Document:

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                                                                     EXHIBIT 4.5

THIS PURCHASE OPTION HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THIS PURCHASE OPTION AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS PURCHASE OPTION MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR PURSUANT TO AN
EXEMPTION THEREFROM UNDER THE ACT AND SUCH LAWS, SUPPORTED BY AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.

THIS PURCHASE OPTION MAY NOT, IN ANY EVENT, BE TRANSFERRED TO ANY PERSON OR
ENTITY THAT IS NOT AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501,
PROMULGATED UNDER THE ACT.

                              UNIT PURCHASE OPTION

                               FOR THE PURCHASE OF

                     264,000 UNITS, EACH UNIT CONSISTING OF

                    ONE SHARE OF COMMON STOCK AND ONE WARRANT

                                       OF

                       VIDEO NETWORK COMMUNICATIONS, INC.

                            (A DELAWARE CORPORATION)

1.     Purchase Option.

       THIS CERTIFIES THAT, in consideration of $100 and other good and valuable
consideration duly paid by or on behalf of _________________________ ("Holder"),
as registered owner of this Purchase Option, to Video Network Communications,
Inc. ("Company"), Holder is entitled, at any time or from time to time after one
day following the six month anniversary of the date hereof ("Commencement
Date"), and at or before 5:00 p.m., Eastern Time, ______ __, ____ [54 months
after the Commencement Date] ("Expiration Date"), but not thereafter, to
subscribe for, purchase and receive, in whole or in part, up to 264,000 units
("Units") of the Company. If the Expiration Date is a day on which banking
institutions are authorized by law to close, then this Purchase Option may be
exercised on the next succeeding day that is not such a day in accordance with
the terms herein. During the period ending on the Expiration Date, the Company
agrees not to take any action that would terminate the Purchase Option.

       Each Unit consists of one share of the Company's common stock
("Share(s)") and one warrant ("Warrant(s)"). The Warrants are identical to the
warrants of the Company currently trading on Nasdaq under the symbol "VNCIW"
("Public Warrants"). Notwithstanding the foregoing, (i) the Holder agrees that
the Warrants may not be exercised until one day following the six-month
anniversary of the closing ("Closing") of the VNCI Private Placement (as defined
below); (ii) the Company will register the Warrants, and Extra Warrants, if any
(as defined below) and the shares underlying such warrants in accordance with
the registration rights described hereinbelow and as granted to the subscribers
in the VNCI Private Placement; and (iii) the Company agrees not to redeem the
Warrants (even if the conditions to redemption set forth in the Warrant
Agreement have been satisfied) until (a) one day following the six-month
anniversary of the Closing and (b) the Warrants, Extra Warrants and the shares
underlying such warrants are registered in accordance with the registration
rights described hereinbelow and as granted to the subscribers in the VNCI
Private Placement. Each Unit is identical to those securities issued to
investors pursuant to the Company's Confidential Private Placement Memorandum
dated ______ __, 2000 ("Memorandum"). This Purchase Option is initially
exercisable at a price per Unit equal to $______[, THE GREATER OF (i) $1.625 OR
(ii) $0.125 ABOVE THE CLOSING SALES PRICE OF A SHARE ON THE DAY PRIOR TO THE
CLOSING]; provided, however, that upon the occurrence of any of the events
specified in Section 6 hereof, the rights granted by this Purchase Option,
including the exercise price and the number of shares of

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Common Stock, Warrants and Extra Warrants, if any, to be received upon such
exercise, shall be adjusted as therein specified. The term "Exercise Price"
shall mean the initial exercise price or, if adjustments thereto have been made,
the adjusted exercise price. The Units and the shares of Common Stock and
Warrants comprising the Units, including the "Extra Warrants" (as described in
Section 5 hereof), are sometimes collectively referred to herein as the
"Securities." This Purchase Option is being issued in connection with the
issuance and sale by the Company of identical securities to investors in a
private placement for which EarlyBirdCapital, Inc. ("EBC") has acted as
placement agent ("VNCI Private Placement").

2.     Exercise.

       2.1    Exercise Form. In order to exercise this Purchase Option, the
exercise form attached hereto must be duly executed and completed and delivered
to the Company, together with this Purchase Option and payment of the Exercise
Price (except as provided in Section 2.3 hereof) in cash or by certified check
or official bank check for the Units being purchased. If the subscription rights
represented hereby shall not be exercised at or before 5:00 p.m., Eastern time,
on the Expiration Date, except as otherwise provided in Section 1 hereof, this
Purchase Option shall become null and be void without further force or effect,
and all rights represented hereby shall cease and expire.

       2.2    Legend. The Warrants and any Extra Warrants purchased under this
Purchase Option shall bear the legends contained on the Warrants and any Extra
Warrants issued to investors in the VNCI Private Placement. Each certificate for
Common Stock purchased under this Purchase Option shall bear a legend
substantially as follows unless the issuance of such Securities by the Company
have been registered under the Securities Act of 1933, as amended ("Securities
Act"):

              This security has been acquired for investment and has not been
              registered under the Securities Act of 1933, as amended, or
              applicable state securities laws. The securities may not be sold,
              pledged or transferred in the absence of such registration or an
              exemption therefrom under said Act and such laws, supported by an
              opinion of counsel, reasonably satisfactory to the Company and its
              counsel, that such registration is not required.

