Document:

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                                                                    EXHIBIT 10.2

                         CHAPARRAL NETWORK STORAGE, INC.
                            2000 STOCK INCENTIVE PLAN

                                  ARTICLE ONE
                               GENERAL PROVISIONS

I.   PURPOSE OF THE PLAN

     This 2000 Stock Incentive Plan is intended to promote the interests of
Chaparral Network Storage, Inc., a Delaware corporation, by providing eligible
persons 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 the service of the Corporation.

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

II.  STRUCTURE OF THE PLAN

     A. This Plan shall be divided into five separate equity programs:

        (i)   the Discretionary Option Grant Program under which eligible
     persons may, at the discretion of the Plan Administrator, be granted
     options to purchase shares of Common Stock,

        (ii)  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 options,

        (iii) the Stock Issuance Program under which eligible persons may, at
     the discretion of the Plan Administrator, be issued shares of Common Stock
     directly, either through the immediate purchase of such shares or as a
     bonus for services rendered the Corporation (or any Parent or Subsidiary),

        (iv)  the Automatic Option Grant Program under which eligible
     non-Employee Board members shall automatically receive options at periodic
     intervals to purchase shares of Common Stock; and

        (v)   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 option grant.

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

III. ADMINISTRATION OF THIS PLAN

     A. The following provisions shall govern the administration of this Plan:

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        (i)   The Board shall delegate authority to administer the Discretionary
     Option Grant Program, the Salary Investment Option Grant Program and the
     Stock Issuance Program with respect to Section 16 Insiders and highly
     compensated Employees to the Primary Committee.

        (ii)  Administration of the Discretionary Option Grant Program, the
     Salary Investment Option Grant Program and the Stock Issuance Program 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.

        (iii) The Board shall have the authority to administer the Director Fee
     Option Grant Program with respect to Section 16 Insiders but may delegate
     such authority in whole or in part to the Primary Committee.

        (iv)  Administration of the Automatic Option Grant Program shall be
     self-executing in accordance with the terms of that program.

     B. Each Plan Administrator shall, within the scope of its administrative
jurisdiction under this Plan, have full power and authority subject to the
provisions of this Plan:

        (i)   to establish such rules as it may deem appropriate for proper
     administration of this Plan, to make all factual determinations, to
     construe and interpret the provisions of this Plan and the awards
     thereunder and to resolve any and all ambiguities thereunder;

        (ii)  to determine, with respect to awards made under the Discretionary
     Option Grant and Stock Issuance Programs, which eligible persons are to
     receive such awards, the time or times when such awards are to be made, the
     number of shares to be covered by each such award, the vesting schedule (if
     any) applicable to the award, the status of a granted option as either an
     Incentive Option or a Non-Statutory Option and the maximum term for which
     the option is to remain outstanding;

        (iii) to amend, modify or cancel any outstanding award with the consent
     of the holder or accelerate the vesting of such award; and

        (iv)  to take such other discretionary actions as permitted pursuant to
     the terms of the applicable program.

     Decisions of each Plan Administrator within the scope of its administrative
functions under this Plan shall be final and binding on all parties.

     C. 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.

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     D. 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 this Plan or any options or stock issuances under this
Plan.

IV.  ELIGIBILITY

     A. The persons eligible to participate in the Discretionary Option 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. Only non-Employee Board members shall be eligible to participate in the
Automatic Option Grant and Director Fee Option Grant Programs.

V.   STOCK SUBJECT TO THIS PLAN

     A. The stock issuable under this Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of this Plan shall not exceed
10,000,000 shares. Such authorized share reserve consists of (i) the number of
shares which remain available for issuance, as of the Registration Date, under
the Predecessor Plan, including the shares subject to the outstanding options to
be incorporated into this Plan and the additional shares which would otherwise
be available for future grant under the Predecessor Plan (estimated to be
7,000,000 shares), plus (ii) three million (3,000,000) shares.

     B. The number of shares of Common Stock available for issuance under this
Plan shall automatically increase on the first trading day of each calendar year
during the term of this Plan, beginning with the 2001 calendar year, by an
amount equal to four and one-half percent (4.5%) of the shares of Common Stock
outstanding on the last trading day of the immediately preceding calendar year,
but in no event shall such annual increase exceed four million (4,000,000)
shares.

     C. No one person participating in this Plan may receive options, separately
exercisable stock appreciation rights and direct stock issuances for more than
two and one-half million (2,500,000) shares of Common Stock in the aggregate per
calendar year, beginning with the 2000 calendar year.

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     D. Shares of Common Stock subject to outstanding options (including options
incorporated into this Plan from the Predecessor Plan) shall be available for
subsequent issuance under this Plan to the extent those options expire,
terminate or are canceled for any reason prior to exercise in full. Unvested
shares issued under this Plan and subsequently repurchased by the Corporation,
at the original exercise or issue price paid per share, pursuant to the
Corporation's repurchase rights under this Plan, shall be added back to the
number of shares of Common Stock reserved for issuance under this Plan and shall
accordingly be available for reissuance through one or more subsequent options
or direct stock issuances under this Plan. However, should the exercise price of
an option under this Plan be paid with shares of Common Stock or should shares
of Common Stock otherwise issuable under this Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an option or the vesting of a stock issuance under this Plan,
then the number of shares of Common Stock available for issuance under this Plan
shall be reduced by the gross number of shares for which the option is exercised
or which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock issuance. Shares of
Common Stock underlying one or more stock appreciation rights exercised under
this Plan shall not be available for subsequent issuance.

