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                                                                    EXHIBIT 10.4

                              BROADCOM CORPORATION
                            1998 STOCK INCENTIVE PLAN

                  AMENDED AND RESTATED EFFECTIVE MARCH 23, 2004

                                   ARTICLE ONE

                               GENERAL PROVISIONS

      I.    PURPOSE OF THE PLAN

            This amended and restated 1998 Stock Incentive Plan is intended to
promote the interests of Broadcom Corporation, a California corporation, by
providing eligible persons in the Corporation's service with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in such service.

            Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.

            All share numbers in this March 2004 amendment and restatement
reflect the two-for-one splits of the Common Stock that were effected on
February 17, 1999 and February 11, 2000 through the payments of dividends of one
additional share of Common Stock for every share of Common Stock outstanding on
February 5, 1999 and January 31, 2000, respectively.

      II.   STRUCTURE OF THE PLAN

            A.    The Plan is divided into five equity incentive programs:

                  -     the Discretionary Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock or stock appreciation rights tied to the value
of such Common Stock,

                  -     the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested
each year in special option grants,

                  -     the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of Common
Stock pursuant to restricted stock awards, restricted stock units or other share
right awards that vest upon the completion of a designated service period or the
attainment of pre-established performance milestones, or such shares of Common
Stock may be issued through direct purchase or as a bonus for services rendered
the Corporation (or any Parent or Subsidiary),

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                  -     the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive option grants at
designated intervals over their period of continued Board service, and

                  -     the Director Fee Option Grant Program under which
non-employee Board members may elect to have all or any portion of their annual
retainer fee otherwise payable in cash applied to a special stock option grant.

            B.    The provisions of Articles One and Seven shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.

      III.  ADMINISTRATION OF THE PLAN

            A.    The Primary Committee shall have sole and exclusive authority
to administer the Discretionary Grant and Stock Issuance Programs with respect
to Section 16 Insiders. Administration of the Discretionary Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. However, any
discretionary grants or stock issuances to members of the Primary Committee must
be authorized and approved by a disinterested majority of the Board.

            B.    Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also at any time terminate the
functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.

            C.    Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Grant and Stock
Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding
options, stock appreciation rights, stock issuances or other stock-based awards
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Grant and Stock Issuance Programs under its jurisdiction or any
stock option, stock appreciation right, stock issuance or other stock-based
award thereunder.

            D.    The Primary Committee shall have the sole and exclusive
authority to determine which Section 16 Insiders and other highly compensated
Employees shall be eligible for participation in the Salary Investment Option
Grant Program for one or more calendar years. However, all option grants under
the Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.

                                       2.
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            E.    Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.

            F.    Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
those programs, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.

      IV.   ELIGIBILITY

            A.    The persons eligible to participate in the Discretionary Grant
and Stock Issuance Programs are as follows:

                  (i)   Employees,

                  (ii)  non-employee members of the Board or the board of
      directors of any Parent or Subsidiary, and

                  (iii) consultants and other independent advisors who provide
      services to the Corporation (or any Parent or Subsidiary).

            B.    Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.

            C.    Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the grant of stock options or stock appreciation rights
under the Discretionary Grant Program, which eligible persons are to receive
such grants, the time or times when those grants are to be made, the number of
shares to be covered by each such grant, the status of a granted option as
either an Incentive Option or a Non-Statutory Option, the time or times when
each option or stock appreciation right is to become exercisable, the vesting
schedule (if any) applicable to the grant and the maximum term for which the
grant is to remain outstanding and (ii) with respect to stock issuances or other
stock-based awards under the Stock Issuance Program, which eligible persons are
to receive such issuances or awards, the time or times when the issuances or
awards are to be made, the number of shares subject to each such issuance or
award, the vesting schedule (if any) applicable to the shares subject to such
issuance or award and the consideration for such shares.

            D.    The Plan Administrator shall have the absolute discretion
either to grant options or stock appreciation rights in accordance with the
Discretionary Grant Program or to effect stock issuances or other stock-based
awards in accordance with the Stock Issuance Program.

                                       3.
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            E.    The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members after the Underwriting Date, whether
through appointment by the Board or election by the Corporation's shareholders,
and (ii) those individuals who continue to serve as non-employee Board members
at one or more Annual Shareholders Meetings held after the Underwriting Date,
including any individuals who first became non-employee Board members prior to
such Underwriting Date. A non-employee Board member who has previously been in
the employ of the Corporation (or any Parent or Subsidiary) shall not be
eligible to receive an option grant under the Automatic Option Grant Program at
the time he or she first becomes a non-employee Board member, but shall be
eligible to receive periodic option grants under the Automatic Option Grant
Program while he or she continues to serve as a non-employee Board member.

            F.    All non-employee Board members shall be eligible to
participate in the Director Fee Option Grant Program.

      V.    STOCK SUBJECT TO THE PLAN

            A.    The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. Subject to the automatic share increase
provisions of Section V.B. of this Article One and any additional shares
authorized by the vote of the Board and approved by the shareholders, the number
of shares of Common Stock reserved for issuance over the term of the Plan shall
not exceed 222,184,480 shares.(1) Such reserve includes an additional increase
of 12,000,000 shares authorized by the Board March 23, 2004, subject to
shareholder approval at the 2004 Annual Meeting of Shareholders (the "2004
Annual Meeting"). To the extent any unvested shares of Common Stock outstanding
under the Predecessor Plans as of the Plan Effective Date are subsequently
repurchased by the Corporation, at the option exercise price paid per share, in
connection with the holder's termination of Service prior to vesting in those
shares, the repurchased shares shall be added to the reserve of Common Stock
available for issuance under the Plan, but in no event shall such addition
exceed 18,000,000 shares.

            B.    The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of January
each calendar year during the term of the Plan, beginning with calendar year
2000, by an amount equal to four and one-half percent (4.5%) of the total number
of shares of Class A and Class B Common Stock outstanding on the last trading
day in December of the immediately preceding calendar year, but in no event
shall any such annual increase exceed 18,000,000 shares.

            C.    No one person participating in the Plan may receive stock
options, stand-alone stock appreciation rights, direct stock issuances (whether
vested or unvested) and other stock-based awards (whether in the form of
restricted stock units or other share right awards) for more than 6,000,000
shares of Common Stock in the aggregate per calendar year.

-----------------

      (1) The Common Stock issuable under the Plan shall be Class A Common
Stock, except to the extent such stock is to be issued upon the exercise of
outstanding options incorporated from the Predecessor Plans. For those options,
the issuable stock shall be Class B Common Stock.

                                       4.
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            D.    Shares of Common Stock subject to outstanding options
(including options incorporated into this Plan from the Predecessor Plans) or
other awards made under the Plan shall be available for subsequent issuance
under the Plan to the extent (i) those options or awards expire or terminate for
any reason prior to the issuance of the shares of Common Stock subject to those
options or awards or (ii) the awards are cancelled in accordance with the
cancellation-regrant provisions of Article Two. Unvested shares issued under the
Plan and subsequently cancelled or repurchased by the Corporation at the
original exercise or issue price paid per share pursuant to the Corporation's
repurchase rights under the Plan shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall accordingly be
available for subsequent reissuance under the Plan. All shares that become
available for reissuance under the Plan, including the shares of Class B Common
Stock subject to the outstanding options incorporated into this Plan from the
Predecessor Plans that expire or terminate unexercised and any unvested shares
of Class B Common Stock repurchased by the Corporation pursuant to its
repurchase rights, shall be issuable solely as Class A Common Stock. In
addition, should the exercise price of an option under the Plan be paid with
shares of Common Stock, the authorized reserve of Common Stock under the Plan
shall be reduced only by the net number of shares issued under the exercised
stock option. Should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option or stock appreciation right or the
issuance of fully-vested shares under the Stock Issuance Program, the number of
shares of Common Stock available for issuance under the Plan shall be reduced
only by the net number of shares issued under the exercised stock option or
stock appreciation right or the net number of fully-vested shares issued under
the Stock Issuance Program. Such withholding shall in effect constitute a cash
bonus under the Plan, payable directly to the applicable taxing authorities on
behalf of the individual concerned, in an amount equal to the Fair Market Value
of the withheld shares, and shall not be treated as an issuance and immediate
repurchase of those shares.

            E.    If any change is made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made by the Plan Administrator to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options, stand-alone
stock appreciation rights, direct stock issuances and other stock-based awards
under the Plan per calendar year, (iii) the number and/or class of securities
for which grants are subsequently to be made under the Automatic Option Grant
Program to new and continuing non-employee Board members, (iv) the number and/or
class of securities and the exercise or base price per share in effect under
each outstanding option or stock appreciation right under the Plan, (v) the
number and/or class of securities and exercise price per share in effect under
each outstanding option incorporated into this Plan from the Predecessor Plans,
(vi) the number and/or class of securities subject to each outstanding
restricted stock unit or other stock-based award under the Plan, (vii) the
maximum number and/or class of securities by which the share reserve is to
increase automatically each calendar year pursuant to the provisions of Section
V.B of this Article One

                                       5.
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and (viii) the maximum number and/or class of securities that may be added to
the Plan through the repurchase of unvested shares issued under the Predecessor
Plans. Such adjustments to the outstanding options, stock appreciation rights or
other stock-based awards are to be effected in a manner that shall preclude the
enlargement or dilution of rights and benefits under those options, stock
appreciation rights or other stock-based awards. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.

                                       6.
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                                   ARTICLE TWO

                           DISCRETIONARY GRANT PROGRAM

      I.    OPTION TERMS

            Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

            A.    EXERCISE PRICE.

                  1.    The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the option grant date.

                  2.    The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the forms
specified below:

                  (i)   cash or check made payable to the Corporation,

                  (ii)  shares of Common Stock held for the requisite period
      necessary to avoid a charge to the Corporation's earnings for financial
      reporting purposes and valued at Fair Market Value on the Exercise Date,
      or

                  (iii) to the extent the option is exercised for vested shares,
      through a special sale and remittance procedure pursuant to which the
      Optionee shall concurrently provide irrevocable instructions to (a) a
      brokerage firm (reasonably satisfactory to the Corporation for purposes of
      administering such procedure) to effect the immediate sale of the
      purchased shares and remit to the Corporation, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      federal, state and local income and employment taxes required to be
      withheld by the Corporation by reason of such exercise and (b) the
      Corporation to deliver the certificates for the purchased shares directly
      to such brokerage firm to complete the sale.

            Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

            B.    EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.

                                       7.
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            C.    EFFECT OF TERMINATION OF SERVICE.

                  1.    The following provisions shall govern the exercise of
any options held by the Optionee at the time of cessation of Service or death:

                  (i)   Any option outstanding at the time of the Optionee's
      cessation of Service for any reason shall remain exercisable for such
      period of time thereafter as shall be determined by the Plan Administrator
      and set forth in the documents evidencing the option, but no such option
      shall be exercisable after the expiration of the option term.

                  (ii)  Any option held by the Optionee at the time of death and
      exercisable in whole or in part at that time may be subsequently exercised
      by the personal representative of the Optionee's estate or by the person
      or persons to whom the option is transferred pursuant to the Optionee's
      will or the laws of inheritance or by the Optionee's designated
      beneficiary or beneficiaries of that option.

                  (iii) Should the Optionee's Service be terminated for
      Misconduct or should the Optionee otherwise engage in Misconduct while
      holding one or more outstanding options under this Article Two, then all
      those options shall terminate immediately and cease to be outstanding.

                  (iv)  During the applicable post-Service exercise period, the
      option may not be exercised in the aggregate for more than the number of
      vested shares for which that option is at the time exercisable. No
      additional shares shall vest under the option following the Optionee's
      cessation of Service, except to the extent (if any) specifically
      authorized by the Plan Administrator in its sole discretion pursuant to an
      express written agreement with Optionee. Upon the expiration of the
      applicable exercise period or (if earlier) upon the expiration of the
      option term, the option shall terminate and cease to be outstanding for
      any shares for which the option has not been exercised.

                  2.    The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

                  (i)   extend the period of time for which the option is to
      remain exercisable following the Optionee's cessation of Service from the
      limited exercise period otherwise in effect for that option to such
      greater period of time as the Plan Administrator shall deem appropriate,
      but in no event beyond the expiration of the option term, and/or

                  (ii)  permit the option to be exercised, during the applicable
      post-Service exercise period, not only with respect to the number of
      vested shares of Common Stock for which such option is exercisable at the
      time of the Optionee's cessation of Service but also with respect to one
      or more additional installments in which the Optionee would have vested
      had the Optionee continued in Service.

                                       8.
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            D.    SHAREHOLDER RIGHTS. The holder of an option shall have no
shareholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

            E.    REPURCHASE RIGHTS. The Plan Administrator shall have the
discretion to grant options that are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

            F.    TRANSFERABILITY OF OPTIONS. The transferability of options
granted under the Plan shall be governed by the following provisions:

                  (i)   Incentive Options. During the lifetime of the Optionee,
Incentive Options shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or the laws of inheritance
following the Optionee's death.

                  (ii)  Non-Statutory Options. Non-Statutory Options shall be
subject to the same limitation on transfer as Incentive Options, except that the
Plan Administrator may structure one or more Non-Statutory Options so that the
option may be assigned in whole or in part during the Optionee's lifetime to one
or more Family Members of the Optionee or to a trust established exclusively for
the Optionee and/or one or more such Family Members, to the extent such
assignment is in connection with the Optionee's estate plan or pursuant to a
domestic relations order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.

                  (iii) Beneficiary Designations. Notwithstanding the foregoing,
the Optionee may designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding options under this Article Two (whether
Incentive Options or Non-Statutory Options), and those options shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee's death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee's death.

                                       9.
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      II.   INCENTIVE OPTIONS

            The terms specified below, together with any additions, deletions or
changes thereto imposed from time to time pursuant to the provisions of the Code
governing Incentive Options, shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Seven shall be applicable to Incentive Options. Options
that are specifically designated as Non-Statutory Options when issued under the
Plan shall not be subject to the terms of this Section II.

            A.    ELIGIBILITY. Incentive Options may only be granted to
Employees.

            B.    EXERCISE PRICE. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

            C.    DOLLAR LIMITATION. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options that become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

            D.    10% SHAREHOLDER. If any Employee to whom an Incentive Option
is granted is a 10% Shareholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

      III.  STOCK APPRECIATION RIGHTS

            A.    AUTHORITY. The Plan Administrator shall have full power and
authority, exercisable in its sole discretion, to grant stock appreciation
rights in accordance with this Section III to selected Optionees or other
individuals eligible to receive option grants under the Discretionary Grant
Program.

            B.    TYPES. Three types of stock appreciation rights shall be
authorized for issuance under this Section III: (i) tandem stock appreciation
rights ("Tandem Rights"), (ii) stand-alone stock appreciation rights
("Stand-alone Rights") and (iii) limited stock appreciation rights ("Limited
Rights").

            C.    TANDEM RIGHTS. The following terms and conditions shall govern
the grant and exercise of Tandem Rights.

                                      10.
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                  1.    One or more Optionees may be granted a Tandem Right,
exercisable upon such terms and conditions as the Plan Administrator may
establish, to elect between the exercise of the underlying stock option for
shares of Common Stock or the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate exercise price payable for
such vested shares.

                  2.    No such option surrender shall be effective unless it is
approved by the Plan Administrator, either at the time of the actual option
surrender or at any earlier time. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section III may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.

                  3.    If the surrender of an option is not approved by the
Plan Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.

            D.    STAND-ALONE RIGHTS. The following terms and conditions shall
govern the grant and exercise of Stand-alone Rights under this Article Two:

                  1.    One or more individuals eligible to participate in the
Discretionary Grant Program may be granted a Stand-alone Right not tied to any
underlying option under this Discretionary Grant Program. The Stand-alone Right
shall relate to a specified number of shares of Common Stock and shall be
exercisable upon such terms and conditions as the Plan Administrator may
establish. In no event, however, may the Stand-alone Right have a maximum term
in excess of ten (10) years measured from the grant date. Upon exercise of the
Stand-alone Right, the holder shall be entitled to receive a distribution from
the Corporation in an amount equal to the excess of (i) the aggregate Fair
Market Value (on the exercise date) of the shares of Common Stock underlying the
exercised right over (ii) the aggregate base price in effect for those shares.

                  2.    The number of shares of Common Stock underlying each
Stand-alone Right and the base price in effect for those shares shall be
determined by the Plan Administrator in its sole discretion at the time the
Stand-alone Right is granted. In no event, however, may the base price per share
be less than the Fair Market Value per underlying share of Common Stock on the
grant date.

                  3.    Stand-alone Rights shall be subject to the same
transferability restrictions applicable to Non-Statutory Options and may not be
transferred during the holder's lifetime, except to one or more Family Members
of the holder or to a trust established for the holder and/or such Family
Members, to the extent such assignment is in

                                      11.
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connection with the holder's estate plan or pursuant to a domestic relations
order covering the Stand-alone Right as marital property. In addition, one or
more beneficiaries may be designated for an outstanding Stand-alone Right in
accordance with substantially the same terms and provisions as set forth in
Section I.F of this Article Two.

                  4.    The distribution with respect to an exercised
Stand-alone Right may be made in shares of Common Stock valued at Fair Market
Value on the exercise date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.

                  5.    The holder of a Stand-alone Right shall have no
shareholder rights with respect to the shares subject to the Stand-alone Right
unless and until such person shall have exercised the Stand-alone Right and
become a holder of record of the shares of Common Stock issued upon the exercise
of such Stand-alone Right.

            E.    LIMITED RIGHTS. The following terms and conditions shall
govern the grant and exercise of Limited Rights under this Article Two:

                  1.    One or more Section 16 Insiders may, in the Plan
Administrator's sole discretion, be granted Limited Rights with respect to their
outstanding options under this Article Two.

                  2.    Upon the occurrence of a Hostile Tender-Offer, the
Section 16 Insider shall have the unconditional right (exercisable for a thirty
(30)-day period following such Hostile Tender-Offer) to surrender each option
with such a Limited Right to the Corporation. The Section 16 Insider shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Tender-Offer Price of the number of shares in
which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate exercise price payable for
those vested shares. Such cash distribution shall be made within five (5) days
following the option surrender date.

                  3.    The Plan Administrator shall pre-approve, at the time
such Limited Right is granted, the subsequent exercise of that right in
accordance with the terms of the grant and the provisions of this Section III.
No additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option surrender and cash distribution. Any
unsurrendered portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument evidencing
such grant.

            F.    POST-SERVICE EXERCISE. The provisions governing the exercise
of Tandem, Stand-alone and Limited Stock Appreciation Rights following the
cessation of the recipient's Service shall be substantially the same as those
set forth in Section I.C of this Article Two for the options granted under the
Discretionary Grant Program.

            G.    NET COUNTING. Upon the exercise of any Tandem, Stand-alone or
Limited Right under this Section III, the share reserve under Section V of
Article One shall only be reduced by the net number of shares actually issued by
the Corporation upon such exercise, and not by the gross number of shares as to
which such Tandem, Stand-alone or Limited Right is

                                      12.
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exercised. Accordingly, upon the exercise of any such stock appreciation right,
the number of shares available for issuance under the Plan shall increase by the
amount by which the shares subject to that exercised stock appreciation right
exceeds the number of shares actually issued in connection with the exercise.

      IV.   CHANGE IN CONTROL/HOSTILE TAKE-OVER

            A.    No option or stock appreciation right outstanding at the time
of a Change in Control shall vest and become exercisable on an accelerated basis
if and to the extent: (i) that option or stock appreciation right is, in
connection with the Change in Control, assumed by the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant to the
terms of the Change in Control transaction, (ii) such option or stock
appreciation right is replaced with a cash incentive program of the successor
corporation that preserves the spread existing at the time of the Change in
Control on the shares of Common Stock as to which the option or stock
appreciation right is not otherwise at that time exercisable and provides for
subsequent payout in accordance with the same exercise/vesting schedule
applicable to those shares or (iii) the acceleration of such option or stock
appreciation right is subject to other limitations imposed by the Plan
Administrator at the time of the option grant. However, if none of the foregoing
conditions are satisfied, then each option or stock appreciation right
outstanding at the time of the Change in Control but not otherwise exercisable
as to all the shares at the time subject to that option or stock appreciation
right shall automatically accelerate so that each such option and stock
appreciation right shall, immediately prior to the effective date of the Change
in Control, vest and become exercisable as to all the shares of Common Stock at
the time subject to that option or stock appreciation right and may be exercised
as to any or all of those shares as fully vested shares of Common Stock.