       2.3    Conversion Right.

              (1)    Determination of Amount. In lieu of the payment of the
Exercise Price (and in lieu of being entitled to receive Common Stock (except as
provided below), Warrants or Extra Warrants) in the manner required by Section
2.1, the Holder shall have the right (but not the obligation) to convert any
exercisable but unexercised portion of this Purchase Option into Common Stock
("Conversion Right") as follows: upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of any
portion of the Exercise Price in cash) that number of shares of Common Stock
equal to the quotient obtained by dividing (x) the "Value" (as determined below)
of the portion of the Purchase Option being converted by (y) the Common Market
Price (as defined below) on the second trading day prior to the date the Company
receives this Purchase Option for conversion pursuant to Section 2.3.2 hereof.
The "Value" of the portion of the Purchase Option being converted shall equal
the remainder derived from subtracting (a) (i) the Exercise Price multiplied by
(ii) the number of Units underlying the portion of this Purchase Option being
converted from (b) the product of the number of Units under the portion of the
Purchase Option being converted multiplied by the remainder derived from
subtracting (y) the Exercise Price from (z) the sum of the Common Market Value
plus the Warrant Market Value (as defined below). As used herein, the term
"Common Market Price" at any date shall be deemed to be the average last
reported sale price of the Common Stock for the five trading days immediately
preceding such date, as officially reported by the principal securities exchange
on which the Common Stock is listed or admitted to trading, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or if any such exchange on which the Common Stock is listed is not the principal
trading market for the Common Stock, the average last reported sale price of the
Common Stock for the five trading days

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immediately preceding such date as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the Nasdaq National Market or the
Nasdaq SmallCap, or, if applicable, the OTC Bulletin Board, or if the Common
Stock is not listed or admitted to trading on the Nasdaq National Market or the
Nasdaq SmallCap or OTC Bulletin Board or similar organization, as determined in
good faith by resolution of the Board of Directors of the Company, based on the
best information available to it. As used herein, the term "Warrant Market
Price" at any date shall be deemed to be the average last reported sale price of
the Warrants for the five trading days immediately preceding such date, as
officially reported by the principal securities exchange on which the Warrants
are listed or admitted to trading, or, if the Warrants are not listed or
admitted to trading on any national securities exchange or if any such exchange
on which the Warrants are listed is not the principal trading market for the
Warrants, the average last reported sale price of the Warrants for the five
trading days immediately preceding such date as furnished by the NASD through
the Nasdaq National Market or the Nasdaq SmallCap, or, if applicable, the OTC
Bulletin Board, or if the Warrants are not listed or admitted to trading on the
Nasdaq National Market or the Nasdaq SmallCap or OTC Bulletin Board or similar
organization, then the Common Market Price minus the exercise price of the
Warrants.

              (2)    Mechanics of Conversion Right. The Conversion Right may be
exercised by the Holder on any business day on or after the Commencement Date
and not later than the Expiration Date, except as otherwise provided in Section
1 hereof, by delivering to the Company this Purchase Option with a duly executed
exercise form attached hereto with the conversion section completed exercising
the Conversion Right.

3.     Transfer.

       3.1    General Restrictions; Accredited Investors Only. The Holder of
this Purchase Option, by its acceptance hereof, agrees that it will not sell,
transfer or assign or hypothecate this Purchase Option prior to the Commencement
Date to anyone other than (i) an officer of EBC or (ii) if the Purchase Option
was issued and sold to a designee of ECN pursuant to Section 1.3 of the Agency
Agreement between the Company and EBC dated ___________, 2000, an officer or
partner of any such designee. On and after the Commencement Date, the Holder of
this Purchase Option may sell, transfer or assign or hypothecate this Purchase
Option to anyone only upon compliance with, or pursuant to exemptions from,
applicable securities laws and only if the transferee shall certify to the
Company that the transferee is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act. In order to make any permitted assignment,
the Holder must deliver to the Company the assignment form attached hereto duly
executed and completed both by the Holder and the transferee as applicable,
together with this Purchase Option and payment of all transfer taxes, if any,
payable in connection therewith. The Company shall immediately transfer this
Purchase Option on the books of the Company and shall execute and deliver a new
Purchase Option or Purchase Options of like tenor to the appropriate assignee(s)
expressly evidencing the right to purchase the aggregate number of shares of
Common Stock and Warrants purchasable hereunder or such portion of such number
as shall be contemplated by any such assignment.

       3.2    Restrictions Imposed by the Securities Act. This Purchase Option
and the Securities underlying this Purchase Option shall not be transferred
unless and until (i) the Company has received the opinion of counsel for the
Holder that this Purchase Option or the Securities, as the case may be, may be
transferred pursuant to an exemption from registration under the Securities Act
and applicable state law, the availability of which is established to the
reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Purchase Option or Securities, as the case may be, has been
filed by the Company and declared effective by the Securities and Exchange
Commission ("Commission") and remains effective and current and is in compliance
with applicable state law.