     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 (provided, however, that conversion of
any convertible securities of the Corporation shall not be deemed to have been
effected without the Corporation's receipt of consideration), appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under this Plan, (ii) the number and/or class of securities by which
the share reserve is to increase each calendar year pursuant to the automatic
share increase provisions of this Plan, (iii) the number and/or class of
securities for which any one person may be granted options, separately
exercisable stock appreciation rights and direct stock issuances under this Plan
per calendar year, (iv) 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, (v) the number and/or class of securities
and the exercise price per share in effect under each outstanding option under
this Plan and (vi) the number and/or class of securities and price per share in
effect under each outstanding option incorporated into this Plan from the
Predecessor Plan. Such adjustments to the outstanding options are to be effected
in a manner which shall preclude the enlargement or dilution of rights and
benefits under such options. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

                                  ARTICLE TWO
                       DISCRETIONARY OPTION 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 this Plan
applicable to such options.

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     A. EXERCISE PRICE.

        1.    The exercise price per share shall be fixed by the Plan
Administrator at the time of the option grant and may be less than, equal to or
greater than the Fair Market Value per share of Common Stock on the option grant
date, provided that the exercise price for option grants made to Section 16
Insiders and other highly compensated Employees shall not be less than 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, subject to the provisions of Section II of Article Seven
and the documents evidencing the option, be payable in one or more of the
following forms:

        (i)   in 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 Corporation-approved
     brokerage firm 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
     in order 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 vest and become
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.

     C. CESSATION OF SERVICE.

        1.    The following provisions shall govern the exercise of any options
outstanding at the time of the Optionee's 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.

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        (ii)  Each option outstanding at the time of the death of the Optionee
     but not otherwise fully vested shall automatically accelerate so that each
     such option shall, immediately prior to the death of the Optionee, vest and
     become exercisable for all of the shares of Common Stock at the time
     subject to that option which would otherwise have vested in the twenty-four
     (24) months following the date of death of the Optionee and may be
     exercised by the Beneficiary of the Optionee for any or all of those shares
     as fully vested options for shares of Common Stock. Any option exercisable
     in whole or in part by the Optionee at the time of his death, including the
     options which have become exercisable pursuant to the preceding sentence,
     may be subsequently exercised by his or her Beneficiary.

        (iii) Each option outstanding at the time of the Permanent Disability of
     the Optionee but not otherwise fully vested shall automatically accelerate
     so that each such option shall, effective upon the date the Optionee
     becomes Permanently Disabled, become exercisable for all of the shares of
     Common Stock at the time subject to that option which would otherwise have
     vested in the twelve (12) months following the date the Optionee becomes
     Permanently Disabled and may be exercised by the Optionee for any or all of
     those shares as fully vested options for shares of Common Stock.

        (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 the option is exercisable on the date of the Optionee's cessation
     of Service. 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 vested shares for which the option has
     not been exercised. However, the option shall, immediately upon the
     Optionee's cessation of Service, terminate and cease to be outstanding to
     the extent the option is not otherwise at that time exercisable for vested
     shares.

        (v)   Upon the Termination for Cause of the Optionee while his or her
     options are outstanding, then all such options shall terminate immediately
     and cease to be outstanding.

        (vi)  An Optionee's leave of absence for a period agreed by the
     Corporation or required by law shall not constitute a cessation of
     Services. Any option outstanding at the time Optionee commences a leave of
     absence shall remain during the period of such leave of absence outstanding
     and exercisable to the extent exercisable on the commencement date of the
     leave of absence, but the period of such leave of absence shall not be
     credited towards vesting.

        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:

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

        (ii) to permit the option to be exercised, during the applicable
     post-Service exercise period, for one or more additional installments in
     which the Optionee would have vested had the Optionee continued in Service.

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     D. STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder
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 which 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. LIMITED TRANSFERABILITY OF 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 by the laws of descent and
distribution following the Optionee's death. Non-Statutory Options shall be
subject to the same restrictions, except that a Non-Statutory Option may, to the
extent permitted by the Plan Administrator, be assigned in whole or in part
during the Optionee's lifetime (i) as a gift to one or more members of the
Optionee's immediate family, to a trust in which Optionee and/or one or more
such family members hold more than fifty percent (50%) of the beneficial
interest or to an entity in which more than fifty percent (50%) of the voting
interests are owned by one or more such family members or (ii) pursuant to a
domestic relations order. 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.

II.  INCENTIVE OPTIONS

     The terms specified below 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 Six shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options when issued under
this 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 this 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 which 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. In the event the foregoing
results in a portion of an Option designated as an Incentive Option exceeding
the $100,000 limitation,

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such excess shall be treated as a Non-Statutory Option and the portion not in
excess of such limitation shall continue to be treated as an Incentive Option.

     D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted
is a 10% Stockholder, 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.

     E. EXERCISE FOLLOWING CESSATION OF SERVICE. In the event of an Optionee's
cessation of Service, if an Incentive Option held by such Optionee is exercised
(in accordance with the terms and provisions of the documents evidencing such
Option and this Plan) after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Option will thereafter be treated
as a Non-Statutory Option.

