Document:

Exhibit 10.15

                                ISES CORPORATION
                            2600 72nd Street, Ste. C
                            W. Des Moines, Iowa 50322
                     Tel: (515) 331-0560 Fax: (515) 331-3901
                                    ("ISES")

               IN-FLIGHT ENTERTAINMENT SOFTWARE LICENSE AGREEMENT

Customer:      AOM
               Batiment 363
               BP 854
               94551 ORLY AEROGARE CEDEX
               FRANCE

Contact:       Sophie Troel / Product and Services Manager tel: 33 149 79 29 13
               fax: 33 149 79 10 11   stroel@aom-minerve.fr

ISES  hereby  grants  Customer,   and  Customer  hereby  accepts  from  ISES,  a
non-exclusive and non-transferable  right to use the computer programs described
in Section 1 below (the  "Products")  on the  designated  hardware  described in
Section 2 below (the  "Designated  Hardware"),  for the term  specified  herein,
subject to the terms and conditions specified below.

                          GENERAL TERMS AND CONDITIONS

1.   PRODUCTS

"Products"  means (i) the  machine-readable  object code version of the computer
programs  described in the Product  Schedule,  whether embedded on disc, tape or
other media, for use on the computer platform  specified in the Product Schedule
(the "Software"),  (ii) the published user manuals and  documentation  that ISES
makes  generally  available  for the Software (the  "Documentation"),  (iii) the
fixes,  updates,  upgrades or new versions of the Software or Documentation that
ISES may provide to Customer under this Agreement (the  "Enhancements") and (iv)
any  copy  of the  Software,  Documentation  or  Enhancements.  Nothing  in this
Agreement  will  entitle  Customer to receive the source code of the Software or
Enhancements, in whole or in part.

2.   DESIGNATED HARDWARE

"Designated  Hardware" means the hardware equipment  installed in the designated
aircraft,  each as  specified  in the  Product  Schedule.  Customer  may use the
Products as  described  in Section 3 only on the  Designated  Hardware  while it
possesses and operates the Designated Hardware. Any other use or transfer of the
Products will require ISES's prior approval, which (i) shall not be unreasonably
withheld or delayed  and (ii) may be subject to  additional  charges  should any
revision  to the  Products be  required  as a result of the  alternative  use or
transfer.

3.   USE

Customer may use the Products only in and for Customer's  own internal  purposes
in providing in-flight entertainment to passengers. Customer will not permit any
other person to use the Products,  whether on a  time-sharing  or other multiple
user arrangement. Customer may install the Software or Enhancements on a network
or other  multi-user  computer system  specified in the Product Schedule and use
the  Designated  Hardware  to provide  file  services  to  Customer's  in-flight
entertainment  consoles,  up to the  number of seats  specified  in the  Product
Schedule.  Customer may make a reasonable  number of back-up  archival copies of
the Software and Enhancements.  Customer will reproduce all  confidentiality and
proprietary  notices on each of these copies and maintain an accurate  record of
the  location  of each of  these  copies.  Customer  will  not  otherwise  copy,
translate,  modify,  adapt,  decompile,  disassemble  or  reverse  engineer  the
Products,  except as and to the extent expressly authorized by applicable law or
with the prior approval of ISES.

4.   PAYMENT

Customer will pay to ISES the License Fee specified in the Product  Schedule and
by the date specified in the Product Schedule. The License Fee is based upon the
total number of aircraft that may access an in-flight entertainment console. Any
increase in usage may be subject to additional charges. All amounts specified in
the Product  Schedule  are  exclusive of any  applicable  use,  sales,  service,
property or other taxes or contributions, which Customer will pay in addition to
the amount due and payable.  If, under local law or applicable treaty,

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Customer is required to withhold  any tax on such  payments,  then the amount of
the payment will be automatically  increased to totally offset such tax, so that
the  amount  actually  remitted  to ISES,  net of all  taxes,  equals the amount
invoiced or otherwise due. Customer will promptly furnish ISES with the official
receipt of payment  of these  taxes to the  appropriate  taxing  authority.  Any
amount  not paid when due will  accrue  interest  at the rate of 1.5% per month.
Customer will pay such interest when remitting the principal amount to ISES.

5.   SHIPMENT

ISES will, at its own cost, ship the Products from its distribution  center to a
mutually  agreed  third  party in the United  States,  subject to delays  beyond
ISES's control.  Should  Customer desire shipment  outside of the United States,
then ISES will select the method of shipment for  Customer's  account and obtain
all  licenses  required  to export  the  Products  from the  country  of origin.
Customer shall pay or reimburse ISES for the cost of shipment of the Products to
the port of entry at  Customer's  country of domicile.  Customer will (i) obtain
all licenses required to import the Products into its country of domicile,  (ii)
clear the Products  through local  customs and (iii) pay all customs  duties and
other charges assessed on such  importations,  if applicable.  Risk of loss will
pass to Customer upon arrival of the Products at the port of entry in Customer's
country of domicile.