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4.     New Purchase Options to be Issued.

       4.1    Partial Exercise or Transfer. Subject to the restrictions in
Section 3 hereof, this Purchase Option may be exercised or assigned in whole or
in part. In the event of the exercise or assignment hereof in part only, upon
surrender of this Purchase Option for cancellation, together with the duly
executed exercise or assignment form and funds sufficient to pay any Exercise
Price and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Purchase Option of like tenor to this Purchase Option in
the name of the Holder evidencing the right of the Holder to purchase the
aggregate number of Units purchasable hereunder as to which this Purchase Option
has not been exercised or assigned.

       4.2    Lost Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Purchase Option and of reasonably satisfactory indemnification, the Company
shall execute and deliver a new Purchase Option of like tenor and date. Any such
new Purchase Option executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute a substitute contractual obligation
on the part of the Company.

5.     Registration Obligation/Extra Warrants.

       5.1    The Holder of this Purchase Option shall be entitled to the same
registration rights with respect to (i) the resale of this Purchase Option, (ii)
the sale of the Common Stock and Warrants issuable upon exercise of this
Purchase Option, (iii) the sale of the Extra Warrants (as defined in the
Subscription Agreement referred to below), and (iv) the sale of the Common Stock
issuable upon exercise of the Warrants included in the Units and the Extra
Warrants (collectively, the "Registrable Securities") as the Company has granted
to investors in the VNCI Private Placement as described in the Subscription
Agreement and Investor Information Statement entered into by the Company and
each such investor a form of which is attached as Exhibit __ to the Memorandum
("Subscription Agreement"), including, without limitation and subject to the
limitations and obligations set forth therein, the mandatory registration
obligation set forth in Section 5.A.(1) of Schedule 1 to the Subscription
Agreement (described in more detail below in subsection 5.3 below) and the
provisions relating thereto as set forth in Section 5.A of Schedule 1 to the
Subscription Agreement.

       5.2    Successors and Assigns. The registration rights granted to the
Holders inure to the benefit of all the Holders' successors, heirs, pledgees,
assignees, transferees and purchasers of the Registrable Securities.

       5.3    Mandatory Registration Obligation. The Company shall file, within
45 days after the Closing of the VNCI Private Placement ("Closing"), a
Registration Statement ("Registration Statement") under the Securities Act with
the SEC and make appropriate filings in such states as EBC shall reasonably
specify, registering for sale or resale, as the case may be and at the sole
discretion of the Placement Agent, this Purchase Option and the Common Stock,
Warrants and "Extra Warrants" referred to below underlying the Purchase Option.
The Company shall use its best efforts to have the Registration Statement
declared effective by the 120th day after the Closing ("Target Date"). If the
Registration Statement is not declared effective by the SEC and cleared by the
National Association of Securities Dealers, Inc. ("NASD") by the Target Date,
then on the Target Date and on each monthly anniversary of the Target Date
thereafter until the earlier of the effective date of the Registration Statement
("Effective Date") or the nineteenth monthly anniversary of the Target Date, the
Company shall issue to EBC (and its designees), Warrants ("Extra Warrants") to
purchase a number of shares of Common Stock equal to 5% of the number of
Warrants underlying this Purchase Option. The Extra Warrants shall have the same
terms as the Warrants sold in the Offering. The Company shall keep the
Registration Statement current and effective until all the securities registered
thereunder are sold or can be sold freely under an appropriate exemption,
without limitation. The Company shall bear all fees and expenses incurred by the
Company in connection with the preparation of the Registration Statement and
filing it with the SEC and NASD, including the fees (no more

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than $15,000) of one special counsel for all of the holders of the securities
sold in the VNCI Private Placement and of the Purchase Options.

6.     Adjustments.

       6.1    Adjustments to Exercise Price and Number of Securities. The
Exercise Price and the number of Units (as well as the number of any Extra
Warrants issuable hereunder) underlying the Purchase Option shall be subject to
adjustment from time to time as hereinafter set forth:

              (1)    Stock Dividends, Recapitalization, Reclassification,
Split-Ups. If after the date hereof, and subject to the provisions of Section
6.2 below, the number of outstanding shares of Common Stock is increased by a
stock dividend payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable upon exercise of the Purchase Option shall be increased in proportion
to such increase in outstanding shares. Additionally in such event, the number
of Warrants and Extra Warrants, if any, shall be increased on an "as if
exercised" basis, as if the Purchase Option had been exercised, the Warrants and
Extra Warrants, if any, underlying the Purchase Option were outstanding, and
then, in accordance with the terms of the Warrant Agreement between the Company
and Continental Stock Transfer & Trust Company dated June 18, 1999, as amended
August __, 2000 ("Warrant Agreement").