            B.    All outstanding repurchase rights under the Discretionary
Grant Program shall also terminate automatically, and the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Change in Control, except to the extent: (i) those repurchase rights are
assigned to the successor corporation (or parent thereof) or otherwise continue
in full force and effect pursuant to the terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

            C.    Immediately following the consummation of the Change in
Control, all outstanding options and stock appreciation rights under the
Discretionary Grant Program shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the terms of
the Change in Control transaction.

            D.    Each option that is assumed in connection with a Change in
Control or otherwise continued in effect shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of
securities that would have been issuable to the Optionee in consummation of such
Change in Control had the option been exercised immediately prior to such Change
in Control. In the event outstanding Stand-alone Rights are to

                                      13.
<PAGE>

be assumed in connection with a Change in Control transaction or otherwise
continued in effect, the shares of Common Stock underlying each such Stand-alone
Right shall be adjusted immediately after such Change in Control to apply to the
number and class of securities into which those shares of Common Stock would
have been converted in consummation of such Change in Control had those shares
actually been outstanding at that time. Appropriate adjustments to reflect such
Change in Control shall also be made to (i) the exercise price payable per share
under each outstanding option, provided the aggregate exercise price payable for
such securities shall remain the same, (ii) the base price per share in effect
under each outstanding Stand-alone Right, provided the aggregate base price
shall remain the same , (iii) the maximum number and/or class of securities
available for issuance over the remaining term of the Plan and (iv) the maximum
number and/or class of securities for which any one person may be granted stock
options, stand-alone stock appreciation rights, direct stock issuances and other
stock-based awards under the Plan per calendar year, (v) the maximum number
and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the automatic share increase
provisions of the Plan and (vi) the maximum number and class of securities that
may be added to the Plan through the repurchase of unvested shares issued under
the Predecessor Plans. To the extent the actual holders of the Corporation's
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in
connection with the assumption or continuation of the outstanding options or
stock appreciation rights under the Discretionary Grant Program, substitute, for
the securities underlying those assumed rights, one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control transaction.

            E.    The Plan Administrator shall have the discretionary authority
to structure one or more outstanding options or stock appreciation rights under
the Discretionary Grant Program so that those options or stock appreciation
rights shall, immediately prior to the effective date of a Change in Control,
vest and become exercisable as to all the shares at the time subject to those
options or stock appreciation rights and may be exercised as to any or all of
those shares as fully vested shares of Common Stock, whether or not those
options or stock appreciation rights are to be assumed or otherwise continued in
full force and effect pursuant to the express terms of the Change in Control
transaction. In addition, the Plan Administrator shall have the discretionary
authority to structure one or more of the Corporation's repurchase rights under
the Discretionary Grant Program so that those rights shall immediately terminate
at the time of such Change in Control and shall not be assignable to successor
corporation (or parent thereof), and the shares subject to those terminated
rights shall accordingly vest in full at the time of such Change in Control.

            F.    The Plan Administrator shall have full power and authority to
structure one or more outstanding options or stock appreciation rights under the
Discretionary Grant Program so that those options or stock appreciation rights
shall immediately vest and become exercisable as to all of the shares at the
time subject to those options or stock appreciation rights in the event the
Optionee's Service is subsequently terminated by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Change in Control in which those options or
stock appreciation rights do not otherwise vest on an accelerated basis. Any
options or stock appreciation rights so

                                      14.
<PAGE>

accelerated shall remain exercisable as to fully vested shares until the
expiration or sooner termination of their term. In addition, the Plan
Administrator may structure one or more of the Corporation's repurchase rights
under the Discretionary Grant Program so that those rights shall immediately
terminate with respect to any shares held by the Optionee at the time of his or
her Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full at that time.

            G.    The Plan Administrator shall have the discretionary authority
to structure one or more outstanding options or stock appreciation rights under
the Discretionary Grant Program so that those options or stock appreciation
rights shall, immediately prior to the effective date of a Hostile Take-Over,
vest and become exercisable as to all the shares at the time subject to those
options or stock appreciation rights and may be exercised as to any or all of
those shares as fully vested shares of Common Stock. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation's repurchase rights under the Discretionary Grant Program so
that those rights shall terminate automatically upon the consummation of such
Hostile Take-Over, and the shares subject to those terminated rights shall
thereupon vest in full. Alternatively, the Plan Administrator may condition the
automatic acceleration of one or more outstanding options or stock appreciation
rights under the Discretionary Grant Program and the termination of one or more
of the Corporation's outstanding repurchase rights under such program upon the
Involuntary Termination of the Optionee's Service within a designated period
(not to exceed eighteen (18) months) following the effective date of such
Hostile Take-Over. Each option or stock appreciation rights so accelerated shall
remain exercisable for fully vested shares until the expiration or sooner
termination of the term.

            H.    The portion of any Incentive Option accelerated in connection
with a Change in Control shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

            I.    The outstanding options and stock appreciation rights shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

      V.    EXCHANGE/REPRICING PROGRAMS

            A.    The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected holders, the
cancellation of any or all outstanding options or stock appreciation right under
the Discretionary Grant Program (including outstanding options transferred from
the Predecessor Plan) and to grant in exchange one or more of the following: (i)
new options or stock appreciation rights covering the same or a different number
of shares of Common Stock but with an exercise or base price per share not less
than the Fair Market Value per share of Common Stock on the new grant date or
(ii) cash or shares of Common Stock, whether vested or unvested, equal in value
to the value of the cancelled options or stock appreciation rights.

                                      15.
<PAGE>

            B.    The Plan Administrator shall also have the authority,
exercisable at any time and from time to time, with the consent of the affected
holders, to reduce the exercise or base price of one or more outstanding stock
options or stock appreciation rights to a price not less than the then current
Fair Market Value per share of Common Stock or issue new stock options or stock
appreciation rights with a lower exercise or base price in immediate
cancellation of outstanding stock options or stock appreciation rights with a
higher exercise or base price.

                                      16.
<PAGE>

                                  ARTICLE THREE

                     SALARY INVESTMENT OPTION GRANT PROGRAM

      I.    OPTION GRANTS

            The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designee) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Grant Program on the first trading day in January of the calendar
year for which the salary reduction is to be in effect.

      II.   OPTION TERMS

            Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.

            A.    EXERCISE PRICE.

                  1.    The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.

                  2.    The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Grant Program. Except to the extent the
sale and remittance procedure specified thereunder is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise Date.

            B.    NUMBER OF OPTION SHARES. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):

                  X = A / (B x 66-2/3%), where

                  X is the number of option shares,

                                      17.
<PAGE>

                  A is the dollar amount of the reduction in the Optionee's base
            salary for the calendar year to be in effect pursuant to this
            program, and

                  B is the Fair Market Value per share of Common Stock on the
            option grant date.

            C.    EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.

            D.    EFFECT OF TERMINATION OF SERVICE. Should the Optionee cease
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or the laws of inheritance or by the designated beneficiary
or beneficiaries of the option. Such right of exercise shall lapse, and the
option shall terminate, upon the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the three (3)-year period measured from the date
of the Optionee's cessation of Service. However, the option shall, immediately
upon the Optionee's cessation of Service for any reason, terminate and cease to
remain outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.

      III.  CHANGE IN CONTROL/ HOSTILE TAKE-OVER

            A.    In the event of a Change in Control while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of such Change in Control,
vest and become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Change in Control, except to the extent
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the express terms of the Change in Control
transaction. Any option so assumed or continued in effect shall remain
exercisable for the fully-vested shares until the earliest to occur of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee's cessation of Service,
(iii) the termination of the option in connection with a subsequent Change in
Control or (iv) the surrender of the option in connection with a Hostile
Take-Over.

                                      18.
<PAGE>

            B.    In the event of a Hostile Take-Over while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of such Hostile Take-Over,
vest and become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. The option shall remain so exercisable
until the earliest to occur of (i) the expiration of the ten (10)-year option
term, (ii) the expiration of the three (3)-year period measured from the date of
the Optionee's cessation of Service, (iii) the termination of the option in
connection with a Change in Control or (iv) the surrender of the option in
connection with that Hostile Take-Over.

            C.    Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Salary Investment Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to the surrendered option
(whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. Such
cash distribution shall be paid within five (5) days following the surrender of
the option to the Corporation. The Primary Committee shall, at the time the
option with such limited stock appreciation right is granted under the Salary
Investment Option Grant Program, pre-approve any subsequent exercise of that
right in accordance with the terms of this Paragraph C. Accordingly, no further
approval of the Primary Committee or the Board shall be required at the time of
the actual option surrender and cash distribution.

            D.    Each option that is assumed in connection with a Change in
Control or otherwise continued in full force and effect shall be appropriately
adjusted, immediately after such Change in Control, to apply to the number and
class of securities that would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately
prior to such Change in Control. Appropriate adjustments shall also be made to
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same. To
the extent the actual holders of the Corporation's outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control transaction, the successor corporation may, in connection with the
assumption of the outstanding options under the Salary Investment Option Grant
Program, substitute one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Change in Control transaction.

            E.    The grant of options under the Salary Investment Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

                                      19.
<PAGE>

      IV.   REMAINING TERMS

            The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Grant Program.

                                      20.
<PAGE>

                                  ARTICLE FOUR

                             STOCK ISSUANCE PROGRAM

      I.    STOCK ISSUANCE TERMS

            A.    Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement that complies with the terms specified below. Shares of Common Stock
may also be issued under the Stock Issuance Program pursuant to share right
awards or restricted stock units that entitle the recipients to receive the
shares underlying those awards or units upon the attainment of designated
performance goals or the satisfaction of specified Service requirements or upon
the expiration of a designated time period following the vesting of those awards
or units.

            B.    ISSUE PRICE.

                  1.    The price per share at which shares of Common Stock may
be issued under the Stock Issuance Program shall be fixed by the Plan
Administrator, but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the issuance date.

                  2.    Shares of Common Stock may be issued under the Stock
Issuance Program for any of the following items of consideration that the Plan
Administrator may deem appropriate in each individual instance:

                  (i)   cash or check made payable to the Corporation;

                  (ii)  past services rendered to the Corporation (or any Parent
      or Subsidiary); or

                  (iii) any other valid form of consideration permissible under
      the California General Corporation Law at the time such shares are issued.