III. CHANGE IN CONTROL

     A. Each option outstanding at the time of a Change in Control but not
otherwise fully vested 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 of the shares of Common Stock at the time subject
to that option which would otherwise have vested in the twelve (12) months
following the date of the Change of Control and may be exercised for any or all
of those shares as fully vested shares of Common Stock if: (i) such option is,
in connection with the Change in Control, assumed or otherwise continued in full
force and effect by the successor corporation (or parent thereof) pursuant to
the terms of the Change in Control, or (ii) such option is replaced with a cash
incentive program of the successor corporation which preserves the spread
existing at the time of the Change in Control on the shares of Common Stock for
which the option is not otherwise at that time exercisable and provides for
subsequent payout in accordance with the same vesting schedule applicable to
those option shares. If such option is not so assumed or replaced, then all
options outstanding at the time of a Change in Control but not otherwise fully
vested shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Change in Control, become
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares as fully vested
options for shares of Common Stock.

     B. If such option is so assumed or replaced, and if there is an Involuntary
Termination of the employment of the Optionee by the successor corporation or
affiliate thereof within twelve (12) months from the date of the Change in
Control, then all options of such Optionee outstanding at the time of such
termination but not otherwise fully vested shall automatically accelerate so
that each such option shall, as of the effective date of the Change in Control,
become exercisable for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully vested
options for shares of Common Stock. Any options so accelerated shall remain
exercisable for fully vested shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall immediately terminate upon such Involuntary Termination.

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     C. All outstanding repurchase rights 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 or (ii) such accelerated vesting is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.

     D. Each option which 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 which 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
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 maximum number
and/or class of securities available for issuance over the remaining term of
this Plan and (iii) the maximum number and/or class of securities for which any
one person may be granted options, separately exercisable stock appreciation
rights and direct stock issuances under this Plan per calendar year.

     E. The Plan Administrator may at any time provide that one or more options
will automatically accelerate in connection with a Change in Control, whether or
not those options are assumed or otherwise continued in full force and effect
pursuant to the terms of the Change in Control. Any such option shall
accordingly become exercisable, immediately prior to the effective date of such
Change in Control, for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully vested
shares of Common Stock. In addition, the Plan Administrator may at any time
provide that one or more of the Corporation's repurchase rights shall not be
assignable in connection with such Change in Control and shall terminate upon
the consummation of such Change in Control.

     F. 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 in excess of the dollar limitation shall be exercisable
as a Non-Statutory Option under the Federal tax laws.

IV.  STOCK APPRECIATION RIGHTS

     The Plan Administrator may, subject to such conditions as it may determine,
grant to selected Optionees stock appreciation rights which will allow the
holders of those rights to elect between the exercise of the underlying option
for shares of Common Stock and the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (a) the
Option Surrender Value of the number of shares for which the option is
surrendered over (b) the aggregate exercise price payable for such shares. The
distribution 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.

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                                 ARTICLE THREE
                     SALARY INVESTMENT OPTION GRANT PROGRAM

I.   OPTION GRANTS

     The Primary Committee may implement the Salary Investment Option Grant
Program for one or more calendar years beginning after the Underwriting Date and
select the Section 16 Insiders and other highly compensated Employees eligible
to participate in the Salary Investment Option Grant Program for each such
calendar year. 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 designate) an
irrevocable authorization directing the Corporation to reduce his or her base
salary for that calendar year by an amount not less than Five Thousand Dollars
($5,000.00) nor more than Fifty Thousand Dollars ($50,000.00). The Primary
Committee shall have complete discretion to determine whether to approve the
filed authorization in whole or in part. To the extent the Primary Committee
approves the authorization, the individual who filed that authorization shall be
granted an option under the Salary Investment Grant Program on the first trading
day in January for 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 one hundred percent (100%) 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 Option 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 C), where

        X is the number of option shares,

        A is the dollar amount of the approved reduction in the Optionee's base
        salary for the calendar year, and

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

        C is equal to the exercise price per share established by the Board
        (which amount shall be expressed as a percentage of Fair Market Value).

     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. CESSATION OF SERVICE. Each option outstanding at the time of the
Optionee's cessation of Service 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 option term or (ii) the
expiration of the three (3)-year period following the Optionee's cessation of
Service. To the extent the option is held by the Optionee at the time of his or
her death, the option may be exercised by his or her Beneficiary. However, the
option shall, immediately upon the Optionee's cessation of Service, 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. An
Optionee's leave of absence for a period agreed by the Corporation shall not
constitute a cessation of Services. Any option outstanding at the time Optionee
commences a leave of absence shall remain during the period of such leave of
absence outstanding and exercisable to the extent exercisable on the
commencement date of the leave of absence, but the period of such leave of
absence shall not be credited towards vesting.

III. CHANGE IN CONTROL

     A. In the event of any Change in Control while the Optionee remains in
Service, each outstanding option shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in
Control become fully exercisable with respect to the total number of 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 option
accelerated in connection with a Change in Control shall terminate upon 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
terms of the Change in Control.

     B. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted to apply to the number and class of securities
which 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.

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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 options made
under the Discretionary Option Grant Program.

                                  ARTICLE FOUR
                             STOCK ISSUANCE PROGRAM

I.   STOCK ISSUANCE TERMS

     Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening options. Shares
of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals or Service requirements. Each such
award shall be evidenced by one or more documents which comply with the terms
specified below.

     A. PURCHASE PRICE.

        1. The purchase price per share of Common Stock subject to direct
issuance shall be fixed by the Plan Administrator and may be less than, equal to
or greater than the Fair Market Value per share of Common Stock on the issue
date.