              (2)    Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.2, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, upon the effective date
thereof, the number of shares of Common Stock issuable on exercise of this
Purchase Option shall be decreased in proportion to such decrease in outstanding
shares. Additionally in such event, the number of Warrants and Extra Warrants,
if any, shall be decreased on an "as if exercised" basis, as if the Purchase
Option had been exercised, the Warrants and Extra Warrants, if any, underlying
the Purchase Option were outstanding, and then, in accordance with the terms of
the Warrant Agreement.

              (3)    Adjustments in Exercise Price. Whenever the number of
shares of Common Stock issuable upon exercise of this Purchase Option is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares purchasable upon the exercise of this Purchase Option immediately prior
to such adjustment, and (y) the denominator of which shall be the number of
shares so purchasable immediately thereafter.

              (4)    Replacement of Securities upon Reorganization, etc. In case
of any reclassification or reorganization of the outstanding shares of Common
Stock (other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
solely affects the par value of such shares of Common Stock), or in the case of
any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is
dissolved, the Holder of this Purchase Option shall have the right thereafter
(until the expiration of the right of exercise of this Purchase Option) to
receive upon the exercise hereof, for the same aggregate Exercise Price payable
hereunder immediately prior to such event, the kind and amount of shares of
stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or other transfer, by a Holder of the number of shares
of Common Stock of the Company obtainable upon exercise of this Purchase Option
immediately prior to such event. The provisions of this Section 6.1.4 shall
similarly apply to successive reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.

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              (5)    Changes in Form of Purchase Option. This form of Purchase
Option need not be changed because of any change pursuant to this Section, and
Purchase Options issued after such change may state the same Exercise Price and
the same number of securities as are stated in the Purchase Options initially
issued pursuant to this Purchase Option. The acceptance by any Holder of the
issuance of new Purchase Options reflecting a required or permissive change
shall not be deemed to waive any rights to a prior adjustment or the computation
thereof.

       6.2    Redemption of Warrants. Notwithstanding anything to the contrary
contained in the form of Warrants issued to investors in the VNCI Private
Placement, the Warrants and Extra Warrants, if any, issuable upon exercise of
this Purchase Option cannot, under any circumstances, be redeemed by the Company
until such time as they have been issued to the Holder.

       6.3    Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of a share of Common Stock
issuable upon the exercise or transfer of this Purchase Option, nor shall it be
required to issue scrip or pay cash in lieu of any fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up or down to the nearest whole number of
shares of Common Stock or other securities, properties or rights.

       6.4    Notice of Adjustment. Upon the happening of any event requiring an
adjustment of the Exercise Price hereunder, the Company shall forthwith give
written notice thereof to the Holders stating the adjusted Exercise Price and
the adjusted number of shares of Common Stock issuable upon exercise of this
Purchase Option resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.

7.     Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Purchase Option, the number of shares of
Common Stock and the Warrants and Extra Warrants, if any, issuable upon exercise
of this Purchase Option, such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Purchase Options and
payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon the exercise of this Purchase Option and the securities
underlying the Purchase Option shall be duly and validly issued, fully paid and
non-assessable and not subject to preemptive rights of any stockholder. As long
as the Purchase Options shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock, Warrants and Extra Warrants, if
any, issuable upon exercise of the Purchase Options and the Common Stock
issuable upon exercise of the Warrants and Extra Warrants, if any, underlying
the Purchase Options to be listed (subject to official notice of issuance) on
all securities exchanges (or, if applicable, on Nasdaq) on which the Common
Stock and/or Warrants are then listed and/or quoted.

8.     Notices of Record Date. Nothing herein shall be construed as conferring
upon the Holders the right to vote or consent as a stockholder for the election
of directors or any other matter, or as having any right whatsoever as a
stockholder of the Company, other than as set forth in Section __ of the Agency
Agreement between EBC and the Company dated ________ __, 2000. In case:

       (a)    the Company shall take a record of the holders of its Common Stock
and Warrants (and/or other stock or securities at the time deliverable upon the
exercise of this Purchase Option) for the purpose of entitling or enabling them
to receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of any class or any other securities, or to
receive any other right, or

       (b)    of any capital reorganization of the Company, any reclassification
of the capital stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the surviving entity), or any transfer of all or substantially
all of the assets of the Company, or

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       (c)    of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will deliver
or cause to be delivered to the Holder a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Purchase Option) shall be entitled to
exchange their shares of Common Stock, Warrants and/or Extra Warrants, if any,
(or such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least ten
(10) days prior to the record date or effective date for the event specified in
such notice, provided that the failure to mail such notice shall not affect the
legality or validity of any such action.

       8.1    Transmittal of Notices. All notices, requests, consents and other
communications under this Purchase Option shall be in writing and shall be
deemed to have been duly made on the date of delivery if delivered personally or
sent by overnight courier, with acknowledgment of receipt to the party to whom
notice is given, or on the fifth day after mailing if mailed to the party to
whom notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of the Purchase Option, to the address of such Holder as shown
on the books of the Company, or (ii) if to the Company, to its principal
executive office.