6.   MAINTENANCE AND SUPPORT

(a) Maintenance. During the warranty period specified in Section 7(a), ISES will
provide Customer,  at no additional charge, with the fixes and updates that ISES
may make generally available as part of its standard  maintenance  services (the
"Updates").  Customer may elect to continue  receiving Updates for the remainder
of the Term (as  defined  in  Section  12(a))  after the  Warranty  Period  (the
"Maintenance Period"), as long as the Agreement is in effect.

(b) "Hot-Line"  Support.  During the Warranty Period and any Maintenance  Period
for which  Customer  has paid,  ISES will  provide  Customer,  at no  additional
charge, with advice, consultation and assistance to use the Product and diagnose
and correct problems that Customer may encounter (the "Hot-Line Support").  ISES
will offer the Hot-Line Support  remotely by telephone,  fax or other electronic
communication during its business hours, 8:00 am to 5:00 pm C.S.T. Customer will
bear all telephone and other  expenses that it may incur in connection  with the
Hot-Line  Support.  ISES may offer  on-site  support to Customer  at  additional
charges.

Hot-Line Contact Information:

         Contact: Tony Hoffman
         Address: ISES Corp.
                  2600 72nd St., Suite C
                  Des Moines, IA 50322
         Phone:   (515) 331-0560
         Fax:     (515) 331-3901
                  Email:  tony@ises-amp.com

(c)  Limitation.  The Updates will not include any upgrade or new version of the
Products that ISES decides, in its sole discretion,  to make generally available
to its  customer  base as a  separately  priced  item.  This Section will not be
interpreted  to require  ISES to (i) develop and  release  Enhancements  or (ii)
customize  the   Enhancements  to  operate  in  conjunction  with  any  Customer
Modification  or  otherwise  satisfy  Customers'   particular  requests.  If  an
Enhancement  replaces the prior  version of the Product,  Customer  will destroy
such prior version upon installing the Enhancement.

7.   WARRANTIES AND REMEDIES

(a) Limited Warranty. ISES warrants that (i) the Software will conform to ISES's
published  specifications  in effect on the date of delivery,  (ii) the Software
will perform substantially as described in the accompanying Documentation for 90
days after  delivery of the Product,  and (iii) from the date of delivery of the
Product by ISES until  December 31,  2000,  the  Products  will  record,  store,
process and present  calendar dates falling on or after December 31, 1999 in the
same  manner and with  substantially  the same  functionality  as such  Products
record,  store,  process and present  calendar dates falling before December 31,
1999,  (iv) it will perform any  maintenance  and support  services  pursuant to
Section 6 with reasonable  care and skill.  Customer  acknowledges  that (i) the
Products  may not satisfy all of  Customer's  requirements,  (ii) the use of the
Products may not be  uninterrupted or error-free and (iii) this limited warranty
will be not  apply  in  case of any  Customer  Modifications.  Customer  further
acknowledges that (i) the License Fee and other charges  contemplated under this
Agreement  are based on the limited  warranty,  disclaimers  and  limitation  of
liability  specified  in  Sections  7, 8 and 9 and (ii)  such  charges  would be
substantially higher if any of these provisions were unenforceable.

(b)  Remedies.  In case of breach of warranty  or any other duty  related to the
quality  of the  Products,  ISES or its  representative  will,  at its own  cost
promptly correct or replace any defective Software or, if not practicable,  ISES
will accept the return of the defective  Software and refund to Customer (i) the
amount actually paid to ISES for the defective Software, less depreciation based
on a 5-year straight line  depreciation  schedule,  and (ii) a pro rata share of
any  maintenance  fees that  Customer  actually paid to ISES for the period that
such Software was not usable.  Customer  acknowledges  that this  Paragraph sets
forth  Customer's  exclusive  remedy,  and ISES's exclusive  liability,  for any
breach of warranty or other duty related to the quality of the Products.

(c) Limitations.  The warranty  provided in this Section 7 will not apply to the
extent  that the  breach of  warranty  or Product  defect is not  brought to the
attention of ISES during the applicable warranty period or arises as a result of
(i)  failure to  properly  install or use the  Product  in  accordance  with its
documentation,  (ii) failure of the operating  environment or hardware  failure,
(iii)  modification of the Products other than by ISES, (iv) failure to promptly
install an Update  provided to the  Customer by ISES that would have  eliminated
the defect,  (v) use of the Products  with  ambiguous  date related data or in a
Year 2000  non-compliant  operating  environment or (vi) the  combination of the
Products with other items not provided by ISES, but only if the breach

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would  not have  occurred  from use of the  Product  alone  with the  Designated
Hardware existing as of the date of this Agreement.