            C.    VESTING PROVISIONS.

                  1.    Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to share right awards or restricted stock units that entitle
the recipients to receive the shares

                                      21.
<PAGE>

underlying those awards or units upon the attainment of designated performance
goals or the satisfaction of specified Service requirements or upon the
expiration of a designated time period following the vesting of those awards or
units, including (without limitation) a deferred distribution date following the
termination of the Participant's Service.

                  2.    The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more stock
issuances or restricted stock unit or share right awards so that the shares of
Common Stock subject to those issuances or awards shall vest (or vest and become
issuable) upon the achievement of certain pre-established corporate performance
goals based on one or more of the following criteria (all as the Plan
Administrator may in its sole discretion define in accordance with applicable
accounting principles and standards): (i) return on total shareholder equity;
(ii) earnings per share of Common Stock; (iii) net income (before or after
taxes) or operating income; (iv) earnings before interest, taxes, depreciation
and amortization or operating income before depreciation and amortization; (v)
sales or revenue targets; (vi) return on assets, capital or investment; (vii)
cash flow; (viii) market share; (ix) cost reduction goals; (x) budget
comparisons; (xi) implementation or completion of projects or processes
strategic or critical to the Corporation's business operations; (xii) measures
of customer satisfaction; (xiii) any combination of, or a specified increase in,
any of the foregoing; and (xiv) the formation of joint ventures, research and
development collaborations, marketing or customer service collaborations, or the
completion of other corporate transactions intended to enhance the Corporation's
revenue or profitability or expand its customer base. In addition, such
performance goals may be based upon the attainment of specified levels of the
Corporation's performance under one or more of the measures described above
relative to the performance of other entities and may also be based on the
performance of any of the Corporation's business units or divisions or any
Parent or Subsidiary. Performance goals may include a minimum threshold level of
performance below which no award will be earned, levels of performance at which
specified portions of an award will be earned and a maximum level of performance
at which an award will be fully earned.

                  3.    Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) that the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

                  4.    The Participant shall have full shareholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares. The Participant
shall not have any shareholder rights with respect to the shares of Common Stock
subject to a restricted stock unit or share right award until that award vests
and

                                      22.
<PAGE>

the shares of Common Stock are actually issued thereunder. However,
dividend-equivalent units may be paid or credited, either in cash or in actual
or phantom shares of Common Stock, on outstanding restricted stock unit or share
right awards, subject to such terms and conditions as the Plan Administrator may
deem appropriate.

                  5.    Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further shareholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash, cash equivalent or otherwise, the
Corporation shall repay to the Participant the same form of consideration as the
Participant paid for the surrendered shares.

                  6.    The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock that
would otherwise occur upon the cessation of the Participant's Service or the
non-attainment of the performance objectives applicable to those shares. Any
such waiver shall result in the immediate vesting of the Participant's interest
in the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives. However, no vesting requirements tied to the attainment of
performance objectives may be waived with respect to shares that were intended
at the time of issuance to qualify as performance-based compensation under Code
Section 162(m).

                  7.    Outstanding share right awards or restricted stock units
under the Stock Issuance Program shall automatically terminate, and no shares of
Common Stock shall actually be issued in satisfaction of those awards or units,
if the performance goals or Service requirements established for such awards or
units are not attained or satisfied. The Plan Administrator, however, shall have
the discretionary authority to issue vested shares of Common Stock under one or
more outstanding share right awards or restricted stock units as to which the
designated performance goals or Service requirements have not been attained or
satisfied. However, no vesting requirements tied to the attainment of
performance goals may be waived with respect to awards or units which were at
the time of grant intended to qualify as performance-based compensation under
Code Section 162(m).

      II.   CHANGE IN CONTROL/HOSTILE TAKE-OVER

            A.    All of the Corporation's outstanding repurchase rights under
the Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Change in Control, except to the extent (i) those repurchase
rights are to be assigned to the successor corporation (or parent thereof) or
otherwise continued in full force and effect pursuant to the express terms of
the Change in Control transaction or (ii) such accelerated vesting is precluded
by other limitations imposed in the Stock Issuance Agreement.

                                      23.
<PAGE>

            B.    Each outstanding restricted stock unit or share right award
assumed in connection with a Change in Control or otherwise continued in effect
shall be adjusted immediately after the consummation of that Change in Control
to apply to the number and class of securities into which the shares of Common
Stock subject to the award immediately prior to the Change in Control would have
been converted in consummation of such Change in Control had those shares
actually been outstanding at that time.

            C.    The Plan Administrator shall have the discretionary authority
to structure one or more unvested stock issuances or one or more restricted
stock unit or other share right awards under the Stock Issuance Program so that
the shares of Common Stock subject to those issuances or awards shall
automatically vest (or vest and become issuable) in whole or in part immediately
upon the occurrence of a Change in Control or upon the subsequent termination of
the Participant's Service by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of that Change in Control transaction.

            D.    The Plan Administrator shall also have the discretionary
authority to structure one or more unvested stock issuances or one or more
restricted stock unit or other share right awards under the Stock Issuance
Program so that the shares of Common Stock subject to those issuances or awards
shall automatically vest (or vest and become issuable) in whole or in part
immediately upon the occurrence of a Hostile Take-Over or upon the subsequent
termination of the Participant's Service by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months) following the
effective date of that Hostile Take-Over.

            E.    The Plan Administrator's authority under Paragraphs C and D of
this Section II shall also extend to any stock issuances, restricted stock units
or other share right awards intended to qualify as performance-based
compensation under Code Section 162(m), even though the automatic vesting of
those issuances, units or awards pursuant to Paragraph C or D of this Section II
may result in their loss of performance-based status under Code Section 162(m).

                                      24.
<PAGE>

                                  ARTICLE FIVE

                         AUTOMATIC OPTION GRANT PROGRAM

      I.    OPTION TERMS

            A.    GRANT DATES. Option grants shall be made on the dates
specified below:

                  1.    Each individual who is first elected or appointed as a
non-employee Board member at any time on or after March 7, 2002 shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 100,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.(2) Such individual shall receive an additional
100,000-share option grant once every four (4) years thereafter during his or
her period of continued service as an Eligible Director. Each such additional
100,000-share grant shall be made immediately upon his or her completion of each
subsequent four (4)-year period of continued service as an Eligible Director.(3)

                  2.    On the date of the 2002 Annual Shareholders Meeting,
each individual with at least four (4) years of continuous service as a
non-employee Board member shall automatically be granted a Non-Statutory Option
to purchase 100,000 shares of Common Stock. Each such individual shall receive
an additional 100,000-share option grant once every four (4) years thereafter
during his or her period of continued service as an Eligible Director. Each such
additional 100,000-share grant shall be made immediately upon his or her
completion of each subsequent four (4)-year period of continued service as an
Eligible Director,(4) with such service to be measured from the starting point
of the April 25, 2002 Annual Shareholders Meeting.

                  3.    If a continuing non-employee Board member has not, as of
the date of the 2002 Annual Shareholders Meeting, completed at least four (4)
years of continuous service as an Eligible Director, then that individual shall
receive his or her 100,000-share grant immediately upon his or her completion of
four (4) years of service in such capacity. Such individual shall receive an
additional 100,000-share option grant once every four (4) years thereafter
during his or her period of continued service as an Eligible Director. Each such

-----------------

      (2) Prior to April 21, 2000, the initial grant to a newly elected or
appointed non-employee Board member was for 160,000 shares, as adjusted for the
two 2-for-1 splits of the Common Stock.

      (3) The four (4)-year period for calculating the new 100,000-share renewal
grant shall be suspended during any period the Eligible Director serves as an
executive officer or other employee of the Corporation or any Parent or
Subsidiary.

      (4) The four (4)-year period for calculating the new 100,000-share renewal
grant shall be suspended during any period the Eligible Director serves as an
executive officer or other employee of the Corporation or any Parent or
Subsidiary.

                                      25.
<PAGE>

additional 100,000-share grant shall be made immediately upon his or her
completion of each subsequent four (4)-year period of continued service as an
Eligible Director. (5)

                  4.    On the date of each annual meeting of shareholders, each
individual who is to continue to serve as an Eligible Director, whether or not
that individual is standing for re-election to the Board at that particular
annual meeting of shareholders, shall automatically be granted a Non-Statutory
Option to purchase 15,000 shares of Common Stock, whether or not that individual
has served as a non-employee Board member for at least six (6) months. There
shall be no limit on the number of such 15,000-share option grants any one
Eligible Director may receive over his or her period of Board service, and
non-employee Board members who have previously been in the employ of the
Corporation (or any Parent or Subsidiary) shall be eligible to receive one or
more such annual option grants over their period of continued Board service.
Such grant shall be in addition to any 100,000-share option grant to which such
individual may be entitled to receive in the same year as that Annual
Shareholders Meeting pursuant to the provisions of paragraphs A.1 through A.3
above.

            B.    EXERCISE PRICE.

                  1.    The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.

                  2.    The exercise price shall be payable in one or more of
the alternative forms authorized under the Discretionary Grant Program. Except
to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

            C.    OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.

            D.    EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any
unvested shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. The shares subject to each
100,000-share grant shall vest, and the Corporation's repurchase right shall
lapse, in a series of four (4) successive equal annual installments upon the
Optionee's completion of each year of service as a Board member over the four
(4)-year period measured from the option grant date. The shares subject to each
annual 15,000-share option grant shall vest, and the Corporation's repurchase
right shall lapse, upon the earlier of (i) the Optionee's completion of

-----------------

      (5) The four (4)-year period for calculating the new 100,000-share renewal
grant shall be suspended during any period the Eligible Director serves as an
executive officer or other employee of the Corporation or any Parent or
Subsidiary.

                                      26.
<PAGE>

the one (1)-year period of Board service measured from the grant date or (ii)
the Optionee's continuation in Board service through the day immediately
preceding the date of the first annual meeting of shareholders following the
annual meeting of shareholders at which such option was granted.(6)

            E.    LIMITED TRANSFERABILITY OF OPTIONS. Each option under this
Article Five may be assigned in whole or in part during the Optionee's lifetime
to one or more Family Members of the Optionee or to a trust established
exclusively for Optionee and/or for one or more such Family Members, to the
extent such assignment is in connection with the Optionee's estate plan or
pursuant to a domestic relations order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. The Optionee may also designate one
or more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Five, and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.