9.     Miscellaneous.

       9.1    Amendments. The Company and EBC may from time to time supplement
or amend this Purchase Option without the approval of any of the Holders in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
or to make any other provisions in regard to matters or questions arising
hereunder that the Company and EBC may deem necessary or desirable and that the
Company and EBC deem shall not adversely affect the interest of the Holders. All
other modifications or amendments shall require the written consent of the party
against whom enforcement of the modification or amendment is sought.

       9.2    Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Purchase
Option.

       9.3    Entire Agreement. This Purchase Option (together with the
registration rights provisions in the Subscription Agreement referred to in this
Purchase Option) constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.

       9.4    Binding Effect. This Purchase Option shall inure solely to the
benefit of and shall be binding upon, the Holder and the Company and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Purchase Option or any provisions
herein contained.

       9.5    Governing Law; Submission to Jurisdiction. This Purchase Option
shall be governed by and construed and enforced in accordance with the laws of
the State of New York, without giving effect to conflict of laws. Each of the
Company and the Holder hereby agrees that any action, proceeding or claim
against it arising out of, or relating in any way to this Purchase Option shall
be brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. Each of the Company
and the Holder hereby waives any objection to such exclusive jurisdiction and
that such courts represent an inconvenient forum. Any process or summons to be
served upon the Company may be

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served by transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at its principal business
offices. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.

       9.6    Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Purchase Option shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect the
validity of this Purchase Option or any provision hereof or the right of the
Company or any Holder to thereafter enforce each and every provision of this
Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of
any of the provisions of this Purchase Option shall be effective unless set
forth in a written instrument executed by the party or parties against whom or
which enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver of
any other or subsequent breach, non-compliance or non-fulfillment.

       9.7    Exchange Agreement. As a condition of the Holder's receipt and
acceptance of this Purchase Option, Holder agrees that, at any time prior to the
complete exercise of this Purchase Option by Holder, if the Company and EBC
enter into an agreement ("Exchange Agreement") pursuant to which they agree that
all outstanding Purchase Options will be exchanged for securities or cash or a
combination of both, then Holder shall agree to such exchange and become a party
to the Exchange Agreement.

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       IN WITNESS WHEREOF, the Company has caused this Purchase Option to be
signed by its duly authorized officer as of the __ day of ____ , 2000.

                                              VIDEO NETWORK COMMUNICATIONS, INC.

                                              By:
                                                 -------------------------------
                                                 Name:
                                                 Title:

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                               NOTICE OF EXERCISE
                     To Be Executed by the Registered Holder
                 In Order to Exercise this Unit Purchase Option

       The undersigned registered Holder hereby irrevocably elects to exercise
the attached Purchase Option and to purchase ___ Units of Video Network
Communications, Inc. (and to receive any Extra Warrants issuable upon such
exercise) and hereby makes payment of $________ (at the rate of $____ per Unit)
in payment of the Exercise Price pursuant thereto. Please issue the securities
comprising the Units as to which this Purchase Option is exercised in accordance
with the instructions given below. The undersigned acknowledges that upon
exercise of this Purchase Option, the Company will issue certificates evidencing
the shares of Common Stock, Warrants, and Extra Warrants underlying the Units
for which this Purchase Option is exercised, and no Units will be issued.

                                       or

       The undersigned Registered Holder hereby irrevocably elects to exercise
the attached Purchase Option and to purchase ___ Units of Video Network
Communications, Inc. (and to receive any Extra Warrants issuable upon such
exercise) by surrender of the unexercised portion of the attached Purchase
Option (with a "Value" of $______ based on a "Common Market Price" of $______
and a "Warrant Market Value" of $______). Please issue the securities comprising
the Units as to which this Purchase Option is exercised in accordance with the
instructions given below.

PLEASE ISSUE CERTIFICATES AS FOLLOWS:

----------------------------------------  PLEASE INSERT SOCIAL SECURITY OR OTHER
                                          IDENTIFYING NUMBER
----------------------------------------

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

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

--------------------------------------------------------------------------------
                     (please print or type name and address)
and be delivered to

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

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

--------------------------------------------------------------------------------
                     (please print or type name and address)

and if such number of Units  exercised  shall not be all the Units  evidenced by
the attached Purchase Option, that a new Purchase Option for the balance of such
Purchase  Option be registered in the name of, and delivered to, the  registered
Holder at the address stated below.

<TABLE>
<S>                                            <C>
Dated:
      -------------                             --------------------------------
                                                (Signature of Registered Holder)

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

                                                --------------------------------
                                                (Address)

                                                --------------------------------
                                                (Taxpayer Identification Number)

                                                --------------------------------
                                                Signature Guaranteed
</TABLE>

                                       10
<PAGE>   11

                                 ASSIGNMENT FORM

To be executed by the Registered Holder
In order to Assign Purchase Option

FOR VALUE RECEIVED,______________________ hereby sell, assigns and transfer unto

----------------------------------------  PLEASE INSERT SOCIAL SECURITY OR OTHER
                                          IDENTIFYING NUMBER
----------------------------------------

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

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

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

--------------------------------------------------------------------------------
                     (please print or type name and address)

______________________ of the Purchase Options represented by the attached
instrument, and hereby irrevocably constitutes and appoints
________________________ Attorney to transfer these Purchase Options on the
books of the Company, with full power of substitution in the premises.

