option granted pursuant to the Plan shall be evidenced by a Stock Option
Agreement in substantially the form of Exhibit "A" or "B" attached hereto and
incorporated fully herein by reference (each, an "Option Agreement").  Exhibit
"A" shall be used whenever such option is intended to be an "incentive stock
option" within the meaning of Section 422 of the Code ("Incentive Stock
Option").  Exhibit "B" shall be used whenever such option is intended to be a
nonqualified stock option, as determined in the sole and absolute discretion of
the Committee.

  2.3  Option Period.  Except as otherwise provided herein, each option and all
       -------------                                                           
rights or obligations thereunder shall expire on such date as the Committee
shall determine (the "Expiration Date"), but not later than the tenth
anniversary of the date on which the option is granted, and shall be subject to
earlier termination as hereinafter provided.  Notwithstanding the foregoing, the
Expiration Date of an Incentive Stock Option granted to any individual who owns
or is deemed to own more than 10% of the total combined voting power and value
of all classes of stock of the Company, its Parent, if any, or a Subsidiary,
shall be a date which is not later than the fifth anniversary of the date on
which the option is granted, and shall be subject to earlier termination as
hereinafter provided.

  2.4  Terms of Options.  Each option granted under this Plan by its terms shall
       ----------------                                                         
require the officer, employee, director or consultant granted such option to
remain in the continuous employ or service of the Company or of a Parent or
Subsidiary of the Company for such period of time, if any, from the date of
grant of such option before the right to exercise any part of the option will
accrue as the Committee may determine at the time of granting such option.

  2.5  Exercise of Options.  Each option shall become exercisable and the total
       -------------------                                                     
number of shares of Stock subject thereto shall be as the Committee shall
determine, as set forth in the Option Agreement evidencing such option.  The
purchase price of the Stock purchased upon exercise of an option shall be paid
in full in cash or by check at the time of each exercise of an option or by such
other consideration as may be provided for in the Option Agreement by the
Committee; provided, however, that if the Option Agreement so provides and upon
receipt of all regulatory approvals, the person exercising the option may
deliver, in payment of a portion or all of the purchase price, shares of Stock,
including a multiple series of exchanges of such Stock, which shall be valued at
the Fair Market Value of such Stock on the date of exercise of the option.  No
options shall be exercisable except in respect of whole shares of Stock.

  2.6  Nontransferability of Options.  An option granted under the Plan shall,
       -----------------------------                                          
by its terms, be nontransferable by the Optionee other than by will or by the
laws of descent and distribution, and shall be exercisable during the Optionee's
lifetime only by the Optionee or by the Optionee's duly appointed guardian or
personal representative.

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  2.7  Termination of Relationship.
       --------------------------- 

       (a) If the employment or other service of the Optionee is terminated for
  any reason other than (i) Disability (as hereinafter defined) of the Optionee,
  or (ii) death of the Optionee, an option (to the extent otherwise exercisable
  on the date of such termination) shall be exercisable by the Optionee at any
  time prior to the Expiration Date of the option or within thirty (30) days
  after the date of such termination of employment or other service, whichever
  is the shorter period.

       (b) If the Optionee's employment or other service is terminated by reason
  of the Optionee's Disability, an option (to the extent otherwise exercisable
  on the date of the Optionee's termination of employment or other service by
  reason of Disability) shall be exercisable by the Optionee at any time prior
  to the Expiration Date of the option or within twelve (12) months after the
  date of such termination, whichever is the shorter period.  As used herein,
  the term "Disability" shall mean the inability 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 twelve (12)
  months.  The determination of whether or not an Optionee's employment or
  service is terminated by reason of Disability shall be in the sole and
  absolute discretion of the Committee.  An individual shall not be considered
  Disabled unless he furnishes proof of the existence thereof in such form and
  manner, and at such times, as the Committee may require.

       (c) If an Optionee dies while in the employ or other service of the
  Company or of a Parent of Subsidiary of the Company, the option shall be
  exercisable (to the extent otherwise exercisable on the date of the death of
  such Optionee) by the person or persons entitled to do so under the Optionee's
  will, or, if the Optionee shall fail to make testamentary disposition of said
  option or shall die intestate, by the Optionee's legal representative or
  representatives, at any time prior to the Expiration Date of the option or
  within twelve (12) months after the date of such death, whichever is the
  shorter period.