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

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

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

     B. VESTING/ISSUANCE PROVISIONS; PERFORMANCE SHARES.

        1. The Plan Administrator may issue shares of Common Stock which are
fully and immediately vested upon issuance or which are to vest in one or more
installments over the Participant's period of Service or upon attainment of
specified performance targets. Alternatively, the Plan Administrator may issue
share right awards which shall entitle the recipient to receive a specified
number of vested shares of Common Stock upon the attainment of one or more
performance targets or Service requirements established by the Plan
Administrator.

        2. The Plan Administrator may establish maximum and minimum performance
targets to be achieved during the applicable Performance Cycle in accordance
with the following: Any performance targets established by the Plan
Administrator shall relate to corporate, group, unit or individual performance
and may be established in terms of one or more of the following factors:
revenue, earnings, sales, market shares, costs, stock price, growth in earnings,
and/or ratios of earnings or revenue to equity or assets. If the Plan
Administrator establishes maximum and minimum

                                      -12-

<PAGE>   13

performance target, the Plan Administrator shall establish the method for
computing the number of Performance Shares payable to a Participant upon
satisfaction of each of the performance targets, and shall designate the
Participants who are eligible for such Performance Shares within 90 days after
the commencement of the Performance Cycle to which the awards relate or, if
earlier, before 25 percent of such Performance Cycle has elapsed. Multiple
performance targets may be used and the components of multiple performance
targets may be given the same or different weight in determining the amount of
an award earned, and may relate to absolute performance or relative performance
measured against other groups, units, individuals or entities. Each performance
target, and the methods for computing the amount of an award to which an
employee shall be entitled as a result of the achievement of one or more
performance targets, shall be stated in terms of an objective formula or
standard. Achievement of the maximum performance target shall entitle the
Participant to payment at the full or maximum amount specified with respect to
the award; provided, however, that notwithstanding any other provisions of this
Plan, in the case of an award of Performance Shares, the Plan Administrator in
its discretion may establish an upper limit on the amount payable (whether in
cash or shares) as a result of the achievement of the maximum performance
target. The Plan Administrator may also establish that a portion of a full or
maximum amount of a Participant's a award of Performance Shares will be paid for
performance which exceeds the minimum performance target but falls below the
maximum performance target applicable to such award. Following the conclusion of
each Performance Cycle, the Plan Administrator shall determine the extent to
which performance targets have been attained, and the satisfaction of any other
terms and conditions with respect to an award relating to such Performance
Cycle. The Plan Administrator shall certify what, if any, payment is due with
respect to an award of Performance Shares and whether such payment shall be made
in cash, Common Stock or some combination. Payment shall be made in a lump sum
or installments, as determined by the Plan Administrator, commencing as promptly
as practicable following the end of the applicable Performance Cycle, subject to
such terms and conditions and in such form as may be prescribed by the Plan
Administrator.

        3. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her 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 stockholder rights with respect to
the issued shares of Common Stock, 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.

        5. Should the Participant cease to remain in Service while holding one
or more unvested shares of Common Stock, 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 stockholder rights with
respect to those shares. To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant's

                                      -13-

<PAGE>   14

purchase-money indebtedness), the Corporation shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to the surrendered shares.

        6. The Plan Administrator may waive the surrender and cancellation of
one or more unvested shares of Common Stock (or other assets attributable
thereto) which would otherwise occur upon the cessation of the Participant's
Service or the non-attainment of the performance objectives applicable to those
shares. 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.

        7. Outstanding share right awards shall automatically terminate, and no
shares of Common Stock shall actually be issued in satisfaction of those awards,
if the performance targets or Service requirements established for such awards
are not attained. The Plan Administrator, however, shall have the authority to
issue shares of Common Stock in satisfaction of one or more outstanding share
right awards as to which the designated performance targets or Service
requirements are not attained.

II.  CHANGE IN CONTROL

     A. All of the Corporation's outstanding repurchase rights 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 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 or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the option grant is issued.

     B. The Plan Administrator may at any time provide for the automatic
termination of one or more of those outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or (ii) an Involuntary Termination of the
Participant's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which those
repurchase rights are assigned to the successor corporation (or parent thereof)
or otherwise continue in full force and effect.

III. SHARE ESCROW/LEGENDS

     Unvested shares 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.

                                      -14-

<PAGE>   15

                                  ARTICLE FIVE
                         AUTOMATIC OPTION GRANT PROGRAM

I.   OPTION TERMS

     A. GRANT DATES. Options 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 after the Underwriting Date shall automatically be
granted, on the date of such initial election or appointment, a Non-Statutory
Option to purchase forty-five thousand (45,000) shares of Common Stock, provided
that individual has not previously been in the employ of the Corporation (or any
Parent or Subsidiary).

        2. On the date of each Annual Stockholders Meeting beginning with the
2001 Annual Stockholder Meeting, each individual who has served as a
non-Employee Board member for six months or more and who is to continue to serve
as a non-Employee Board member following such Annual Stockholders Meeting shall
automatically be granted a Non-Statutory Option to purchase fifteen thousand
(15,000) shares of Common Stock.

     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 Option 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 initial 45,000-share option shall
vest and become exercisable in a series of three (3) successive equal annual
installments over the Optionee's period of continued service as a Board member,
with the first such installment to vest and become exercisable upon the
Optionee's completion of one (1) year of Board service measured from the option
grant date. Each annual 15,000-share option shall vest and become exercisable
upon the Optionee's completion of one (1) year of Board service measured from
the option grant date.