(d) Disclaimer.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL WARRANTIES,
CONDITIONS,  REPRESENTATIONS,  INDEMNITIES  AND  GUARANTEES  WITH RESPECT TO THE
PRODUCTS,  WHETHER  EXPRESS OR IMPLIED,  ARISING BY LAW,  CUSTOM,  PRIOR ORAL OR
WRITTEN STATEMENTS BY ISES, ITS AGENTS OR OTHERWISE (INCLUDING,  BUT NOT LIMITED
TO ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, SATISFACTORY
QUALITY AND NON-INFRINGEMENT) ARE HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.

8.   INDEMNITY

(a) Indemnity.  If an action is brought against Customer claiming that a Product
infringes a presently issued U.S. patent,  or a copyright or trade secret,  ISES
will defend Customer at ISES's expense and,  subject to this Section and Section
9,  pay  the  damages  and  costs  finally  awarded  against   customer  in  the
infringement  action,  but only if (i)  Customer  notifies  ISES  promptly  upon
learning  that the claim might be asserted,  (ii) ISES has sole control over the
defense of the claim and any  negotiation  for its  settlement or compromise and
(iii) Customer provides ISES with full cooperation in the investigation, defense
and  settlement of such claim as ISES may  reasonably  require,  providing  that
Customer  shall be  reimbursed  all of its  reasonable  out of  pocket  expenses
incurred as a result.

(b) Alternative  Remedy. If a claim described in Section 8(a) may be or has been
asserted,  Customer  will permit  ISES,  at ISES's  option and  expense,  to (i)
procure  the right to continue  using the  Product,  (ii)  replace or modify the
Product to eliminate the infringement  while providing  functionally  equivalent
performance or only if the remedies specified in (i) and (ii) are unavailable to
ISES on commercially  reasonable  terms,  (iii) accept the return of the Product
and refund to Customer the amount  actually paid to ISES for such Product,  less
depreciation  based on a 5-year  straight-line  depreciation  schedule and a pro
rata share of any maintenance  fees that Customer  actually paid to ISES for the
period that such Product was not usable.

(c) Limitation.  ISES shall have no indemnity  obligation to Customer under this
Section if the infringement  claim results from (i) a correction or modification
of the Product not provided by ISES, such as a Customer  Modification,  (ii) the
failure to promptly  install an Update provided to Customer by ISES or (iii) the
combination  of the Product  with other items not  provided by ISES,  unless the
infringement would have occurred from use of the Product alone.

9.   NO CONSEQUENTIAL DAMAGES

UNDER  NO   CIRCUMSTANCES   WILL  ISES  OR  ITS  LICENSORS  BE  LIABLE  FOR  ANY
CONSEQUENTIAL,  INDIRECT,  SPECIAL,  PUNITIVE  OR  INCIDENTAL  DAMAGES  OR  LOST
PROFITS,  WHETHER  FORESEEABLE OR  UNFORESEEABLE,  BASED ON CUSTOMER'S CLAIMS OR
THOSE OF ITS PASSENGERS (INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR LOSS OF DATA,
GOODWILL,  USE  OF  MONEY  OR  USE  OF  THE  PRODUCTS,  INTERRUPTION  IN  USE OR
AVAILABILITY  OF DATA,  STOPPAGE OF OTHER WORK OR  IMPAIRMENT OF OTHER ASSETS OR
EQUIPMENT),  ARISING  OUT OF BREACH OR FAILURE  OF EXPRESS OR IMPLIED  WARRANTY,
BREACH OF CONTRACT,  MISREPRESENTATION,  NEGLIGENCE, STRICT LIABILITY IN TORT OR
OTHERWISE.  IN NO EVENT WILL THE AGGREGATE LIABILITY WHICH ISES OR ITS LICENSORS
MAY INCUR IN ANY ACTION OR PROCEEDING  EXCEED THE TOTAL AMOUNT  ACTUALLY PAID BY
CUSTOMER FOR THE SPECIFIC PRODUCT THAT DIRECTLY CAUSED THE DAMAGE.  THIS SECTION
WILL NOT APPLY  ONLY WHEN AND TO THE EXTENT  THAT  APPLICABLE  LAW  SPECIFICALLY
REQUIRES LIABILITY, DESPITE THE FOREGOING EXCLUSION AND LIMITATION.

10.  OWNERSHIP

All  trademarks,  service marks,  patents,  copyrights,  trade secrets and other
proprietary  rights  in or  related  to the  Products  are and will  remain  the
exclusive  property  of  ISES  or its  licensors,  whether  or not  specifically
recognized or perfected under applicable law.  Customer will not take any action
that  jeopardizes  ISES's or its  licensor's  proprietary  rights or acquire any
right in the  Products,  except the limited use rights  specified  in Section 3.
ISES or its licensor will own all rights in any copy, translation, modification,
adaptation or derivation of the Products, including any Customer Modification or
other  improvement  or  development  of the Products.  Customer will obtain,  at
ISES's reasonable request and expense,  the execution of any instrument that may
be  appropriate  to assign these rights to ISES or its designee or perfect these
rights in ISES's or its licensor's name.