       (d) If an Optionee dies within thirty (30) days after his termination of
  employment or other service, or within the twelve-month period described in
  subsection (b) above,  an option shall be exercisable (to the extent otherwise
  exercisable on the date of such termination) by the person or persons entitled
  to do so under the Optionee's will, or, if the Optionee shall fail to make
  testamentary disposition of said option or shall die intestate, by the
  Optionee's legal representative or representatives, at any time prior to the
  Expiration Date of the option or within three (3) months after the date of
  death, whichever is the shorter period.

  2.8  Issuance of Stock Certificates.  Upon exercise of an option, but subject
       ------------------------------                                          
to the provisions of Section 3.6 of this Plan, the person exercising the option
shall be entitled to one (1) stock certificate evidencing the shares of Stock
acquired upon such exercise; provided, however, that any person who tenders
shares of Stock in payment of a portion or all of the purchase price of Stock
purchased upon exercise of the option shall be entitled to receive a separate
certificate representing the number of shares purchased in consideration of the
tender of such Stock.

  2.9  Limitation on Grant of Incentive Stock Options.  The aggregate Fair
       ----------------------------------------------                     
Market Value (determined at the time the option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Optionee during any calendar year (under all such plans of the individual's
employer and its Parent or Subsidiary) shall not exceed $100,000.  In the event
the limits of this Section 2.9 would otherwise be exceeded, the Optionee may
still exercise his option, but such option, to the extent of such excess, shall
be deemed to be a nonqualified stock option.

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<PAGE>
 
  2.10 Other Limitations.  The Board shall impose any other limitations on the
       -----------------                                                      
terms and conditions of Incentive Stock Options granted under the Plan required
in order that such options qualify as Incentive Stock Options as that term is
defined in Section 422 of the Code.

  2.11 "Stand-Off" Agreement.  By exercising an option granted under the Plan,
       ---------------------                                                  
each Optionee will be deemed to have agreed for a period of time (not to exceed
90 days, but up to 270 days if approved by a  majority of the Board) from the
effective date of any registration (other than a registration effected solely to
implement an employee benefit plan or a transaction to which Rule 145
promulgated under the Securities Act of 1933, as amended (the "Act"), is
applicable) of securities of the Company (upon request of the Company or of the
underwriters managing any underwritten offering of the Company's securities) not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any shares of Stock received upon exercise of an option or
any shares of Stock covered by an option granted under the Plan, other than
shares of Stock included in the registration, without the prior written consent
of the Company or such underwriters, as the case may be.

  2.12 Vesting and Exercise of Vested Options.  Each option granted pursuant to
       --------------------------------------                                  
the Plan may only be exercised to the extent that the Optionee is vested in such
option.  Each option shall vest separately in accordance with the option vesting
schedule determined by the Committee, which will be incorporated into the Option
Agreement entered into between the Company and such Optionee.  The option
vesting schedule may be accelerated if, in the sole discretion of the Committee,
the acceleration of the option vesting schedule would be in the best interests
of the Company.

                                      III
                                Other Provisions
                                ----------------

  3.1  Adjustments Upon Changes in Capitalization or Merger.  Subject to any
       ----------------------------------------------------                 
required action by the stockholders of the Company, the number of shares of
Stock covered by each outstanding option, and the aggregate number of shares of
Stock which have been authorized for issuance under the Plan, as well as the
exercise price per share of Stock covered by each such outstanding option, shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Stock resulting from a stock split or the payment of a stock dividend
with respect to the  Stock or any other increase or decrease in the number of
issued shares of Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive.  Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Stock subject to an option.

  In the event of the dissolution or liquidation of the Company, each Option
shall terminate as of a date to be fixed by the Committee; provided, however,
that not less than thirty (30) days' written notice of the date so fixed shall
be given to each Optionee.  During such period each option which has not
previously been terminated, exercised or cancelled will fully vest and become
exercisable (subject to the expiration of the term of such option),
notwithstanding the vesting schedule set forth in the Option Agreement
evidencing the grant of such option or any performance based restriction.  Upon
the date fixed by the Committee, any unexercised option shall terminate and be
of no further effect.