     E. CESSATION OF BOARD SERVICE. The following provisions shall govern the
exercise of any options outstanding at the time of the Optionee's cessation of
Board service:

        (i) Any option outstanding at the time of the Optionee's cessation of
     Board service for any reason shall remain exercisable for a twelve
     (12)-month period following the

                                      -15-

<PAGE>   16

     date of such cessation of Board service, but in no event shall such option
     be exercisable after the expiration of the option term.

        (ii) Any option exercisable in whole or in part by the Optionee at the
     time of death may be subsequently exercised by his or her Beneficiary.

        (iii) Following the Optionee's cessation of Board service, the option
     may not be exercised in the aggregate for more than the number of shares
     for which the option was exercisable on the date of such cessation of Board
     service. 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 vested shares for which the option has
     not been exercised. However, the option shall, immediately upon the
     Optionee's cessation of Board service, terminate and cease to be
     outstanding for any and all shares for which the option is not otherwise at
     that time exercisable.

        (iv) However, 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.

II.  CHANGE IN CONTROL

     A. In the event of any Change in Control, the shares of Common Stock at the
time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option may, immediately prior to
the effective date of such Change in Control, became fully exercisable for all
of the shares of Common Stock at the time subject to such option and maybe
exercised for all or any of those shares as fully vested options for shares of
Common Stock. Each such option accelerated in connection with a Change in
Control shall terminate upon 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 terms of the Change in Control.

     B. All outstanding repurchase rights 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.

     C. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted to apply to the number and class of securities
which 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.

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 options made under the
Discretionary Option Grant Program.

                                      -16-

<PAGE>   17

                                  ARTICLE SIX
                        DIRECTOR FEE OPTION GRANT PROGRAM

I.   OPTION GRANTS

     The Board may implement the Director Fee Option Grant Program as of the
first day of any calendar year beginning after the Underwriting Date. Upon such
implementation of the Program, each non-Employee Board member may elect to apply
all or any portion of the annual retainer fee otherwise payable in cash for his
or her service on the Board 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 election is to be in effect. Each non-Employee Board member
who files such a timely election with respect to the annul retainer fee 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 that fee
would otherwise be payable.

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 established by the Board prior
to the start of each calendar year and may range from one hundred percent (100%)
to 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 alternative forms authorized
under the Discretionary Option 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 C), where

        X is the number of option shares,

        A is the dollar amount of the approved reduction in the Optionee's base
        salary for the calendar year, and

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

                                      -17-

<PAGE>   18

        C is equal to the exercise price per share established by the Board
        (which amount shall be expressed as a percentage of Fair Market Value).

     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 month of Board service during the calendar year in which the
option is granted. Each option shall have a maximum term of ten (10) years
measured from the option grant date.

     D. CESSATION OF BOARD SERVICE. Should the Optionee cease Board service for
any reason (other than death or Permanent Disability) while holding one or more
options, 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 at the time of such 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.

     E. 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 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.

     Should the Optionee die after cessation of Board service but while holding
one or more options, 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 Optionee's Beneficiary. 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

     A. In the event of any Change in Control while the Optionee remains in
Board service, each outstanding option held by such Optionee shall automatically
accelerate so that each such option shall, immediately prior to the effective
date of the Change in Control, become fully exercisable with respect to the
total number of 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 option accelerated in connection with a Change in Control shall
terminate upon the Change in Control, 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.

                                      -18-

<PAGE>   19

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 options made under
the Discretionary Option Grant Program.

                                 ARTICLE SEVEN
                                 MISCELLANEOUS

I.   No Impairment Of Authority

     Outstanding awards 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.

II.  Tax Withholding

     The Corporation's obligation to deliver shares of Common Stock upon the
exercise of options or the issuance or vesting of such shares under this Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements. An Optionee may be required
to pay to the Corporation, and the Corporation shall have the right and is
hereby authorized to withhold from any option, from any payment due or transfer
made under any option or under this Plan or from any compensation or other
amount owing to an Optionee, the amount (in cash, shares of Common Stock, other
securities, other options or other property, as determined by the Plan
Administrator) of any applicable withholding taxes in respect of an option, its
exercise, or any payment or transfer under an option or under this Plan and to
take such other action as may be necessary in the opinion of the Corporation to
satisfy all obligations for the payment of such taxes. In the case of payments
of options in the form of shares of Common Stock, at the discretion of the Plan
Administrator, the Optionee may be required to pay to the Corporation the amount
of any taxes required to be withheld with respect to such shares or, in lieu
thereof, the Corporation shall have the right to retain (or the Optionee may be
offered the opportunity to elect to tender) the number of shares whose Fair
Market Value equals the amount required to be withheld. The Plan Administrator
may provide for additional cash payments to Optionees to defray or offset any
tax arising from the grant, vesting, exercise or payments of any option. In the
discretion of the Plan Administrator, the Corporation may offer loans to
Optionees to satisfy withholding requirements on such terms as the Plan
Administrator may determine, which terms may in the discretion of the
Corporation be non-interest bearing.

III. Effective Date And Term Of This Plan

     A. This Plan shall become effective immediately on the Registration Date.
However, the Salary Investment Option Grant and Director Fee Option Grant
Programs shall not be implemented until such time as the Primary Committee or
the Board may deem appropriate. Options may be granted under the Discretionary
Option Grant Program at any time on or after the Registration Date. However, no
options granted under this Plan may be exercised, and no shares shall be issued
under this Plan, until this Plan is approved by the Corporation's stockholders.