11.  CONFIDENTIALITY

(a)  Confidentiality.   Customer  acknowledges  that  the  Products  incorporate
confidential and proprietary information developed or acquired by or licensed to
ISES. Customer will take all reasonable  precautions  necessary to safeguard the
confidentiality  of the  Products,  including  (i) those  taken by  Customer  to
protect Customer's own confidential information and (ii) those which ISES or its
authorized  representative  may reasonably  request from time to time.  Customer
will not allow the removal or defacement of any  confidentiality  or proprietary
notice placed on the Products. The placement of copyright notices on these items
will not constitute publication or otherwise impair their confidential nature.

(b) Disclosure. Customer will not disclose, in whole or in part, any item of the
Products that has been designated as  confidential to any individual,  entity or
other person, except (i) to those of Customer's employees or consultants who (x)
require  access for  Customer's  authorized use of the Products and (y) agree to
comply with the use and non-disclosure  restrictions  applicable to the Products
under this  Agreement.  Customer  shall cause any employee or consultant who has
access  to the  source  code  of  the  Software  to  expressly  acknowledge  its
confidential and proprietary nature. Customer acknowledges that any unauthorized
use or

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<PAGE>

disclosure of the Products may cause  irreparable  damage to ISES, its licensors
and ISES. If an unauthorized use or disclosure occurs, Customer will immediately
notify ISES and take, at Customer's expense, all steps which may be available to
recover  the  Products  and to  prevent  their  subsequent  unauthorized  use or
dissemination.

(c) Limitation. Customer will have no confidentiality obligation with respect to
any portion of the Products  that (i) Customer knew or  independently  developed
before  receiving the Products  under this  Agreement,  (ii)  Customer  lawfully
obtained from a third party under no confidentiality  obligation or (iii) became
available  to the  public  other  than as a  result  of any act or  omission  by
Customer or any of Customer's employees or consultants.

12.  TERM AND TERMINATION

(a) Term.  This agreement  will become  effective as of the date set forth below
and  continue in effect for an initial  term of 12 months (the  "Term"),  unless
otherwise   terminated   pursuant  to  Section   12(b).   This   Agreement  will
automatically  renew for additional terms of 12 months each, unless either party
provides the other with written notice of its intention not to renew at least 45
days prior to the expiration of the Term or any renewal thereof.

(b)  Termination   for  Cause.   Either  party  may  terminate  this  Agreement,
immediately   upon  notice  to  the  other   party  and   without   judicial  or
administrative  resolution, if the other party or any of its employees or agents
breach any term or condition  hereof and such breach is not cured within 60 days
after receipt of notice specifying the breach and demanding its cure;  provided,
however, that a cure period shall be applicable to a breach of Sections 10 or 11
only if such breach is, in the non-breaching party's opinion, reasonably capable
of cure.  This Agreement will  terminate  automatically  if either party becomes
insolvent  or  enters  into  bankruptcy,  suspension  of  payments,  moratorium,
reorganization  or any other proceeding that relates to insolvency or protection
of creditors' rights. Upon the termination of this Agreement for any reason, all
rights granted to Customer  hereunder will cease, and Customer will promptly (i)
purge the  Software and  Enhancements  from the  Designated  Hardware and all of
Customer's other computer  systems,  storage media and other files, (ii) destroy
the Products and all copies thereof and (iii) deliver to ISES a letter signed by
an officer of Customer  which  certifies  that  Customer has complied with these
termination obligations. Upon termination of this Agreement by Customer pursuant
to Section  12(c),  ISES shall  refund to Customer the  pro-rated  amount of the
then-paid  license  fee  or  maintenance  fee  for  the  remaining  term  of the
Agreement.  The  provisions  of  Sections  7, 8, 9, 10, and 11 will  survive the
termination of this Agreement.

13.  INSPECTION

During  the  term  of  this  Agreement,  ISES or its  representative  may,  upon
reasonable  prior notice to Customer,  inspect the files,  computer  processors,
equipment,  aircraft and  facilities of Customer  during normal working hours to
verify  Customer's  compliance  with  this  Agreement.   While  conducting  such
inspection,  ISES or its  representative  will be entitled to copy any item that
Customer may possess in violation of this Agreement.

14.  ASSIGNMENT

Customer shall not assign,  delegate or otherwise transfer this Agreement or any
of its rights or obligations hereunder without ISES's prior approval.

15.  EXPORT CONTROLS

Customer  acknowledges that the Products and all related technical  information,
documents  and materials are subject to export  controls  under the U.S.  Export
Administration  Regulations.  Customer  will (i) comply  strictly with all legal
requirements established under these controls, (ii) cooperate fully with ISES in
any official or unofficial  audit or inspection  that relates to these  controls
and (iii) not export, re-export, divert or transfer, directly or indirectly, any
such item or direct products thereof to Cuba, Iran,  Iraq,  Libya,  North Korea,
Sudan,  Syria or any  country  that is  embargoed  by  Executive  order,  unless
Customer  has  obtained  the prior  written  authorization  of ISES and the U.S.
Commerce  Department.  Upon  notice to  Customer,  ISES may modify  this list to
conform to changes in the U.S. Export Administration Regulations.