<TABLE>
<S>                                           <C>
Dated:                                         X
      ----------------                          --------------------------------
                                                (Signature of Registered Holder)

                                                --------------------------------
                                                    (Signature Guaranteed)
</TABLE>

THE SIGNATURE ON THE ASSIGNMENT OR THE PURCHASE FORM MUST CORRESPOND TO THE NAME
AS WRITTEN UPON THE FACE OF THIS PURCHASE OPTION CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST
BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.

                      CERTIFICATION OF STATUS OF TRANSFEREE
            TO BE EXECUTED BY THE TRANSFEREE OF THIS PURCHASE OPTION

       The undersigned transferee hereby certifies to the registered Holder and
to Video Network Communications, Inc. that the transferee is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended.

Dated:                                        X
      ----------------                         ---------------------------------
                                                   (Signature of Transferee)

                                       11<PAGE>   1
                                                                     EXHIBIT 4.2

                             BURR-BROWN CORPORATION
                            1993 STOCK INCENTIVE PLAN

                 (As Amended and Restated as of August 24, 2000)

PREAMBLE

     The BURR-BROWN CORPORATION previously adopted the Burr-Brown Research
Corporation Incentive Stock Plan of 1981("Original Plan"), which was amended and
restated on several dates (most recently March 4, 1997) as the Burr-Brown
Corporation 1993 Stock Incentive Plan ("1993 Plan"). This amendment and
restatement of the 1993 Plan is effective as of August 24, 2000 ("Effective
Date") in connection with the acquisition of the Burr-Brown Corporation by Texas
Instruments Incorporated ("Parent") and shall apply to all outstanding Option
Grants and Stock Issuances subject to the 1993 Plan.

                                   ARTICLE ONE
                                     GENERAL

         1. Definitions. As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the contrary:

         1.1 "Board" shall mean the Board of Directors of Parent.

         1.2 "Change in Control" shall mean a change in ownership or control of
the Company effected through either of the following transactions:

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

               1.2.2 there is a change in the composition of the Board over a
         period of twenty-four (24) consecutive months or less such that a
         majority of the Board members (rounded up to the next whole number)
         ceases, by reason of one or more proxy contests for the election of
         Board members, 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 such election or
         nomination was approved by the Board.

<PAGE>   2

         1.3 "Code" shall mean the Internal Revenue Code of 1986.

         1.4 "Committee" shall mean a Committee of the Board designated by the
Board to administer the Plan. Unless otherwise determined by the Board, the
Committee shall be the Compensation Committee of the Board.

         1.5 "Company" shall mean Texas Instruments Tucson Corporation (formerly
known as Burr-Brown Corporation).

         1.6 "Corporate Transaction" shall mean any of the following
stockholder-approved transactions to which the Company is a party:

               1.6.1 a merger, consolidation or other reorganization in which
         the Company is not the surviving entity, except for a transaction the
         principal purpose of which is to change the state in which the Company
         is incorporated,

               1.6.2 the sale, transfer or other disposition of all or
         substantially all of the assets of the Company in complete liquidation
         or dissolution of the Company, or

               1.6.3 any reverse merger in which the Company is the surviving
         entity but in which securities possessing more than fifty percent (50%)
         of the total combined voting power of the Company's outstanding
         securities are transferred to a person or persons different from those
         who held such securities immediately prior to such merger.

         1.7 "Fair Market Value" shall mean, with respect to Stock, the closing
price per share of Stock on the last preceding date to the date in question or,
if there is no such price, then the Fair Market Value shall be the closing price
on the last preceding date for which such price exists. With respect to property
other than Stock, the fair market value of such property shall be determined by
such methods or procedures as shall be established from time to time by the
Committee.

         1.8 "Hostile Take-Over" shall mean a change in ownership of the Company
in which any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which the
Board does not recommend such stockholders to accept.

         1.9 "Option" shall mean an option to purchase Stock granted pursuant to
the provisions of the Discretionary Option Grant or Automatic Option Grant
Program.

                                       2
<PAGE>   3

         1.10 "Optionee" shall mean any person to whom an Option is granted
pursuant to the Discretionary Option Grant or Automatic Option Grant Program.

         1.11 "Original Plan" shall mean the Burr-Brown Research Corporation
Incentive Stock Plan of 1981, as amended and restated in 1983.

         1.12 "Participant" shall mean an employee or consultant to whom Stock
is issued pursuant to the provisions of the Stock Issuance Program.

         1.13 "Plan" shall mean the Burr-Brown Corporation 1993 Stock Incentive
Plan, as amended and restated as of the Effective Date, and thereafter as
amended from time to time.

         1.14 "Service" shall mean the performance of services on a periodic
basis to the Company (or any Subsidiary corporation or Parent) in the capacity
of an employee, a non-employee member of the board of directors or an
independent consultant or advisor, except to the extent otherwise specifically
provided in the applicable Option or Stock issuance agreement executed pursuant
to the provisions of the Plan.

         1.15 "Stock" shall mean the Common Stock of the Parent.