            F.    TERMINATION OF BOARD SERVICE. The following provisions shall
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:

                  (i)   The Optionee (or, in the event of Optionee's death, the
      personal representative of the Optionee's estate or the person or persons
      to whom the option is transferred pursuant to the Optionee's will or the
      laws of inheritance or the designated beneficiary or beneficiaries of such
      option) shall have a twelve (12)-month period following the date of such
      cessation of Board service in which to exercise each such option.

                  (ii)  During the twelve (12)-month exercise period, the option
      may not be exercised in the aggregate for more than the number of vested
      shares of Common Stock for which the option is exercisable at the time of
      the Optionee's cessation of Board service.

                  (iii) Should the Optionee cease to serve as a Board member by
      reason of death or Permanent Disability, then all shares at the time
      subject to the option shall immediately vest so that such option may,
      during the twelve (12)-month exercise period following such cessation of
      Board service, be exercised for all or any portion of those shares as
      fully-vested shares of Common Stock.

-----------------

      (6) This vesting schedule shall be in effect for each 15,000-share option
granted pursuant to Section I.A.4 of this Article Five at or after the 2004
Annual Shareholders Meeting.

                                      27.
<PAGE>

                  (iv)  In no event shall the option remain exercisable after
      the expiration of the option term. Upon the expiration of the twelve
      (12)-month exercise period or (if earlier) upon the expiration of the
      option term, the option shall terminate and cease to be outstanding for
      any vested shares for which the option has not been exercised. However,
      the option shall, immediately upon the Optionee's cessation of Board
      service for any reason other than death or Permanent Disability, terminate
      and cease to be outstanding to the extent the option is not otherwise at
      that time exercisable for vested shares.

      II.   CHANGE IN CONTROL/ HOSTILE TAKE-OVER

            A.    In the event of any Change in Control while the Optionee
remains a Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under the Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all the option shares as fully-vested shares of
Common Stock and may be exercised for any or all of those vested shares.
Immediately following the consummation of the Change in Control, each automatic
option grant shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the express terms of the Change in Control
transaction.

            B.    In the event of a Hostile Take-Over while the Optionee remains
a Board member, the shares of Common Stock at the time subject to each option
outstanding under the Automatic Option Grant Program but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Hostile Take-Over, become exercisable for all
the option shares as fully-vested shares of Common Stock and may be exercised
for any or all of those vested shares. Each such option shall remain exercisable
for such fully-vested option shares until the expiration or sooner termination
of the option term or the surrender of the option in connection with that
Hostile Take-Over.

            C.    All outstanding repurchase rights under the Automatic Option
Grant Program shall automatically terminate, and the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Change in Control or Hostile Take-Over.

            D.    Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding automatic option grants. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. No approval or consent
of the Board or any Plan Administrator shall be required at the time of the
actual option surrender and cash distribution.

                                      28.
<PAGE>

            E.    Each option that is assumed in connection with a Change in
Control or otherwise continued in full force and effect shall be appropriately
adjusted, immediately after such Change in Control, to apply to the number and
class of securities that would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately
prior to such Change in Control. Appropriate adjustments shall also be made to
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same. To
the extent the actual holders of the Corporation's outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control transaction, the successor corporation may, in connection with the
assumption of the outstanding options under the Automatic Option Grant Program,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Change in Control transaction.

            F.    The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

      III.  REMAINING TERMS

            The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Grant Program.

                                      29.
<PAGE>

                                   ARTICLE SIX

                        DIRECTOR FEE OPTION GRANT PROGRAM

      I.    OPTION GRANTS

            The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years for which the Director Fee Option Grant
Program is to be in effect. For each such calendar year the program is in
effect, each non-employee Board member may irrevocably elect to apply all or any
portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant
under this Director Fee Option Grant Program. Such election must be filed with
the Corporation's Chief Financial Officer prior to the first day of the calendar
year for which the annual retainer fee that is the subject of that election is
otherwise payable. Each non-employee Board member who files such a timely
election shall automatically be granted an option under this Director Fee Option
Grant Program on the first trading day in January in the calendar year for which
the annual retainer fee that is the subject of that election would otherwise be
payable in cash.

      II.   OPTION TERMS

            Each option shall be a Non-Statutory Option governed by the terms
and conditions specified below.

            A.    EXERCISE PRICE.

                  1.    The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.

                  2.    The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Grant Program. Except to the extent the
sale and remittance procedure specified thereunder is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise Date.

            B.    NUMBER OF OPTION SHARES. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):

                  X = A / (B x 66-2/3%), where

                  X is the number of option shares,

                  A is the portion of the annual retainer fee subject to the
            non-employee Board member's election, and

                                      30.
<PAGE>

                  B is the Fair Market Value per share of Common Stock on the
            option grant date.

            C.    EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) equal monthly installments upon the
Optionee's completion of each calendar month of Board service during the
calendar year for which the retainer fee election is in effect. Each option
shall have a maximum term of ten (10) years measured from the option grant date.

            D.    LIMITED TRANSFERABILITY OF OPTIONS. Each option under this
Article Six may be assigned in whole or in part during the Optionee's lifetime
to one or more Family Members of the Optionee or to a trust established
exclusively for Optionee and/or one or more such Family Members, to the extent
such assignment is in connection with Optionee's estate plan or pursuant to a
domestic relations order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate. The Optionee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options under this
Article Six, and those options shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding those options. Such beneficiary or beneficiaries
shall take the transferred options subject to all the terms and conditions of
the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be
exercised following the Optionee's death.

            E.    TERMINATION OF BOARD SERVICE. Should the Optionee cease Board
service for any reason (other than death or Permanent Disability) while holding
one or more options under this Director Fee Option Grant Program, then each such
option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Board service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation
of Board service. However, each option held by the Optionee under this Director
Fee Option Grant Program at the time of his or her cessation of Board service
shall immediately terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.

            F.    DEATH OR PERMANENT DISABILITY. Should the Optionee's service
as a Board member cease by reason of death or Permanent Disability, then each
option held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully-vested shares until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Board service. In the event of the
Optionee's death while holding such option, the option may be exercised by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.

                                      31.
<PAGE>

                  Should the Optionee die after cessation of Board service but
while holding one or more options under this Director Fee Option Grant Program,
then each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee's cessation of Board
service (less any shares subsequently purchased by Optionee prior to death), by
the personal representative of the Optionee's estate or by the person or persons
to whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the three
(3)-year period measured from the date of the Optionee's cessation of Board
service.

      III.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

            A.    In the event of any Change in Control while the Optionee
remains a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in
Control, vest and become exercisable for all the shares of Common Stock at the
time subject to such option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Change in Control, except to the extent
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the express terms of the Change in Control
transaction. Any option so assumed or continued in effect shall remain
exercisable for the fully-vested shares until the earliest to occur of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee's cessation of Board
service, (iii) the termination of the option in connection with a subsequent
Change in Control transaction or (iv) the surrender of the option in connection
with a Hostile Take-Over.

            B.    In the event of a Hostile Take-Over while the Optionee remains
a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Hostile
Take-Over, vest and become exercisable for all the shares of Common Stock at the
time subject to such option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. The option shall remain so exercisable
until the earliest to occur of (i) the expiration of the ten (10)-year option
term, (ii) the expiration of the three (3)-year period measured from the date of
the Optionee's cessation of Board service, (iii) the termination of the option
in connection with a Change in Control transaction or (iv) the surrender of the
option in connection with that Hostile Take-Over.

            C.    Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Director Fee Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to each surrendered option
(whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the

                                      32.
<PAGE>

aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the option to the
Corporation. No approval or consent of the Board or any Plan Administrator shall
be required at the time of the actual option surrender and cash distribution.

            D.    Each option that is assumed in connection with a Change in
Control shall be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities that would have been
issuable to the Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control. Appropriate
adjustments shall also be made to the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control transaction, the successor
corporation may, in connection with the assumption of the outstanding options
under this Plan, substitute one or more shares of its own common stock with a
fair market value equivalent to the cash consideration paid per share of Common
Stock in such Change in Control transaction.

            E.    The grant of options under the Director Fee Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

      IV.   REMAINING TERMS

            The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Grant Program.

                                      33.
<PAGE>

                                  ARTICLE SEVEN

                                  MISCELLANEOUS

      I.    TAX WITHHOLDING

            A.    The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable federal, state and
local income and employment tax withholding requirements.

            B.    The Plan Administrator may, in its discretion, provide any or
all holders of Non-Statutory Options (other than the options granted under the
Automatic Option Grant Program), stock appreciation rights, restricted stock
units or any other share right awards pursuant to which vested shares of Common
Stock are to be issued under the Plan and any or all Participants to whom vested
or unvested shares of Common Stock are issued in a direct issuance under the
Stock Issuance Program with the right to utilize either or both of the following
methods to satisfy all or part of the Withholding Taxes to which such holders
may become subject in connection with the exercise of their options or stock
appreciation rights, the issuance to them of vested shares or the subsequent
vesting of unvested shares issued to them:

                  Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or stock appreciation right or upon the issuance of
fully-vested shares, a portion of those shares with an aggregate Fair Market
Value equal to the percentage of the Withholding Taxes (not to exceed one
hundred percent (100%)) designated by the holder and make a cash payment equal
to such Fair Market Value directly to the appropriate taxing authorities on the
individual's behalf. The shares of Common Stock so withheld shall NOT reduce the
number of shares of Common Stock authorized for issuance under the Plan.

                  Stock Delivery: The election to deliver to the Corporation, at
the time the Non-Statutory Option or stock appreciation right is exercised, the
vested shares are issued or the unvested shares subsequently vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with such exercise, share issuance or share vesting triggering the
Withholding Taxes) with an aggregate Fair Market Value equal to the percentage
of the Withholding Taxes (not to exceed one hundred percent (100%)) designated
by the holder. The shares of Common Stock so delivered shall not be added to the
shares of Common Stock authorized for issuance under the Plan.

            II.   SHARE ESCROW/LEGENDS

            Unvested shares issued under the Plan may, in the Plan
Administrator's discretion, be held in escrow by the Corporation until the
Participant's interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those
unvested shares.

                                      34.
<PAGE>

      III.  EFFECTIVE DATE AND TERM OF THE PLAN

            A.    The Plan became effective immediately on the Plan Effective
Date. However, the Salary Investment Option Grant Program and the Director Fee
Option Grant Program shall not be implemented until such time as the Primary
Committee may deem appropriate. Options may be granted under the Discretionary
Grant Program and the Automatic Option Grant Program at any time on or after the
Plan Effective Date.