16.  MISCELLANEOUS

All notices or approvals  required or  permitted  under this  Agreement  must be
given in  writing.  Any waiver or  modification  of this  Agreement  will not be
effective  unless executed in writing and signed by the parties.  This Agreement
will bind the parties'  successors-in-interest.  This Agreement will be governed
by and interpreted in accordance with the laws of the State of New York,  U.S.A.
The parties hereby exclude  application of the U.N.  Convention on Contracts for
the International Sale of Goods from this Agreement and any transaction  between
them  related  thereto.  If any  provision  of  this  Agreement  is  held  to be
unenforceable, in whole or in part, such holding will not affect the validity of
the other provisions of this Agreement,  unless either party in good faith deems
the  unenforceable  provision  to be  essential,  in which  case such  party may
terminate this Agreement  effective  immediately upon notice to the other party.
Any press release or other public  statement  regarding this Agreement  shall be
mutually agreed to between the parties. Either party may use the other's name in
its  advertising  collateral,  subject to the prior approval of the other party,
which shall not be unreasonably  withheld or delayed. This Agreement constitutes
the complete and entire statement of all conditions and  representations  of the
agreement  between  ISES and  Customer  with  respect to its subject  matter and
supersedes all prior writings or understandings.

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<PAGE>

     THIS AGREEMENT IS NOT EFFECTIVE UNTIL SIGNED ON BEHALF OF BOTH PARTIES.

ISES Corporation                            AOM
---------------------------                 -----------------------------
("ISES")                                    ("Customer")

By:     /S/                                 By:    /S/
       (Signature)                                 (Signature)
       --------------------                        ----------------------

Name:  Mark Malinak                         Name:  P. G. Pailleret
       --------------------                        ----------------------

Title: VP Sales                             Title: Chief Operating Officer
       --------------------                        ----------------------

Date:  4/19/00                              Date:  4/27/00
       --------------------                        ----------------------

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<PAGE>

PRODUCT SCHEDULE

Software:       ISES AifSoft(TM)Travel Kit Game Suite consisting of the
                following ten (10) games:

                1.       Solitaire
                2.       Backgammon
                3.       Othello
                4.       Tetris
                5.       Twins Cafe Match game
                6.       Zero G
                7.       Chinese Solitaire
                8.       Hangman
                9.       Professional Gold Digger
                10.      Draw Poker

Computer Platform:         Rockwell Collins TES Core D

Designated Hardware (S/N): Rockwell Collins TES

Designated Aircraft:       [Confidential  Treatment has been  requested for this
                           portion of this Exhibit]

Cabin Deployment:          Full cabin deployment

Annual License Fee:        [Confidential Treatment has been requested for this
                           portion of this Exhibit]

Installation Fee:          [Confidential Treatment has been requested for this
                           portion of this Exhibit]

Payment Due Date:          Upon receipt of invoice

AOM is  responsible  for  [Confidential  Treatment  has been  requested for this
portion of this Exhibit].

Content  Updates are subject to  [Confidential  Treatment has been requested for
this portion of this Exhibit].

Custom Content Services:

1.   Logo graphic provided by AOM on game startup screens and card backs.

     [Confidential  Treatment  has  been  requested  for  this  portion  of this
     Exhibit]

2.   Language text  modifications  for and associated  "help" screens to French.
     AOM to provide  translation for  Professional  Gold Digger,  Draw Poker and
     Chinese Solitaire questions/answers, if new questions are required.

3.   New Trivia questions, if required.

     [Confidential  Treatment  has  been  requested  for  this  portion  of this
     Exhibit]

                                       6<PAGE>   1
                                                                    EXHIBIT 10.3

                                     FORM OF

                               OMNISKY CORPORATION

                                 2000 STOCK PLAN

                                    ARTICLE 1

                               GENERAL PROVISIONS

I.    PURPOSE OF THE PLAN

      This 2000 Stock Plan is intended to promote the interests of OmniSky
Corporation, 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. The Plan shall be divided into five separate equity incentive programs:

            1. 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,

            2. 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,

            3. 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 to the Corporation (or any Parent or Subsidiary),

            4. 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

            5. 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 the Plan and shall govern the interests of all persons under the
Plan.
<PAGE>   2
III.  ADMINISTRATION OF THE PLAN

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

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

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

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

      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 the Plan or any options or stock issuances under the Plan.

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

                                      -2-
<PAGE>   3
IV.   ELIGIBILITY

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

            1. Employees,

            2. non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and

            3. 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.

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

      E. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.