  If a Corporate Transaction (as hereinafter defined) is consummated and
immediately following the consummation of such Corporate Transaction the persons
who were holders of shares of Stock immediately prior to the consummation of
such Corporate Transaction do not receive any securities or

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<PAGE>
 
other property ("Corporate Transaction Consideration") as a result of such
Corporate Transaction and continue to hold solely the shares of Stock held by
them immediately prior to the consummation of such Corporate Transaction, the
options will remain outstanding and will continue in full force and effect
(without any modification) following the consummation of such Corporate
Transaction.

  If a Corporate Transaction is consummated and immediately following the
consummation of such Corporate Transaction the persons who were holders of
shares of Stock immediately prior to the consummation of such Corporate
Transaction do receive Corporate Transaction Consideration as a result of such
Corporate Transaction or do not continue to hold solely the shares of Stock held
by them immediately prior to the consummation of such Corporate Transaction, the
terms and conditions of the options will be modified as follows:

     (i) If the documentation pursuant to which a Corporate Transaction will be
  consummated provides for the assumption by the entity issuing Corporate
  Transaction Consideration to the persons who were the holders of shares of
  Stock immediately prior to the consummation of such Corporate Transaction of
  the options granted pursuant to the Plan without any modification or amendment
  (other than Permitted Modifications (as hereinafter defined)), such options
  will remain outstanding and will continue in full force and effect, subject to
  the Permitted Modifications, following the consummation of such Corporate
  Transaction.

     (ii) If the documentation pursuant to which a Corporate Transaction will be
  consummated does not provide for the assumption by the entity issuing
  Corporate Transaction Consideration to the persons who were the holders of
  shares of Stock immediately prior to the consummation of such Corporate
  Transaction of the options granted pursuant to the Plan without any
  modification or amendment (other than Permitted Modifications), all vesting
  restrictions (performance based or otherwise) will accelerate and the holders
  of such options may (subject to the expiration of the term of such options)
  exercise such options without regard to such vesting restrictions during the
  ten (10) day period immediately preceding the consummation of such Corporate
  Transaction.  For purposes of the immediately preceding sentence, all
  performance based goals will be deemed to have been satisfied in full.  The
  Company will provide each Optionee with reasonable notice of the termination
  of such vesting restrictions and the impending termination of such options.
  Upon the consummation of such a Corporate Transaction, all unexercised options
  will automatically terminate and cease to be outstanding.

As used herein, the term "Corporate Transaction" will be deemed to mean any sale
of all or substantially all of the assets of the Company or the merger of the
Company with or into another corporation.  As used herein, the term "Permitted
Modifications" will be deemed to mean any modification of an option which is
made in connection with a Corporate Transaction and which provides that
subsequent to the consummation of the Corporate Transaction (i) the exercise
price of such option will be proportionately adjusted to reflect the exchange
ratio applicable to the particular Corporate Transaction and/or (ii) the nature
and amount of consideration to be received upon exercise of the option will be
the same (on a per share basis) as was received by persons who were holders of
shares of Stock immediately prior to the consummation of the Corporate
Transaction.

  Notwithstanding the foregoing, in the event of the consummation of a Corporate
Transaction in which a Change in Control (as hereinafter defined) occurs,  all
vesting restrictions (performance based or otherwise) applicable to options will
accelerate and the holders of such options may (subject to the expiration of the
term of such options) exercise such options without regard to such vesting
restrictions.  For purposes of the immediately preceding sentence, all
performance based goals will be deemed to have been satisfied in full.  As used
herein, the term "Change in Control" will be deemed to mean (i) a merger

                                      A-6
<PAGE>
 
of the Company with or into another corporation is consummated, other than a
merger that would result in the holders of voting securities of the Company
outstanding immediately prior thereto owning (directly or indirectly) not less
than fifty percent (50%) of the combined voting power of the voting securities
of the surviving or resulting entity outstanding immediately after such merger
or (ii) an agreement for the sale or other disposition of all or substantially
all of the Company's assets (evaluated on a consolidated basis, without regard
to whether the sale or disposition is effected via a sale or disposition of
assets of the Company, the sale or disposition of the securities of one or more
Subsidiaries of the Company or the sale or disposition of the assets of one or
more Subsidiaries of the Company) is consummated.