            B.    The Plan shall serve as the successor to the Predecessor
Plans, and no further option grants or direct stock issuances shall be made
under the Predecessor Plans after the Section 12 Registration Date. All options
outstanding under the Predecessor Plans on the Section 12 Registration Date
shall be incorporated into the Plan at that time and shall be treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Common
Stock.

            C.    One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Changes in Control and Hostile Take-Overs, may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plans that do not otherwise contain such provisions.

            D.    The Plan was amended and restated by the Board March 23, 2004
(the "2004 Restatement"), subject to shareholder approval at the 2004 Annual
Meeting to (i) increase the number of shares of Common Stock reserved for
issuance under the Plan by an additional 12,000,000 shares, (ii) expand the
types of stock-based awards available under the Plan to include stand-alone
stock appreciation rights and restricted stock units and other stock-based
awards that vest upon the attainment of designated performance goals or the
satisfaction of specified Service requirements or, in the case of certain
restricted stock units or other stock-based awards, become payable upon the
expiration of a designated time period following such vesting events, including
(without limitation) a deferred distribution date following the termination of
the individual's service with the Corporation, (iii) designate a series of
performance criteria that the Plan Administrator may utilize in establishing
specific targets to be attained as a condition to the vesting of one or more
stock issuances or other stock-based awards under the Plan to qualify the
compensation attributable to those awards as performance-based compensation for
Code Section 162(m) purposes, (iv) bring the provisions of the Plan into
compliance with recent changes in the Nasdaq requirements for listed companies
and the Treasury regulations applicable to plans under which Incentive Options
may be granted, (v) extend the term of the Plan by an additional six (6) years
until February 28, 2014, (vi) eliminate the financing provisions previously
available under the Plan, (vii) modify the vesting schedule in effect for all
annual option grants made under the Automatic Option Grant Program on or after
the date of the 2004 Annual Meeting to the continuing non-employee Board members
so that each such grant will vest no later than the day immediately preceding
the date of the first Annual Shareholders Meeting following the Annual
Shareholders Meeting at which that option was granted and (viii) effect a series
of additional revisions to facilitate plan administration and to establish net
counting provisions so that the share reserve is reduced only by the actual
number

                                      35.
<PAGE>

of shares issued under the amended and restated Plan, and not by the gross
number of shares subject to awards made thereunder. Should the Corporation's
shareholders not approve the 2004 Restatement at the 2004 Annual Meeting, then
none of the changes and revisions effected to the Plan by the 2004 Restatement
shall become effective.

            E.    The Plan shall terminate upon the earliest to occur of (i)
February 28, 2014,7 (ii) the date on which all shares available for issuance
under the Plan shall have been issued as fully-vested shares or (iii) the
termination of all outstanding options, stock appreciation rights, restricted
stock units and other share right awards in connection with a Change in Control.
Should the Plan terminate February 28, 2014, then all option grants, stock
appreciation rights, unvested stock issuances, restricted stock units and other
share right awards outstanding at that time shall continue to have force and
effect in accordance with the provisions of the documents evidencing such
grants, issuances or awards.

      IV.   AMENDMENT OF THE PLAN

            A.    The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to stock options, stock appreciation rights, unvested stock issuances or
other stock-based awards at the time outstanding under the Plan unless the
Optionee or the Participant consents to such amendment or modification. In
addition, shareholder approval will be required for any amendment to the Plan
that (i) materially increases the number of shares of Common Stock available for
issuance under the Plan, (ii) materially expands the class of individuals
eligible to receive option grants or other awards under the Plan, (iii)
materially increases the benefits accruing to the Optionees and Participants
under the Plan or materially reduces the price at which shares of Common Stock
may be issued or purchased under the Plan, (iv) materially extends the term of
the Plan or (v) expands the types of awards available for issuance under the
Plan.

            B.    Options and stock appreciation rights may be granted under the
Discretionary Grant, Automatic Option Grant, Director Fee Option Grant and
Salary Investment Option Grant Programs and shares of Common Stock may be issued
under the Stock Issuance Program that in each instance involve shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under those programs shall be
held in escrow until the number of shares of Common Stock available for issuance
under the Plan is sufficiently increased either by (1) the automatic annual
share increase provisions of Section V.B. of Article One or (2) shareholder
approval of an amendment of the Plan sufficiently increasing the share reserve.
If shareholder approval is required and is not obtained within twelve (12)
months after the date the first excess issuances are made against the contingent
increase, then (i) any unexercised options, stock appreciation rights or other
stock-based awards granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees and the Participants

-----------------

            (7) The February 28, 2014 termination date of the Plan is subject to
shareholder approval of the 2004 Restatement at the 2004 Annual Meeting. In the
absence of such shareholder approval, the termination date of the Plan shall
remain January 31, 2008.

                                      36.
<PAGE>

the exercise or purchase price paid for any excess shares issued under the Plan
and held in escrow, together with interest (at the applicable short term federal
rate) for the period the shares were held in escrow, and such shares shall
thereupon be automatically cancelled and cease to be outstanding.

      V.    USE OF PROCEEDS

            Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

      VI.   REGULATORY APPROVALS

            A.    The implementation of the Plan, the grant of any stock option,
stock appreciation right or other stock-based award under the Plan and the
issuance of any shares of Common Stock (i) upon the exercise of any granted
option or stock appreciation right or (ii) pursuant to any award under the Stock
Issuance Program shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options, stock appreciation rights or other stock-based
awards granted under it and the shares of Common Stock issued pursuant to it.

            B.    No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the NASDAQ National Market(R), if applicable) on which
Common Stock is then listed for trading.

      VII.  NO EMPLOYMENT/SERVICE RIGHTS

            Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.

                                      37.
<PAGE>

                                    APPENDIX

            The following definitions shall be in effect under the Plan:

            A.    AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under Article Five of the Plan.

            B.    BOARD shall mean the Corporation's Board of Directors.

            C.    CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through any of the following transactions:

                  (i)   a shareholder-approved merger or consolidation in which
      securities possessing more than fifty percent (50%) of the total combined
      voting power of the Corporation's outstanding securities are transferred
      to a person or persons different from the persons holding those securities
      immediately prior to such transaction, or

                  (ii)  a shareholder-approved sale, transfer or other
      disposition of all or substantially all of the Corporation's assets in
      complete liquidation or dissolution of the Corporation, or

                  (iii) the acquisition, directly or indirectly by any person or
      related group of persons (other than the Corporation or a person that
      directly or indirectly controls, is controlled by, or is under common
      control with, the Corporation), of beneficial ownership (within the
      meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
      fifty percent (50%) of the total combined voting power of the
      Corporation's outstanding securities pursuant to a tender or exchange
      offer made directly to the Corporation's shareholders.

            D.    CODE shall mean the Internal Revenue Code of 1986, as amended.

            E.    COMMON STOCK shall mean the Corporation's Class A Common
Stock.

            F.    CORPORATION shall mean Broadcom Corporation, a California
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Broadcom Corporation, which shall by appropriate
action adopt the Plan.

            G.    DIRECTOR FEE OPTION GRANT PROGRAM shall mean the special stock
option grant program in effect for non-employee Board members under Article Six
of the Plan.

            H.    DISCRETIONARY GRANT PROGRAM shall mean the discretionary grant
program in effect under Article Two of the Plan pursuant to which stock options
and stock appreciation rights may be granted to one or more eligible
individuals.

                                       1
<PAGE>

            I.    ELIGIBLE DIRECTOR shall mean a non-employee Board member
eligible to participate in the Automatic Option Grant Program or the Director
Fee Option Grant Program in accordance with the eligibility provisions of
Articles One, Five and Six.

            J.    EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

            K.    EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.

            L.    FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

                  (i)   If the Common Stock is at the time traded on the Nasdaq
      National Market, then the Fair Market Value shall be the closing selling
      price per share of Common Stock at the close of regular hours trading
      (i.e., before after- hours trading begins) on the Nasdaq National Market
      on the date in question, as such price is reported by the National
      Association of Securities Dealers. If there is no closing selling price
      for the Common Stock on the date in question, then the Fair Market Value
      shall be the closing selling price on the last preceding date for which
      such quotation exists.

                  (ii)  If the Common Stock is at the time listed on any Stock
      Exchange, then the Fair Market Value shall be the closing selling price
      per share of Common Stock at the close of regular hours trading (i.e.,
      before after-hours trading begins) on the date in question on the Stock
      Exchange determined by the Plan Administrator to be the primary market for
      the Common Stock, as such price is officially quoted in the composite tape
      of transactions on such exchange. If there is no closing selling price for
      the Common Stock on the date in question, then the Fair Market Value shall
      be the closing selling price on the last preceding date for which such
      quotation exists.

            M.    FAMILY MEMBER means, with respect to a particular Optionee or
Participant, any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, bother-in-law or sister-in-law.

            N.    HOSTILE TAKE-OVER shall mean either of the following events
effecting a change in control or ownership of the Corporation:

                                       2
<PAGE>

                  (i)   the acquisition, directly or indirectly, by any person
      or related group of persons (other than the Corporation or a person that
      directly or indirectly controls, is controlled by, or is under common
      control with, the Corporation) of beneficial ownership (within the meaning
      of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
      percent (50%) of the total combined voting power of the Corporation's
      outstanding securities pursuant to a tender or exchange offer made
      directly to the Corporation's shareholders that the Board does not
      recommend such shareholders to accept, or

                  (ii)  a change in the composition of the Board over a period
      of thirty-six (36) consecutive months or less such that a majority of the
      Board members ceases, by reason of one or more contested elections for
      Board membership, to be comprised of individuals who either (A) have been
      Board members continuously since the beginning of such period or (B) have
      been elected or nominated for election as Board members during such period
      by at least a majority of the Board members described in clause (A) who
      were still in office at the time the Board approved such election or
      nomination.

            O.    INCENTIVE OPTION shall mean an option that satisfies the
requirements of Code Section 422.

            P.    INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual that occurs by reason of:

                  (i)   such individual's involuntary dismissal or discharge by
      the Corporation for reasons other than Misconduct, or

                  (ii)  such individual's voluntary resignation following (A) a
      change in his or her position with the Corporation that materially reduces
      his or her duties and responsibilities or the level of management to which
      he or she reports, (B) a reduction in his or her level of compensation
      (including base salary, fringe benefits and target bonus under any
      corporate-performance based bonus or incentive programs) by more than
      fifteen percent (15%) or (C) a relocation of such individual's place of
      employment by more than fifty (50) miles, provided and only if such
      change, reduction or relocation is effected by the Corporation without the
      individual's consent.