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

                                      -3-
<PAGE>   4
V.    STOCK SUBJECT TO THE PLAN

      A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed four
million (4,000,000 ) shares. Such reserve shall consist of the number of shares
estimated to remain available for issuance, as of the Plan Effective Date, under
the Predecessor Plan, including the shares subject to the outstanding options to
be incorporated into the Plan and the additional shares which would otherwise be
available for future grant.

      B. The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with the calendar year
2001, by an amount equal to the lesser of: (i) 3% of the total number of shares
of Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, (ii) one million (1,000,000) shares and
(iii) an amount determined by the Board.

      C. No one person participating in the Plan may receive options, separately
exercisable stock appreciation rights and direct stock issuances for more than
1,000,000 shares of Common Stock in the aggregate per calendar year; provided,
however, that in connection with his or her initial Service, an individual may
be granted options, separately exercisable stock appreciation rights and direct
stock issuances up to an additional 2,500,000 shares (that is, for a possible
total of 3,500,000 shares in the year of initial Service).

      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 the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the 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 the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent options
or direct stock issuances under the Plan. However, should the exercise price of
an option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the number
of shares of Common Stock available for issuance under the 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 the 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, appropriate adjustments shall be made to
(i) the maximum number and/or class of securities issuable under the Plan, (ii)
the number and/or class of securities by which the share reserve is to increase
each calendar year

                                      -4-
<PAGE>   5
pursuant to the automatic share increase provisions of the 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 the Plan per calendar year and in connection with initial
Service to the Corporation (or Parent or Subsidiary), (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 the 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 2

                       DISCRETIONARY OPTION GRANT PROGRAM

I.    OPTION TERMS

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

      A. Exercise Price.

            1. The exercise price per share shall be fixed by the Plan
Administrator.

            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 any form of consideration
permitted by applicable law including 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-designated 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

                                      -5-
<PAGE>   6
such sale and remittance procedure is utilized, payment of the exercise price
for the purchased shares must be made on the Exercise Date.

      B. Exercise and Term of Options. Each option shall be exercisable at such
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option.

      C. Effect of Termination 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 (as set forth in the documents
evidencing the option).

                  (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) 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.

                  (iv) Should the Optionee's Service be terminated for
Misconduct or should the Optionee engage in Misconduct while his or her options
are outstanding, then all such options shall terminate immediately and cease to
be outstanding.

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

                  (i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
limited exercise period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, and/or

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

                                      -6-
<PAGE>   7
      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 to a Beneficiary 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 Seven shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options when issued under the
Plan shall not be subject to the terms of this Section II.

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

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

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

                                      -7-
<PAGE>   8
      D. Term. The term of an Incentive Option shall not exceed ten (10) years
from the date of grant.

      E. 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.

III.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

      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, 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
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (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, (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 or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. Each option outstanding
at the time of the Change in Control shall terminate as provided in Section
III.C. of this Article Two.

      B. 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.

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

      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 the
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

                                      -8-
<PAGE>   9
and direct stock issuances under the Plan per calendar year and upon initial
Service to the Corporation. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption of the outstanding options, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Change in
Control.

      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, as to the number of shares of Common Stock as the Plan
Administrator shall determine 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 Plan Administrator may at any time provide that one or more options
will automatically accelerate upon an "involuntary termination" (to be defined
by the Plan Administrator) of the Optionee's Service within a designated period
following the effective date of any Change in Control in which those options do
not otherwise accelerate. Any options so accelerated shall remain exercisable
for fully-vested shares for such period of time as permitted by the Plan or the
documents evidencing the option. 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.

      G. The Plan Administrator may at any time provide that one or more options
will automatically accelerate in connection with a Hostile Take-Over. Any such
option shall become exercisable, immediately prior to the effective date of such
Hostile Take-Over, 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 terminate
automatically upon the consummation of such Hostile Take-Over. Alternatively,
the Plan Administrator may condition such automatic acceleration and termination
upon an "involuntary termination" (to be defined by the Plan Administrator) of
the Optionee's Service within a designated period following the effective date
of such Hostile Take-Over. Each option so accelerated shall remain exercisable
for fully-vested shares for such period of time as permitted by the Plan or the
documents evidencing the option.

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

IV.   CANCELLATION AND REGRANT OF OPTIONS

                                      -9-
<PAGE>   10
      The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new grant date.

V.    STOCK APPRECIATION RIGHTS

      A. The Plan Administrator shall have full power and authority to grant to
selected Optionees tandem stock appreciation rights and/or limited stock
appreciation rights.

      B. The following terms shall govern the grant and exercise of tandem stock
appreciation rights:

                  (i) One or more Optionees may be granted the right,
exercisable upon such terms as the Plan Administrator may establish, 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 Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (b)
the aggregate exercise price payable for such shares.

                  (ii) No such option surrender shall be effective unless it is
approved by the Plan Administrator, either at the time of the actual option
surrender or at any earlier time. If the surrender is so approved, then the
distribution to which the Optionee shall be entitled 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.