  3.2  Continuation of Employment.  Nothing contained in the Plan (or in any
       --------------------------                                           
option granted pursuant to the Plan) shall confer upon any Optionee any right to
continue in the employ or other service of the Company or any Parent or
Subsidiary or constitute any contract or agreement of employment or interfere in
any way with the right of the Company or any Parent or Subsidiary to reduce any
person's compensation from the rate in existence at the time of the granting of
an option or to terminate such person's employment or other service.  Nothing
contained herein or in any Option Agreement shall affect any other contractual
rights of an employee.

  3.3  Withholding.  The Company or the Parent or any Subsidiary of the Company
       -----------                                                             
shall have the right to deduct any sums that the Committee reasonably determines
that federal, state or local tax law requires to be withheld with respect to the
exercise of any option or as otherwise may be required by those laws.  The
Company or the Parent or any Subsidiary of the Company may require as a
condition to issuing shares of Stock upon exercise of an option that the
Optionee or other person exercising the option pay any sums that federal, state
or local tax law requires to be withheld with respect to the exercise.  Neither
the Company nor the Parent or any Subsidiary of the Company shall be obligated
to advise any Optionee of the existence of the tax or the amount which the
employer corporation will be so required to withhold.  Upon the exercise of a
nonqualified stock option, if tax withholding is required, an Optionee may, with
the consent of the Committee, have shares of Stock withheld ("Share
Withholding") by the Company from the shares of Stock otherwise to be received;
provided, that if the Optionee is subject to the provisions of Section 16 under
--------                                                                       
the Exchange Act, no Share Withholding shall be permitted unless such
transaction complies with the requirements of Rule 16b-3 promulgated under the
Exchange Act.  The number of shares so withheld should have an aggregate Fair
Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes.

  3.4  Amendment and Termination.  The Board may at any time suspend or
       -------------------------                                       
terminate the Plan and may, with the consent of the holder of an option, make
such modifications of the terms and conditions of such holder's option as it
shall deem advisable.  No option may be granted during any suspension of the
Plan or after such termination.  The amendment, suspension or termination of the
Plan shall not, without the consent of the Optionee, alter or impair any rights
or obligations under any option theretofore granted under the Plan.

  The Board may at any time amend the Plan as it shall deem advisable without
further action on the part of the stockholders of the Company; provided, that
                                                               --------      
the Board may not amend any provision of the Plan relating to the amount and
price of Stock subject to the option granted hereunder or the timing of grants
hereunder more than once every six (6) months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
thereunder; and provided further, that any amendment to the Plan must be
                -------- -------                                        
approved by the stockholders of the Company, if the amendment would (i) increase
the aggregate number of shares of Stock which may be issued pursuant to options
granted under the Plan; (ii) change the minimum option price; (iii) increase the
maximum terms of options provided for herein; (iv) materially modify the
requirements as to eligibility for participation in the Plan;

                                      A-7
<PAGE>
 
(v) remove the administration of the Plan from the Committee; or (vi) materially
increase the benefits accruing to holders of options under the Plan.

  Notwithstanding the above, the Committee may grant to an Optionee, if he is
otherwise eligible, additional options or, with the consent of the Optionee, may
grant a new option in lieu of an outstanding option, at a price and for a term
which in any respect is greater or less than that of the earlier option, subject
to the general limitations of Article II hereof.

  3.5  Time of Grant and Exercise.  The granting of an option pursuant to the
       --------------------------                                            
Plan shall take place at the time of the Committee's action, as described in
Section 2.1 hereof; provided, however, that if the appropriate resolutions of
the Committee indicate that an option is to be granted as of and at some future
date, the date of grant shall be such future date.  In the event action by the
Committee is taken by written consent of its members, the action by the
Committee shall be deemed to have been taken at the time the last member
required for a valid action of the Committee signs the consent.

  An option shall be deemed to be exercised when the Secretary of the Company
receives written notice of such exercise from the person entitled to exercise
the option together with payment of the purchase price made in accordance with
Section 2.5 of this Plan.