            Q.    MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not in any way preclude or restrict the right of the Corporation (or any
Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary) for any
other acts or omissions, but such other acts or omissions shall not be deemed,
for purposes of the Plan, to constitute grounds for termination for Misconduct.

                                       3
<PAGE>

            R.    1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

            S.    NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

            T.    OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.

            U.    PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, 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.

            V.    PARTICIPANT shall mean any person who is issued shares of
Common Stock or restricted stock units or other stock-based awards under the
Stock Issuance Program.

            W.    PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
and Director Fee Option Grant Programs, Permanent Disability or Permanently
Disabled shall mean the inability of the non-employee Board member to perform
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

            X.    PLAN shall mean the Corporation's 1998 Stock Incentive Plan,
as set forth in this document.

            Y.    PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Grant and Stock Issuance Programs with respect
to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.

            Z.    PLAN EFFECTIVE DATE shall mean February 3, 1998.

            AA.   PREDECESSOR PLANS shall collectively mean the Corporation's
1994 Amended and Restated Stock Option Plan and the Special Stock Option Plan,
as in effect immediately prior to the Plan Effective Date hereunder.

            BB.   PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Grant and Stock Issuance Programs with respect to Section 16
Insiders and to administer the Salary Investment Option Grant Program solely
with respect to the selection of the eligible individuals who may participate in
such program.

                                       4
<PAGE>

            CC.   SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the salary
investment option grant program in effect under Article Three of the Plan.

            DD.   SECONDARY COMMITTEE shall mean a committee of two or more
Board members appointed by the Board to administer the Discretionary Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.

            EE.   SECTION 12 REGISTRATION DATE shall mean the date on which the
Common Stock is first registered under Section 12 of the 1934 Act.

            FF.   SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

            GG.   SERVICE shall mean the performance of services for the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance.

            HH.   STOCK EXCHANGE shall mean either the American Stock Exchange
or the New York Stock Exchange.

            II.   STOCK ISSUANCE AGREEMENT shall mean the agreement entered into
by the Corporation and the Participant at the time of issuance of shares of
Common Stock under the Stock Issuance Program.

            JJ.   STOCK ISSUANCE PROGRAM shall mean the stock issuance program
in effect under Article Four of the Plan.

            KK.   SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, 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.

            LL.   TAKE-OVER PRICE shall mean the GREATER of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or, if applicable, (ii) the
highest reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over through the acquisition of such Common Stock.
However, if the surrendered option is an Incentive Option, the Take-Over Price
shall not exceed the clause (i) price per share.

            MM.   10% SHAREHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

            NN.   UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

                                       5
<PAGE>

            OO.   UNDERWRITING DATE shall mean the date on which the
Underwriting Agreement is executed and priced in connection with an initial
public offering of the Common Stock.

            PP.   WITHHOLDING TAXES shall mean the applicable income and
employment withholding taxes to which the holder of an option or stock
appreciation right or shares of Common Stock under the Plan may become subject
in connection with the grant or exercise of those options or stock appreciation
rights or the issuance or vesting of those shares.

                                       6
<PAGE>

                              BROADCOM CORPORATION
                    ADDENDUM TO THE 1998 STOCK INCENTIVE PLAN
                             FOR EMPLOYEES IN ISRAEL
                            (EFFECTIVE JULY 18, 2003)

1.    GENERAL

1.1   This addendum (the "Addendum") shall apply only to Optionees who are
      residents of the state of Israel or those who are deemed to be residents
      of the state of Israel for the payment of tax (the "Israeli Optionees").
      The provisions specified hereunder shall form an integral part of the
      Amended and Restated 1998 Stock Incentive Plan of Broadcom Corporation
      (hereinafter: the "Plan"), which applies to the issuance of options to
      purchase shares of Common Stock of Broadcom Corporation (hereinafter: the
      "Corporation").

1.2   This Addendum is effective with respect to Options granted on or after
      January 1, 2003 and shall comply with Amendment no. 132 of the Israeli Tax
      Ordinance.

1.3   This Addendum is to be read as a continuation of the Plan and only
      modifies the terms of Options granted to Israeli Optionees so that they
      comply with the requirements set by the Israeli law in general, and in
      particular with the provisions of Section 102 (as specified herein), as
      may be amended or replaced from time to time. For the avoidance of doubt,
      this Addendum does not add to or modify the Plan in respect of any other
      category of Optionees.

1.4   The Plan and this Addendum are complimentary to each other and shall be
      deemed as one. In any case of contradiction with respect to options
      granted to Israeli Optionees, whether explicit or implied, between the
      provisions of this Addendum and the Plan, the provisions set out in the
      Addendum shall prevail.

1.5   Any capitalized term not specifically defined in this Addendum shall be
      construed according to the interpretation given to it in the Plan.

2.    DEFINITIONS

2.1   "Approved 102 Option" means an Option granted pursuant to Section 102(b)
      of the Ordinance and held in trust by a Trustee for the benefit of the
      Optionee.

2.2   "Capital Gain Option (CGO)" means an Approved 102 Option elected and
      designated by the Corporation to qualify under the capital gain tax
      treatment in accordance with the provisions of Section 102(b)(2) of the
      Ordinance.

2.3   "Controlling Shareholder" shall have the meaning ascribed to it in Section
      32(9) of the Ordinance.

                                       i
<PAGE>

2.4   "Israeli Employee" means a person who is employed by the Corporation or
      its Parent or Subsidiary, (including an individual who is serving as a
      director or an office holder, but excluding any Controlling Shareholder)
      and who is (or is deemed to be) a resident of the state of Israel for the
      payment of taxes.

2.5   "Israeli Non-Employee" means a consultant, adviser, Controlling
      Shareholder or any other person who is (or is deemed to be) a resident of
      the state of Israel for the payment of taxes and provides services to the
      Corporation or its Parent or Subsidiary but who is not an Israeli
      Employee.

2.6   "ITA" means the Israeli Tax Authorities.

2.7   "102 Option" means any Option granted to Israeli Employees pursuant to
      Section 102 of the Ordinance.

2.8   "Option" means an option to purchase one or more shares of Common Stock of
      the Corporation pursuant to the Plan.

2.9   "Option Agreement" means the stock option agreement and other documents
      evidencing the terms and conditions of an Option.

2.10  "Ordinance" means the Israeli Income Tax Ordinance [New Version] 1961 as
      now in effect or as hereafter amended.

2.11  "Ordinary Income Option (OIO)" means an Approved 102 Option elected and
      designated by the Corporation to qualify under the ordinary income tax
      treatment in accordance with the provisions of Section 102(b)(1) of the
      Ordinance.

2.12  "Section 102" means section 102 of the Ordinance and any regulations,
      rules, orders or procedures promulgated thereunder as now in effect or as
      hereafter amended.

2.13  "3(i) Option" means an Option granted pursuant to Section 3(i) of the
      Ordinance to any person who is an Israeli Non- Employee.

2.14  "Trustee" means any individual or entity appointed by the Corporation to
      serve as a trustee and approved by the ITA, all in accordance with the
      provisions of Section 102(a) of the Ordinance.

2.15  "Unapproved 102 Option" means an Option granted pursuant to Section 102(c)
      of the Ordinance and not held in trust by a Trustee.

                                       ii
<PAGE>

3.    ISSUANCE OF OPTIONS/SHARES OF COMMON STOCK

3.1   The persons eligible to receive option grants under this Addendum shall
      include any Israeli Employees and/or Israeli Non-Employees of the
      Corporation or of any Parent or Subsidiary; provided, however, that (i)
      Israeli Employees may only be granted 102 Options; and (ii) Israeli
      Non-Employees may only be granted 3(i) Options.

3.2   The Corporation may designate Options granted to Israeli Employees
      pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.

3.3   The grant of Approved 102 Options shall be made under this Addendum, and
      shall be conditioned upon the approval of this Addendum by the ITA.

3.4   Approved 102 Options may either be classified as Capital Gain Options
      ("CGOs") or Ordinary Income Options ("OIOs").

3.5   No Approved 102 Options may be granted under this Addendum to any eligible
      Israeli Employee, unless and until, the Corporation's election of the type
      of Approved 102 Options as CGO or OIO granted to Israeli Employees (the
      "Election"), is appropriately filed with the ITA. Such Election shall
      become effective beginning with the date of grant of the first Approved
      102 Option granted under this Addendum and shall remain in effect until
      the end of the year following the year during which the Corporation first
      granted Approved 102 Options under this Addendum. The Election shall
      obligate the Corporation to grant only the type of Approved 102 Option it
      has elected (CGO or OIO) during the period indicated in the preceding
      sentence, and shall apply to all Approved 102 Options granted during the
      period the Election is in effect, all in accordance with the provisions of
      Section 102(g) of the Ordinance. For the avoidance of doubt, such Election
      shall not prevent the Corporation from granting Unapproved 102 Options to
      Israeli Employees or 3(i) Options to Israeli Non-Employees simultaneously.

3.6   All Approved 102 Options must be held in trust by a Trustee, as described
      in Section 4 below.

3.7   For the avoidance of doubt, the designation of Unapproved 102 Options and
      Approved 102 Options shall be subject to the terms and conditions set
      forth in Section 102.

4.    TRUSTEE

4.1   Approved 102 Options which shall be granted under this Addendum shall be
      held by the Trustee and any shares of Common Stock issued upon exercise of
      such Approved 102 Options and/or other property received with respect to
      such shares, shall be issued to the Trustee and held for the benefit of
      the Optionees for such period of time as required by Section 102 or any
      regulations, rules or orders or procedures promulgated thereunder (the
      "Holding Period"). In the case the requirements for Approved 102 Options
      are not met, then the Approved 102 Options shall be regarded as Unapproved
      102 Options, all in accordance with the provisions of Section 102.

                                       iii
<PAGE>

4.2   Notwithstanding anything to the contrary, the Trustee shall not release
      any share of Common Stock issued upon exercise of Approved 102 Options (or
      any other property received with respect to such shares) prior to the full
      payment of the Optionee's tax liabilities (including, without limitation,
      social security taxes if applicable) arising from the grant or exercise of
      Approved 102 Options granted to such Optionee.