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

      C. The following terms shall govern the grant and exercise of limited
stock appreciation rights:

                  (i) One or more Section 16 Insiders may be granted limited
stock appreciation rights with respect to their outstanding options.

                  (ii) Upon the occurrence of a Hostile Take-Over, each
individual holding one or more options with such a limited stock appreciation
right shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to the
Corporation. In return for the surrendered option, the Optionee shall receive a
cash

                                      -10-
<PAGE>   11
distribution from the Corporation in an amount equal to the excess of (A) the
Take-Over Price of the shares of Common Stock at the time subject to such option
(whether or not the Optionee is otherwise vested in those shares) over (B) the
aggregate exercise price payable for those shares. Such cash distribution shall
be paid within five (5) days following the option surrender date.

                  (iii) At the time such limited stock appreciation right is
granted, the Plan Administrator shall pre-approve any subsequent exercise of
that right in accordance with the terms of this Paragraph C. Accordingly, no
further approval of the Plan Administrator or the Board shall be required at the
time of the actual option surrender and cash distribution.

                                    ARTICLE 3

                     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 Plan Effective 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) nor more than seventy five thousand Dollars ($75,000). Each individual
who files such a timely election 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 thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.

            2. The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary 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.

                                      -11-
<PAGE>   12
      B. Number of Option Shares. The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):

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

      X is the number of option shares,

      A is the 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.

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

      D. Effect of Termination of Service. 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.

III.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

      A. In the event of any Change in Control or Hostile Take-Over 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 or Hostile Take-Over, 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. Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of the
option term.

      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. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the

                                      -12-
<PAGE>   13
assumption of the outstanding options, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control.

      C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding options. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Option Surrender Value of the shares of Common Stock at the time subject to each
surrendered option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.

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 4

                             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 shall be fixed by the Plan
Administrator.

            2. Subject to the provisions of Section II of Article Seven, 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.

                                      -13-
<PAGE>   14
            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 objectives. 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 goals or Service requirements established by the Plan
Administrator.

            2. 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.

            3. 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.

            4. 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 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.

            5. 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.

            6. 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 goals 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 goals or
Service requirements are not attained.

II.   CHANGE IN CONTROL/HOSTILE TAKE-OVER

                                      -14-
<PAGE>   15
      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 repurchase right 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 Hostile Take-Over or (ii) an "involuntary
termination" (to be defined by the Plan Administrator) of the Participant's
Service within a designated period following the effective date of any Change in
Control or Hostile Take-Over 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.

                                    ARTICLE 5

                         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 Plan Effective Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase one thousand (1,000) shares of Common Stock,
provided that individual has not previously been in the employ of the
Corporation (or any Parent or Subsidiary).

      On the date of each annual stockholders meeting beginning with the 2001
annual stockholder meeting, each individual who is to continue to serve as a
non-employee Board member shall automatically be granted a Non-Statutory Option
to purchase one thousand (1,000) shares of Common Stock, provided that
individual has served as a non-employee Board member for at least six (6)
months. There shall be no limit on the number of such 1,000 share option grants
any one Eligible Director may receive over his or her period of Board service,
and non-employee Board members who have previously been in the employ of the
Corporation (or any Parent or Subsidiary) or who have otherwise received one or
more stock option grants from the Corporation prior to the Underwriting Date
shall be eligible to receive one or more such annual option grants over their
period of continued Board service.

      B. Exercise Price.

                                      -15-
<PAGE>   16
            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 option shall be immediately
exercisable for any or all of the option shares. However, any unvested shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each option shall vest, and the
Corporation's repurchase right shall lapse upon the Optionee's completion of
twelve (12) months 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 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/HOSTILE TAKE-OVER

      A. In the event of any Change in Control or Hostile Take-Over, the shares
of Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full

                                      -16-
<PAGE>   17
so that each such option may, immediately prior to the effective date of such
Change in Control or Hostile Take-Over, 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 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. Each such option accelerated in connection
with a Hostile Take-Over shall remain exercisable until the expiration or sooner
termination of the option term.

      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 or Hostile Take-Over.

      C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding options. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Option Surrender Value of the shares of Common Stock at the time subject to each
surrendered option (whether or not the option is otherwise at the time
exercisable for those shares) over (ii) the aggregate exercise price payable for
such shares. Such cash distribution shall be paid within five (5) days following
the surrender of the option to the Corporation.

      D. 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. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options, substitute one or more shares of its own common stock with
a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Change in Control.

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.

                                    ARTICLE 6

                        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 or years 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

                                      -17-
<PAGE>   18
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 annual 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 thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.