  3.6  Privileges of Stock Ownership; Non-Distributive Intent.  The holder of an
       ------------------------------------------------------                   
option shall not be entitled to the privileges of ownership as to any shares of
Stock not actually issued and delivered to the holder.  Upon exercise of an
option for Stock at a time when there is not in effect under the Act a
registration statement relating to the shares of Stock issuable upon exercise
thereof or not available for delivery a prospectus, the holder of the option
shall represent and warrant in writing to the Company that, inter alia, the
                                                            ----- ----     
shares of Stock purchased are being acquired for investment and not with a view
to the resale or distribution thereof.  No shares of Stock shall be issued upon
the exercise of any option unless and until there shall have been compliance
with any then applicable requirements of the Securities and Exchange Commission
(the "Commission"), other regulatory agencies having jurisdiction and any
exchanges or automated quotation systems upon which securities subject to the
option may be listed or admitted to trading.

  3.7  Effective Date of the Plan.  The Plan shall be effective upon approval by
       --------------------------                                               
the affirmative vote of the holders of a majority of the outstanding shares of
Stock present and entitled to vote at a meeting duly held or by the written
consent of the holders of a majority of the shares of Stock entitled to vote.

  3.8  Expiration.  Unless previously terminated by the Board, the Plan shall
       ----------                                                            
expire at the close of business on the date which is the last day of the ten
(10) year period beginning on the date on which the stockholders approve the
Plan, and no option shall be granted under it thereafter, but such expiration
shall not affect any option theretofore granted.

  3.9  Governing Law.  The Plan and the options issued hereunder shall be
       -------------                                                     
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware applicable to contracts made and performed within that State.

  3.10 No Liability for Good Faith Determinations.  Neither the members of the
       ------------------------------------------                             
Board nor any member of the Committee shall be liable for any act, omission or
determination taken or made in good faith with respect to the Plan or any option
granted under it.

  3.11 Execution of Receipts and Releases.  Any payment or any issuance or
       ----------------------------------                                 
transfer of shares of Stock to the Optionee, or to his legal representative,
heir, legatee or distributee, in accordance with the

                                      A-8
<PAGE>
 
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder.  The Board may require any Optionee, legal
representative, heir, legatee or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.

  3.12 Company Records.  Records of the Company or any Parent or Subsidiary of
       ---------------                                                        
the Company regarding the Optionee's period of employment or other service,
termination of employment or other service and the reason therefor, leaves of
absence, re-employment and other matters shall be conclusive for all purposes
hereunder, unless determined by the Board to be incorrect.

  3.13 Information.  The Company or any Parent or Subsidiary of the Company
       -----------                                                         
shall, upon request or as may be specifically required hereunder, furnish or
cause to be furnished all of the information or documentation which is necessary
or required by the Board or the Committee to perform its duties and functions
under the Plan.

  3.14 No Liability of Company.  The Company assumes no obligation or
       -----------------------                                       
responsibility to the Optionee or his personal representatives, heirs, legatees
or distributees for any act of, or failure to act on the part of, the Board or
the Committee.

  3.15 Company Action.  Any action required of the Company shall be by
       --------------                                                 
resolution of its Board or by a person authorized to act by Board resolution.

  3.16 Severability.  In the event any provision of this Plan shall be held to
       ------------                                                           
be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but shall be fully severable and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included herein.

  3.17 Notice.  Whenever any notice is required or permitted hereunder, such
       ------                                                               
notice must be in writing and personally delivered or sent by mail.  Except as
otherwise provided in Section 3.5 of this Plan, any notice required or permitted
to be delivered hereunder shall be deemed to be delivered on the date on which
it is personally delivered or, whether actually received or not, on the third
(3rd) business day after it is deposited in the United States mail, certified or
registered, postage pre-paid, addressed to the person who is to receive it at
the address which such person has theretofore specified by written notice
delivered in accordance herewith.  The Company or an Optionee may change, at any
time and from time to time, by written notice to the other, the address which it
or he had theretofore specified for receiving notices.  Until it is changed in
accordance herewith, the Company and each Optionee shall specify as its and his
address for receiving notices the address set forth in the Option Agreement
pertaining to the shares to which such notice relates.

  3.18 Waiver of Notices.  Any person entitled to notice hereunder may waive
       -----------------                                                    
such notice.

  3.19 Successors.  The Plan shall be binding upon the Optionee, his heirs,
       ----------                                                          
legatees and legal representatives, upon the Company, its successors and assigns
and upon the Board and its successors.

  3.20 Headings.  The titles and headings of sections and paragraphs are
       --------                                                         
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.

  3.21 Word Usage.  Words used in the masculine shall apply to the feminine
       ----------                                                          
where applicable and, wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.

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