                                      -19-

<PAGE>   20

     B. This Plan shall serve as the successor to the Predecessor Plan, and no
further options or direct stock issuances shall be made under the Predecessor
Plan after the Registration Date. All options outstanding under the Predecessor
Plan on the Registration Date shall be incorporated into this Plan at that time
and shall be treated as outstanding options under this 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 this 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 this Plan, including (without limitation) the
option/vesting acceleration provisions of Article Two relating to Changes in
Control, may, in the Plan Administrator's discretion, be extended to one or more
options incorporated from the Predecessor Plan which do not otherwise contain
such provisions.

     D. This Plan shall terminate upon the earliest of (i) December 31, 2009,
(ii) the date on which all shares available for issuance under this Plan shall
have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.

IV.  Amendment Of This Plan

     A. The Board shall have complete and exclusive power and authority to amend
or modify this Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under this
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

     B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under this Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under this Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess issuances are
made, then (i) any unexercised options 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 the exercise or
purchase price paid for any excess shares issued under this 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 canceled and cease to be outstanding.

                                      -20-

<PAGE>   21

V.   Use Of Proceeds

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

VI.  Regulatory Approvals

     A. The implementation of this Plan, the granting of any stock option under
this Plan and the issuance of any shares of Common Stock (i) upon the exercise
of any granted option or (ii) 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 this Plan, the stock options
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 this 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 this Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.

VII. No Employment/Service Rights

     Nothing in this 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.

                                      -21-

<PAGE>   22

                                    APPENDIX

The following definitions shall be in effect under this Plan:

     A. "Automatic Option Grant Program" shall mean the automatic option grant
program in effect under this Plan.

     B. "Beneficiary" shall mean, in the event the Plan Administrator implements
a beneficiary designation procedure, the person designated by an Optionee or
Participant, pursuant to such procedure, to succeed to such person's rights
under any outstanding awards held by him or her at the time of death. In the
absence of such designation or procedure, the Beneficiary shall be the personal
representative of the estate of the Optionee or Participant or the person or
persons to whom the award is transferred by will or the laws of descent and
distribution.

     C. "Board" shall mean the Corporation's Board of Directors.

     D. "Change in Control" shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:

        (i) any "person" or "group" (within the meaning of Sections 13(d) and
     14(d)(2) of the Securities Exchange Act of 1934 (the "1934 Act")), other
     than a trustee or other fiduciary holding securities under an employee
     benefit plan of the Corporation, being or becoming the "beneficial owner"
     (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
     greater than fifty percent (50%) of the outstanding voting stock of the
     Corporation; or

        (ii) at any time during any period of three consecutive years (not
     including any period prior to the effective date of this Plan), individuals
     who at the beginning of such period constitute the Board (and any new
     director whose election by the Board or whose nomination for election by
     the Corporation's stockholders was approved by a vote of at least
     two-thirds of the directors then still in office who were either directors
     at the beginning of such period or whose election or nomination for
     election was previously so approved) ceasing for any reason to constitute a
     majority thereof; or

        (iii) the stockholders of the Corporation approving a merger or
     consolidation of the Corporation with any other corporation, other than a
     merger or consolidation which would result in the voting securities of the
     Corporation outstanding immediately prior thereto continuing to represent
     (either by remaining outstanding or by being converted into voting
     securities of the surviving entity) at least 80% of the combined voting
     power of the voting securities of the Corporation or such surviving entity
     outstanding immediately after such merger or consolidation, or an agreement
     for the sale by the Corporation of all or substantially all of the
     Corporation's assets.

     E. "Code" shall mean the Internal Revenue Code of 1986, as amended.

     F. "Common Stock" shall mean the Corporation's common stock.

                                      A-1

<PAGE>   23

     G. "Corporation" shall mean Chaparral Network Storage, Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Chaparral Network Storage, Inc., which shall by
appropriate action adopt this Plan.

     H. "Director Fee Option Grant Program" shall mean the director fee option
grant program in effect under this Plan.

     I. "Discretionary Option Grant Program" shall mean the discretionary option
grant program in effect under this Plan.

     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 listed on any established stock exchange or a
     national market system, including without limitation the Nasdaq National
     Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair
     Market Value shall be the closing sales price for such stock (or the
     closing bid, if no sales were reported) as quoted on such exchange or
     system on the date of such determination (or, if such date is not a trading
     day, for the immediately preceding trading day), as reported in The Wall
     Street Journal or such other source as the Board deems reliable.

        (ii) If the Common Stock is regularly quoted by a recognized securities
     dealer but selling prices are not reported, its Fair Market Value shall be
     the mean of the closing bid and asked prices for the Common Stock on the
     date of such determination, as reported in The Wall Street Journal or such
     other source as the Board deems reliable.

        (iii) For purposes of any option grants made on the Underwriting Date,
     the Fair Market Value shall be deemed to be equal to the price per share at
     which the Common Stock is to be sold in the initial public offering
     pursuant to the Underwriting Agreement.

        (iv) For purposes of any options made prior to the Underwriting Date,
     the Fair Market Value shall be determined by the Plan Administrator, after
     taking into account such factors as it deems appropriate.