4.3   With respect to any Approved 102 Option, subject to the provisions of
      Section 102 and any rules or regulation or orders or procedures
      promulgated thereunder, to obtain favorable Approved 102 Option tax
      treatment, an Optionee shall not be entitled to sell or release from trust
      any Option and/or shares of Common Stock received upon the exercise of an
      Approved 102 Option or any other property received with respect to such
      shares, until the lapse of the Holding Period required under Section 102
      of the Ordinance. Notwithstanding the above, if any such sale or release
      occurs during the Holding Period, the sanctions under Section 102 of the
      Ordinance and under any rules or regulation or orders or procedures
      promulgated thereunder shall apply to and shall be borne by such Optionee.

4.4   Upon grant of an Approved 102 Option, the Optionee will sign an
      undertaking to release the Trustee from any liability in respect of any
      action or decision duly taken and bona fide executed in relation with this
      Addendum, or any Approved 102 Option or shares of Common Stock granted to
      him thereunder.

5.    THE OPTIONS

The terms and conditions upon which the Options shall be issued and exercised,
shall be as specified in the Option Agreement to be executed pursuant to the
Plan and to this Addendum. Each Option Agreement shall state, inter alia, the
number of shares of Common Stock to which the Option relates, the type of Option
granted thereunder (whether a CGO, OIO, Unapproved 102 Option or a 3(i) Option),
the vesting provisions and the exercise price.

6.    FAIR MARKET VALUE FOR TAX PURPOSE

Without derogating from Section (L) of the Appendix and solely for the purpose
of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance,
if at the date of grant the Corporation's shares of Common Stock are listed on
any established stock exchange or a national market system, the fair market
value per share of the Common Stock at the date of grant shall be determined in
accordance with the average value of the closing selling price of the
Corporation's shares of Common Stock during the thirty (30) trading days
preceding the date of grant.

7.    ASSIGNABILITY AND SALE OF OPTIONS

7.1   Notwithstanding any other provision of the Plan, including without
      limitation Article Two Section I(F) of the Plan, no Option or any right
      with respect thereto, shall be assignable, transferable or given as
      collateral or any right with respect to them given to any third party
      whatsoever, and during the lifetime of the Optionee each and all of such
      Optionee's rights to purchase shares of Common Stock hereunder shall be
      exercisable only by the Optionee.

                                       iv
<PAGE>

      Any such action made directly or indirectly, for an immediate validation
      or for a future one, shall be void.

7.2   As long as Options or shares of Common Stock purchased pursuant thereto
      are held by the Trustee on behalf of the Optionee, all rights of the
      Optionee over the shares are personal, can not be transferred, assigned,
      pledged or mortgaged, other than by will or laws of descent and
      distribution.

8.    INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER'S PERMIT

8.1   With regards to Approved 102 Options, the provisions of the Plan and/or
      the Addendum and/or the Option Agreement shall be subject to the
      provisions of Section 102 and the Tax Assessing Officer's permit, and the
      said provisions and permit shall be deemed an integral part of the Plan,
      the Addendum and the Option Agreement.

8.2   Any provision of Section 102 and/or the said permit which is necessary to
      receive and/or to keep any tax benefit pursuant to Section 102, which is
      not expressly specified in the Plan or the Addendum or the Option
      Agreement, shall be considered binding upon the Corporation and the
      Optionees.

9.    DIVIDEND

Any dividends payable with respect to shares of Common Stock acquired upon
exercise of an Option shall be subject to any applicable taxation on
distribution of dividends, and when applicable subject to the provisions of
Section 102 and the rules, regulations or orders promulgated thereunder.

10.   TAX CONSEQUENCES

10.1  Any tax consequences arising from the grant or exercise of any Option,
      from the payment for shares of Common Stock covered thereby or from any
      other event or act (of the Corporation, and/or its Parent or Subsidiary,
      or the Trustee or the Optionee), hereunder, shall be borne solely by the
      Optionee (including, without limitation, Optionee's social security taxes
      if applicable). The Corporation and/or its Parent or Subsidiary, and/or
      the Trustee shall withhold taxes according to the requirements under the
      applicable laws, rules, and regulations, including withholding taxes at
      source. Furthermore, the Optionee shall agree to indemnify the Corporation
      and/or its Parent or Subsidiary and/or the Trustee and hold them harmless
      against and from any and all liability for any such tax or other payment
      or interest or penalty thereon, including without limitation, liabilities
      relating to the necessity to withhold, or to have withheld, any such tax
      from any payment made to the Optionee.

10.2  The Corporation and/or, when applicable, the Trustee shall not be required
      to release any share certificate to an Optionee until all required
      payments have been fully made to the

                                       v
<PAGE>

      Corporation and all of Optionee's tax liabilities arising from the grant
      or exercise of an Option have been satisfied.

10.3  With respect to Unapproved 102 Option, if the Optionee ceases to be
      employed by the Company or any Parent or Subsidiary, the Optionee shall
      extend to the Company and/or its Affiliate a security or guarantee for the
      payment of tax due at the time of sale of shares of Common Stock, all in
      accordance with the provisions of Section 102 and the rules, regulation or
      orders promulgated thereunder.

                                       * *

                                       vi
<PAGE>

                 BROADCOM CORPORATION 1998 STOCK INCENTIVE PLAN
                          SUB-PLAN FOR FRENCH EMPLOYEES
                           (EFFECTIVE APRIL 29, 2004)

I.    GENERAL

      This subplan (the "Sub-Plan") sets forth the terms of the Broadcom
Corporation 1998 Stock Incentive Plan, as amended and restated (the "Plan")
applicable to any optionee who is, or may become, subject to taxation on
compensation in France. The terms of this Sub-Plan shall apply to options
granted under the Discretionary Grant Program of the Plan and shall modify the
provisions of that program. All capitalized terms in this Sub-Plan, to the
extent not defined herein, shall have the meaning assigned to them in the Plan.

II.   OPTIONS SUBJECT TO THE PLAN

      Options granted under the Sub-Plan shall be subscription options (i.e.,
options to purchase newly issued shares of Common Stock) and not purchase
options (i.e., options to purchase previously acquired shares of Common Stock).

III.  TERM OF SUB-PLAN

      The Plan has been approved by the shareholders of the Corporation in an
annual meeting of shareholders with authorization to the Board to grant options
thereunder. The authorization may be used by the Board under the Sub-Plan for a
maximum period of thirty-eight (38) months following the date on which the Plan
was approved or ratified by the shareholders in an annual meeting of
shareholders.

IV.   ELIGIBLE PERSONS

      Options may be granted under the Sub-Plan only to Employees; provided,
however, that an Employee who owns more than ten percent (10%) of the
Corporation's Common Stock on the option grant date shall not be eligible to
receive option grants under this Sub-Plan.

V.    EXERCISE PRICE

      The exercise price per share shall not be less than ninety-five percent
(95%) of the average Fair Market Value per share of Common Stock for the twenty
(20) trading days immediately prior to the option grant date. Notwithstanding
Article Two, Section I.A.2(ii) of the Plan, the exercise price may not be paid
in shares of Common Stock.

VI.   GRANT OF OPTIONS

      Options cannot be granted (i) during the ten trading days preceding and
following the date on which the consolidated accounts or annual accounts of the
Corporation are

                                       i
<PAGE>

published and (ii) during a period (x) starting from the date on which the
officers and directors of the Corporation became aware of any information which,
if published, could significantly affect the Corporation's market price and (y)
ending at the close of the tenth trading day following the publication of the
information. No option shall be granted in the twenty (20) trading days
immediately following a distribution of dividends or a capital increase, on the
Nasdaq National Market or such stock exchange on which the shares are listed.

VII.  PLAN LIMITS

      Options may not be granted under this Sub-Plan for more than one-third
(1/3) of the Company's share capital.

VIII. TRANSFERABILITY OF OPTIONS

      During the lifetime of the Optionee, all options granted under this
Sub-Plan shall be exercisable, without exception, only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of
inheritance following the Optionee's death. Accordingly, the provisions of
Article Two, Section I.F. of the Plan shall not apply to options granted under
the Sub-Plan.

IX.   RESTRICTIONS ON SALE OR TRANSFER OF SHARES

      With respect to options exercised prior to the fourth anniversary of the
option grant date (the "Holding Date"), the Plan Administrator may require that
shares of Common Stock acquired upon such exercise may not be sold or otherwise
disposed of prior to the expiration of the Holding Date. The Plan Administrator
may require that any shares of Common Stock acquired prior to the Holding Date
be held in escrow by the Corporation (or person designated by the Corporation).

X.    TERM

      No option shall have a term in excess of nine (9) years and six (6) months
measured from the option grant date.

XI.   DEATH OF A PARTICIPANT

      All options granted under this Sub-Plan may only be exercised (if at all)
within six (6) months following the Optionee's death.

XII.  INCENTIVE OPTIONS

      The Incentive Options provision under Article Two, Section II of the Plan
shall not apply to grants made under the Sub-Plan.

XIII. STOCK APPRECIATION RIGHTS

                                       ii
<PAGE>

      The stock appreciation rights provisions under Article Two, Section III of
the Plan shall not apply to the grants made under the Sub-Plan.

XIV.  REPURCHASE RIGHTS

      The provisions of Article Two, Section I.E. of the Plan shall not apply to
grants made under the Sub-Plan.

XV.   ADJUSTMENTS

      No adjustment to options provided for in Article One, Section V.E. of the
Plan may be made to any option under this Sub-Plan which is inconsistent with
French law and in particular with Sections 174.8 to 174.16 of Decree no. 67-236
of March 23, 1967, implementing French law no. 66-537 of July 24, 1966.

XVI.  AMENDMENT

      The Board may not amend the Plan in a way that affects this Sub-Plan, or
options granted under this Sub-Plan, if such change is inconsistent with French
law (including, but not limited to, regulations or other communications provided
by the AMF (Authorite des Marches Financiers)).

      The Board may not amend this Sub-Plan without the approval of the
shareholders in an annual meeting of shareholders if an amendment to the
corresponding Article in the Plan would require such approval.

      The provision of Article Two, Section I.C.2 and Article Two, Section V.B.
of the Plan shall not apply to grants made under the Sub-Plan.

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