         1.16 "Subsidiary" or "Subsidiaries" shall mean any corporation, the
majority of the outstanding capital stock of which is owned, directly or
indirectly, by the Company.

         1.17 "Take-Over Price" shall mean the greater of (a) the Fair Market
Value per share of Stock subject to an outstanding Option on the date that
Option is surrendered to the Company in connection with a Hostile Take-Over or
(b) the highest reported price per share of such Stock paid by the tender
offeror in effecting such Hostile Take-Over. However, if the surrendered Option
is an incentive stock option under Federal tax laws, the Take-Over Price shall
not exceed the clause (a) price per share.

         2. Purpose. This Plan is intended to benefit the Company by (i)
providing an incentive to and encouraging Stock ownership by key employees
(including officers), non-employee members of the Board and consultants of the
Company and its Subsidiaries; (ii) providing such key employees, non-employee
Board members and consultants the opportunity to acquire a proprietary interest
or to increase their proprietary interest in the Company's success; and (iii)
encouraging such individuals to remain in the Service of the Company or its
Subsidiaries.

         3. Structure of the Plan.

         3.1 Stock Programs. The Plan shall be divided into three (3) separate
components:

               - The Discretionary Option Grant Program, under which eligible
     individuals may, at the discretion of the

                                       3
<PAGE>   4

     Committee, be granted Options to purchase shares of Stock in accordance
     with the provisions of Article Two.

               - The Stock Issuance Program, under which eligible individuals
     may be issued shares of Stock directly, either through the immediate
     purchase of such shares at a price not less than their Fair Market Value at
     the time of issuance or as a bonus tied to the performance of services or
     the Company's attainment of financial objectives, without any cash payment
     required of the recipient.

               - The Automatic Option Grant Program, under which each
     non-employee Board member shall automatically receive special Option grants
     at periodic intervals in accordance with the provisions of Article Four.

         3.2 General Provisions. Unless the context clearly indicates otherwise,
the provisions of Articles One and Five shall apply to the Discretionary Option
Grant, Stock Issuance and Automatic Option Grant Programs and shall accordingly
govern the interests of all individuals under the Plan.

         4. Administration.

         (a) The Plan shall be administered by the Committee. The Committee
shall be appointed by the Board and shall consist of not less than three
directors. The Board may designate one or more directors as alternate members of
the Committee who may replace any absent or disqualified member at any meeting
of the Committee. No member or alternate member of the Committee shall be
eligible, while a member or alternate member, for participation in the Plan. A
director may serve as a member or alternate member of the Committee only during
periods in which a director is an "outside director" as described in Section
162(m) of the Code. The Committee may issue rules and regulations for
administration of the Plan. It shall meet at such times and places as it may
determine. A majority of the members of the Committee shall constitute a quorum.
Subject to the terms of the Plan and applicable law, the Committee shall have
full power and authority to: (i) determine whether, to what extent, and under
what circumstances Options may be settled or exercised in cash, Shares, other
securities, other options, or other property, or canceled, forfeited or
suspended, and the method or methods by which Options may be settled, exercised,
canceled, forfeited or suspended; (ii) determine whether, to what extent, and
under what circumstances cash, stock, other securities, other options, other
property, and other amounts payable with respect to an award under the Plan
shall be deferred either automatically or at the election of the holder thereof
or of the Committee; (iii) interpret and administer the Plan and any instrument
or agreement relating to, or Option or Stock issuance made under, the Plan; (vi)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
(v) determine whether and to what extent Options or Stock Issuances should
comply or continue to comply with any requirement of statute or regulation; and
(vi) make any other determination and take any

                                       4
<PAGE>   5

other action that the Committee deems necessary or desirable for the
administration of the Plan.

         (b) No member of the Board and no member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Discretionary Option Grant or Stock Issuance Program under its jurisdiction or
any Option grant or Stock issuance under it.

         (c) All decisions of the Committee shall be final, conclusive and
binding upon all parties, including the Company, the stockholders and the
Participants.

         5. Option Grants and Stock Issuances.

         5.1 Notwithstanding any other provision in the Plan to the contrary, no
further Option Grants or Stock Issuances shall be made after the Effective Date.

         6. Stock.

         6.1 Stock Available. The Stock to be issued under this Plan may be
either authorized but unissued shares or shares issued and thereafter reacquired
by the Company. The aggregate number of shares of Stock which may be issued
pursuant to this Plan shall not exceed at any time 3,402,048 shares,* subject to
adjustment from time to time as provided in paragraph 6.3 below.

         6.2 In no event may the aggregate number of shares of Stock for which
any one individual participating in the Plan may be granted Options and direct
Stock issuances exceed 1,170,000 shares in the aggregate over the term of the
Plan. For purposes of such limitation, no Option grants or direct Stock
issuances made prior to January 1, 1994 shall be taken into account.