     M. "Incentive Option" shall mean an option which satisfies the requirements
of Code Section 422.

     N. "Involuntary Termination" shall mean the termination of the Service of
any individual which occurs by reason of such individual's involuntary dismissal
or discharge by the Corporation other than a Termination for Cause.

                                      A-2

<PAGE>   24

     O. "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.

     P. "Non-Statutory Option" shall mean an option not intended to satisfy the
requirements of Code Section 422.

     Q. "Option Surrender Value" shall mean the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation. However,
if the surrendered option is an Incentive Option, the Option Surrender Value
shall not exceed the Fair Market Value per share.

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

     S. "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.

     T. "Participant" shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.

     U. "Performance Cycle" means the period of time as specified by the Plan
Administrator over which Performance Shares are to be earned.

     V. "Performance Shares" means an award made pursuant to Article 4 which
entitles a Participant to receive shares of Common Stock based on the
achievement of performance targets during a Performance Cycle.

     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 2000 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 Option Grant, Salary Investment Option 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. However, the
Primary Committee shall have the plenary authority to make all factual
determinations and to construe and interpret any

                                      A-3

<PAGE>   25

and all ambiguities under this Plan to the extent such authority is not
otherwise expressly delegated to any other Plan Administrator.

     Z. "Predecessor Plan" shall mean the Corporation's pre-existing 1998 Stock
Option Plan in effect immediately prior to this Plan Effective Date hereunder.

     AA. "Primary Committee" shall mean a committee of two (2) or more
non-Employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and highly compensated Employees and to administer the Salary
Investment Option Grant Program with respect to all eligible individuals. At all
times following the Section 12 Registration Date, the Primary Committee shall be
comprised of individuals who (1) are not then current Employees of the
Corporation, (2) not then former Employees of the corporation who receive
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year of the Corporation; (3) have not been
officers of the Corporation; and (4) do not receive remuneration (including any
payment in exchange for goods or services) for the Corporation, either directly
or indirectly, in any capacity other than as a director. The preceding sentence
is intending to comply with the requirements of Treasury Regulation Section
1.162-27(e)(3), and shall be construed consistently with such intent.

     BB. "Registration Date" shall mean the date of the closing of the
Corporation's initial public offering of Common Stock pursuant to an effective
registration statement on form S-1.

     CC. "Salary Investment Option Grant Program" shall mean the salary
investment grant program in effect under this Plan.

     DD. "Secondary Committee" shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.

     EE. "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.

     FF. "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.

     GG. "Stock Exchange" shall mean either the American Stock Exchange or the
New York Stock Exchange.

     HH. "Stock Issuance Program" shall mean the stock issuance program in
effect under this Plan.

     II. "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

                                      A-4

<PAGE>   26

percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

     JJ. "10% Stockholder" 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).

     KK. "Termination for Cause" shall mean the termination of the Service of
any individual which occurs by reason of the individual

         1. committing any fraudulent or felonious act in respect to duties to
the Corporation or, with respect to his or her employment, committing an act of
moral turpitude of such degree that it bears upon his or her ability to carry
out his or her functions under this Agreement; or

         2. committing any willful malfeasance or gross negligence (in the
discharge of duties to the Corporation) having a material adverse effect on the
Corporation.

     LL. "Underwriting Agreement" shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

     MM. "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.

     NN. "Withholding Taxes" shall mean the Federal, state and local income and
employment withholding tax liabilities to which the holder of Non-Statutory
Options or unvested shares of Common Stock may become subject in connection with
the exercise of those options or the vesting of those shares

                                      A-5<PAGE>   1
                                                                    EXHIBIT 10.3

                         CHAPARRAL NETWORK STORAGE, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

     1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.

     2. Definitions.

        (a) "Board" shall mean the Board of Directors of the Company.

        (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

        (c) "Common Stock" shall mean the Common Stock of the Company.

        (d) "Company" shall mean Chaparral Network Storage, Inc., a Delaware
corporation, and any Designated Subsidiary of the Company.

        (e) "Compensation" shall mean all base straight time gross earnings and
commissions, exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.

        (f) "Designated Subsidiary" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

        (g) "Employee" shall mean any individual who is an employee of the
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.

        (h) "Enrollment Date" shall mean the first day of each Offering Period.

        (i) "Exercise Date" shall mean the last day of each Offering Period.

        (j) "Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:

<PAGE>   2

            (i) If the Common Stock is listed on any established stock exchange
     or a national market system, including without limitation the Nasdaq
     National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
     its Fair Market Value shall be the closing sales price for such stock (or
     the closing bid, if no sales were reported) as quoted on such exchange or
     system on the date of such determination (or, if such date is not a Trading
     Day, for the immediately preceding Trading Day), as reported in The Wall
     Street Journal or such other source as the Board deems reliable, or;

            (ii) If the Common Stock is regularly quoted by a recognized
     securities dealer but selling prices are not reported, its Fair Market
     Value shall be the mean of the closing bid and asked prices for the Common
     Stock on the date of such determination, as reported in The Wall Street
     Journal or such other source as the Board deems reliable, or;

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

            (iv) For purposes of the Enrollment Date of the first Offering
     Period under the Plan, the Fair Market Value shall be the initial price to
     the public as set forth in the final prospectus included within the
     registration statement in Form S-1 filed with the Securities and Exchange
     Commission for the initial public offering of the Company's Common Stock
     (the "Registration Statement").