            2. The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary 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 66-2/3%), where

      X is the number of option shares,

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

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

      C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) successive equal monthly installments upon the Optionee's
completion of each 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

                                      -18-
<PAGE>   19
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/HOSTILE TAKE-OVER

      A. In the event of any Change in Control or Hostile Take-Over 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 or Hostile Take-Over, 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. Each such option accelerated in connection with a Hostile
Take-Over shall remain exercisable until the expiration or sooner termination of
the option term.

      B. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding options. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Option Surrender Value of the shares of Common Stock at the time subject to each
surrendered option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.

      C. 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
shall also be made to the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption of the outstanding options under the
Director Fee Option Grant

                                      -19-
<PAGE>   20
Program, substitute one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Change in Control.

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 7

                                  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.   FINANCING

      The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares (less the par value of
such shares) plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

III.  TAX WITHHOLDING

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

      B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Withholding Taxes incurred by such holders in connection with the
exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:

      Stock Withholding: The election to have the Corporation withhold, from the
shares of Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the minimum

                                      -20-
<PAGE>   21
required percentage of the Withholding Taxes (not to exceed one hundred percent
(100%)) designated by the holder.

      Stock Delivery: The election to deliver to the Corporation, at the time
the Non-Statutory Option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such holder (other than in connection with
the option exercise or share vesting triggering the Withholding Taxes) with an
aggregate Fair Market Value equal to the minimum required percentage of the
Taxes (not to exceed one hundred percent (100%)) designated by the holder.

IV.   EFFECTIVE DATE AND TERM OF THE PLAN

      A. The Plan shall become effective immediately upon the Plan Effective
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 Plan Effective Date. However,
no options granted under the Plan may be exercised, and no shares shall be
issued under the Plan, until the Plan is approved by the Corporation's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the Plan Effective Date, then all options previously granted under
this Plan shall terminate and cease to be outstanding, and no further options
shall be granted and no shares shall be issued under the Plan.

      B. The 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 Plan Effective Date. All options outstanding under the
Predecessor Plan on the Plan Effective Date shall be incorporated into the Plan
at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.

      C. One or more provisions of the Plan, including (without limitation) the
option/vesting acceleration provisions of Article Two relating to Changes in
Control, 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. The Plan shall terminate upon the earlier of (i) July 28, 2010, or (ii)
the date the Board terminates the Plan. 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.

V.    AMENDMENT OF THE PLAN

      A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or

                                      -21-
<PAGE>   22
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 the 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 the 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 the Plan and held in escrow, together with
interest (at the applicable short term federal rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.

VI.   USE OF PROCEEDS

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

VII.  REGULATORY APPROVALS

      A. The implementation of the Plan, the granting of any stock option under
the 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 the 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 the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

VIII. NO EMPLOYMENT/SERVICE RIGHTS

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

                                      -22-
<PAGE>   23
                                    APPENDIX

      The following definitions shall be in effect under the Plan:

      A. "Automatic Option Grant Program" shall mean the automatic option grant
program in effect under the 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) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation's outstanding voting securities immediately
prior to such transaction,

                  (ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or

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

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

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

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

<PAGE>   24
      H. "Director Fee Option Grant Program" shall mean the director fee option
grant program in effect under the Plan.

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

      J. "Eligible Director" shall mean a non-employee Board member eligible to
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Articles One and Five.

      K. "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.

      L. "Exercise Date" shall mean the date on which the Corporation shall have
received written notice of the option exercise.

      M. "Fair Market Value" per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

                  (i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is reported on
the Nasdaq National Market or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists.

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

                  (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.

      N. "Hostile Take-Over" shall mean:

                  (i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of "beneficial ownership" (within the meaning of

                                      A-2
<PAGE>   25
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such stockholders
to accept, or

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

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

      P. "Misconduct" shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any intentional wrongdoing by such
person, whether by omission or commission, which adversely affects the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material
manner. This definition shall not in any way limit the grounds for the dismissal
or discharge of any person in the Service of the Corporation (or any Parent or
Subsidiary).

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

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

      S. "Option Surrender Value" shall mean the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation or, in the
event of a Hostile Take-Over, effected through a tender offer, the highest
reported price per share of Common Stock paid by the tender offeror in effecting
such Hostile Take-Over, if greater. However, if the surrendered option is an
Incentive Option, the Option Surrender Value shall not exceed the Fair Market
Value per share.

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

      U. "Parent" shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

                                      A-3
<PAGE>   26
      V. "Participant" shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.

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

      X. "Plan" shall mean this 2000 Stock Plan.

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

      Z. "Plan Effective Date" shall mean the date the Plan shall become
effective and shall be coincident with the Underwriting Date.

      AA. "Predecessor Plan" shall mean the Corporation's pre-existing 1999
Stock Plan in effect immediately prior to the Plan Effective Date hereunder.

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

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

                                      A-4
<PAGE>   27
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 the 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 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. "Underwriting Date" shall mean the date the Securities Exchange
Commission declares effective the Corporation's registration statement for its
initial public offering of the Common Stock.

      LL. "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

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