Extreme Packet Devices Inc.
                           309 Legget Drive, Suite 204
                                 Kanata, Ontario
                                     K2K 3A3

                                 March __, 2000

         EPD Option Holder

         Dear ________:

   Re: Acquisition of Extreme Packet Devices Inc. ("EPD") by PMC Sierra, Inc.

As you are no doubt aware,  EPD's Board of Directors  has accepted an offer from
PMC Sierra,  Inc.  ("PMC") to acquire all of the issued and  outstanding  common
shares of EPD in exchange  for special  shares of EPD that will be  exchangeable
for PMC common shares valued at closing at US $415 million (the  "Acquisition").
PMC common shares are publicly traded on the NASDAQ National Market.

This letter is written to explain  what  rights you, as an EPD option  holder as
opposed to an EPD shareholder, have with respect to the Acquisition.  Generally,
the options  that you  currently  hold to purchase EPD common  shares  will,  on
closing,  be assumed by PMC and  accordingly  become  exchanged  for  options to
purchase PMC common  shares.  A more detailed  discussion of the process of this
transaction follows.

There are four major  elements  to any stock  options  granted  under EPD's 1999
Stock  Option  Plan:  (1) the  number of common  shares  under  option;  (2) the
exercise price per common share; (3) the vesting period of the option grant; and
(4) the expiry of the option grant.
We will review how the Acquisition impacts on each of these elements.

(1)      Number of Common Shares Under Option
Under the agreement arrived at between EPD and PMC, EPD option holders are to be
treated identically to EPD shareholders as to the number of PMC common shares to
which they will be entitled to acquire for each EPD common share.

The exact number of PMC common shares will not be calculated until just prior to
closing,  however,  based on the closing price of PMC common shares on March 10,
2000  (US$245.4375),  the exchange ratio would be approximately  0.1913 of a PMC
common share for each EPD common share. For example, an EPD shareholder who owns
10,000 EPD common  shares will be entitled to receive,  through the mechanics of
the Acquisition, 1,913 PMC common shares. Consequently, an option to purchase up
to 10,000 EPD common shares will, following the Acquisition, become an option to
purchase up to 1,900 PMCS common shares.

(2)      Exercise Price per Common Share
While the option  exercise  price per share  changes  after  closing,  the total
exercise price paid for the exercise of your stock options will remain the same.
For example, if you hold an option to purchase up to 10,000 EPD common shares at
CDN $3.00 per share,  using the exchange rate example provided above,  after the
Acquisition, your current option will be converted into an option to purchase up
to 1,913 PMC common shares at  approximately  CDN $15.68 per share.  Both before
and after closing,  the total amount paid for the exercise of such stock options
will be CDN $30,000.
<PAGE>

(3)      Vesting Period of the Option Grant
The options that you currently hold were granted  pursuant to the Extreme Packet
Devices  Inc.  1999 Stock  Option  Plan (the  "Plan"),  a copy of which has been
previously  provided to you. Pursuant to the Plan, your options are to vest over
a four-year  period from their date of grant,  with 25% of the grant  vesting on
the first  anniversary  of the date of grant,  and 2.08% of the remaining  grant
vesting on the first day of each month  thereafter,  starting in the first month
after the first anniversary of the date of grant.

Under the terms of the Acquisition, your options will continue to be governed by
the  provisions of the Plan,  so that the vesting  schedule of your options will
remain unchanged from that noted above.

(4)      Expiry of the Grant
Under the Plan, all options granted  thereunder  expire on the fifth anniversary
of their date of grant.

It is  anticipated  that the  Acquisition  will  have no  effect  on the  expiry
provisions of your options.


We thank you for your  contributions  to Extreme Packet Devices Inc. to date and
we look forward to break new ground with PMC-Sierra, Inc. in the future.


                                                          EXTREME PACKET DEVICES


                                            on behalf of the Board of Directors.


On behalf of PMC-Sierra,  Inc. the undersigned  hereby confirms and acknowledges
that the foregoing accurately represents the agreement between PMC-Sierra,  Inc.
and Extreme  Packet  Devices Inc. with respect to options  granted to employees,
directors  and  consultants  of Extreme  Packet  Devices Inc.  under the Extreme
Packet Devices Inc. 1999 Stock Option Plan.


                                      PMC-SIERRA, INC.


                                      Per:     _______________________________
                                      Name:    _______________________________
                                      Title:   _______________________________



I hereby agree to the foregoing amendments to the stock options granted to me by
Extreme Packet Devices Inc.



                                      Per:     _______________________________
                                      Name:    _______________________________
                                      Title:   _______________________________