        (k) "Offering Period" shall mean a period of approximately six (6)
months during which an option granted pursuant to the Plan may be exercised,
commencing on the first Trading Day on or after August 1 and terminating on the
last Trading Day in the period ending the following January 31, or commencing on
the first Trading Day on or after February 1 and terminating on the last Trading
Day in the period ending the following July 31; provided, however, that the
first Offering Period under the Plan shall commence with the first Trading Day
on or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective and ending on the last Trading
Day on or before July 31, 2000. The duration of Offering Periods may be changed
pursuant to Section 4 of this Plan.

        (l) "Plan" shall mean this Employee Stock Purchase Plan.

        (m) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower; provided, however, that the Purchase Price
may be adjusted by the Board pursuant to Section 20.

        (n) "Reserves" shall mean the number of shares of Common Stock covered
by each option under the Plan which have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.

        (o) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

                                      -2-
<PAGE>   3

        (p) "Trading Day" shall mean a day on which national stock exchanges and
the Nasdaq System are open for trading.

     3. Eligibility.

        (a) Any Employee who shall have been employed by the Company for at
least six months on a given Enrollment Date shall be eligible to participate in
the Plan.

        (b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its Subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.

     4. Offering Periods. The Plan shall be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after August 1 and February 1 each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 20 hereof; provided, however, that the first Offering Period under the
Plan shall commence with the first Trading Day on or after the date on which the
Securities and Exchange Commission declares the Company's Registration Statement
effective and ending on the last Trading Day on or before July 31, 2000. The
Board shall have the power to change the duration of Offering Periods (including
the commencement dates thereof) with respect to future offerings without
stockholder approval if such change is announced at least five (5) days prior to
the scheduled beginning of the first Offering Period to be affected thereafter.

     5. Participation.

        (a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
provided by the Company to this Plan and filing it with the Company's payroll
office prior to the applicable Enrollment Date.

        (b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.

                                      -3-
<PAGE>   4

     6. Payroll Deductions.

        (a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding ten percent (10%) of the Compensation
which he or she receives on each pay day during the Offering Period.

        (b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.

        (c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing or filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

        (d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during an
Offering Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.

        (e) At the time the option is exercised, in whole or in part, or at the
time some or all of the Company's Common Stock issued under the Plan is disposed
of, the participant must make adequate provision for the Company's federal,
state, or other tax withholding obligations, if any, which arise upon the
exercise of the option or the disposition of the Common Stock. At any time, the
Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee. The form of subscription agreement may provide
that shares of Common Stock issued under the Plan may be held in escrow or
legended to provide for satisfaction of withholding obligations.

     7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price, provided that such purchase
shall be subject to the limitations set forth in

                                      -4-
<PAGE>   5
Sections 3(b) and 12 hereof. Exercise of the option shall occur as provided in
Section 8 hereof, unless the participant has withdrawn pursuant to Section 10
hereof. The Option shall expire on the last day of the Offering Period.

     8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.

     9. Delivery. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, the shares purchased upon exercise of his or her
option.

     10. Withdrawal.

         (a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.

         (b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

     11. Termination of Employment. Upon a participant's ceasing to be an
Employee for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.

                                      -5-
<PAGE>   6

     12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

     13. Stock.

         (a) Subject to adjustment upon changes in capitalization of the Company
as provided in Section 19 hereof, the maximum number of shares of the Company's
Common Stock which shall be made available for sale under the Plan shall be
6,000,000 shares, plus an annual increase to be added on the first day of each
of the Company's fiscal years beginning with fiscal year 2001 equal to the
lesser of (i) 1,000,000 shares, (ii) 2.0% of the outstanding shares on such
date, or (iii) a lesser amount determined by the Board. If, on a given Exercise
Date, the number of shares with respect to which options are to be exercised
exceeds the number of shares then available under the Plan, the Company shall
make a pro rata allocation of the shares remaining available for purchase in as
uniform a manner as shall be practicable and as it shall determine to be
equitable.

         (b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.

         (c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.

     14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

     15. Designation of Beneficiary.

         (a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.

         (b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more

                                      -6-
<PAGE>   7

dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.

     16. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 15 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.

     17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

     18. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

     19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.

         (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase per Offering Period (pursuant to Section 7), as well as
the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.

                                      -7-
<PAGE>   8

         (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

         (c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, the Offering Period
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"). The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.

     20. Amendment or Termination.

         (a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as provided
in Section 19 and Section 20 hereof, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any other applicable law, regulation or stock exchange rule), the Company shall
obtain stockholder approval in such a manner and to such a degree as required.

         (b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

                                      -8-
<PAGE>   9

         (c) In the event the Board determines that the ongoing operation of the
Plan may result in unfavorable financial accounting consequences, the Board may,
in its discretion and, to the extent necessary or desirable, modify or amend the
Plan to reduce or eliminate such accounting consequence including, but not
limited to:

             (i) altering the Purchase Price for any Offering Period including
     an Offering Period underway at the time of the change in Purchase Price;

             (ii) shortening any Offering Period so that Offering Period ends
     on a new Exercise Date, including an Offering Period underway at the time
     of the Board action; and

             (iii) allocating shares.

     Such modifications or amendments shall not require stockholder approval or
the consent of any Plan participants.

     21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

     22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

     As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

     23. Term of Plan. The Plan shall become effective upon the date of the
closing of the Company's initial public offering of Common Stock pursuant to an
effective registration statement on form S-1. It shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 20 hereof.

                                      -9-

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