         6.3 If any change is made to the securities issuable under the Plan
(whether by reason of merger, consolidation, reorganization, recapitalization,
Stock dividend, Stock split, combination of shares, exchange of shares or other
change in capitalization) then, subject to the provisions of Section 2 of
Article Two, Section 2 of Article Three and Section 3 of Article Four, the
Committee may make appropriate adjustments in the maximum number and/or kind of
securities issuable under the Plan, the maximum number and/or kind of securities
for which Option grants and direct Stock issuances may be made to any one
participant in the aggregate after December 31, 1993 and the number and/or kind
of securities for which automatic Option grants are to be subsequently made to
newly-elected and continuing non-employee Board members under the Automatic
Option Grant Program in order to reflect the effect of such change upon the
Company's capital structure, and may make appropriate adjustments to the number
and/or kind of securities and Option price of the securities subject to each
outstanding Option to prevent the dilution of benefits thereunder. The
adjustments determined by the Committee shall be final, binding and conclusive.

                                       5
<PAGE>   6

         6.4 Restrictions. Shares issued under the Discretionary Option Grant or
Stock Issuance Program may be subject to such restrictions on transfer,
repurchase rights or other restrictions as shall be determined by the Committee.

         7. Term of Plan.

         7.1 The Discretionary Option Grant and Stock Issuance Programs under
the Plan were adopted by the Board on February 11, 1994, and the date of such
adoption accordingly constitutes the effective date for those two programs and
the Plan. The Automatic Option Grant Program under the Plan was adopted by the
Board on February 11, 1994 and became effective upon approval by the
stockholders at the 1994 Annual Meeting held on April 22, 1994. The date of such
stockholder approval accordingly constitutes the effective date of the Automatic
Option Grant Program. No further Option Grants or Stock Issuances shall be made
under the Discretionary Option Grant, Stock Issuance and Automatic Option Grant
Programs from and after the Effective Date.

         7.2 Amendment. The Plan is amended and restated by the Board of
Directors of the Company as of the Effective Date and shall apply to all
outstanding Option Grants and Stock Issuances under the March 4, 1997
restatement of the Plan and to the fullest extent permitted to all other Option
Grants and Stock Issuances.

         Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an agreement pertaining to the applicable Option Grant or
Stock Issuance or in the Plan, the Board may amend, alter, suspend, discontinue,
or terminate the Plan or any portion thereof at any time; provided, however,
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without (i) stockholder approval is such approval is necessary to
comply with any tax or regulatory requirement for which or with which the Board
deems it necessary or desirable to qualify or comply or (ii) the consent of the
affected Participant, if such action would adversely affect the rights of such
Participant under any outstanding Option Grant or Stock Issuance.
Notwithstanding anything to the contrary herein, the Committee may amend the
Plan in such manner as may be necessary to enable the Plan to achieve its stated
purposes in any jurisdiction outside the United States in a tax-efficient manner
and in compliance with local rules and regulations.

         The Committee may waive any conditions or rights under, amend any terms
of, or amend, alter, suspend, discontinue or terminate, any Options theretofore
granted, prospectively or retroactively, without the consent of any relevant
Participant or holder or beneficiary of any Options; provided, however, that no
such action shall impair the rights of any affected Participant or holder or
beneficiary under any Options theretofore granted under the Plan; and provided
further that, except as provided in Section 6.3, no such action shall reduce the
exercise price of any Option established at the time of grant thereof.

                                       6
<PAGE>   7

         The Committee shall be authorized to make adjustments in the terms and
conditions of, and the criteria included in, Option or Stock Issuances in
recognition of unusual or non-recurring events (including, without limitation,
the events described in Section 6.3 affecting the Company, or the financial
statements of the Company) or of changes in applicable laws, regulations or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
the Plan or any Option or Stock Issuances in the manner and to the extent it
shall deem desirable to carry the Plan into effect.

         7.3 Term of Plan. Unless sooner terminated in accordance with Section 2
of Article Two, Section 2 of Article Three, Section 3 of Article Four or by the
Board, the Plan shall terminate on the earlier of:

               (i) February 10, 2004; or

               (ii) the date on which all shares available for issuance under
     the Plan shall have been issued or their availability cancelled pursuant to
     the surrender of Options granted hereunder.

     If the date of termination is determined under (i) above, then Options and
unvested Stock issuances outstanding on such date shall continue to have force
and effect in accordance with the provisions of the instruments evidencing such
Options and Stock issuances.

                                   ARTICLE TWO
                       DISCRETIONARY OPTION GRANT PROGRAM

         1. Terms and Conditions of Options. Options granted pursuant to this
Discretionary Option Grant Program shall be authorized by the Committee and may
be either Incentive Options or Nonstatutory Options. The granted Options shall
be evidenced by instruments in such form and including such terms and conditions
as the Committee shall from time to time approve; provided, however, that each
such instrument shall comply with the following terms and conditions:

         1.1 Option Price.

               1.1.1 The Option price per share shall be fixed by the Committee,
     but in no event shall the Option price per share be less than the Fair
     Market Value of a share of the option Stock on the date of the Option
     grant.

               1.1.2 Subject to the provisions of Section 1 of Article Five, the
     Option price shall become immediately due and payable upon exercise of the
     Option and shall be payable in one of the alternative forms specified
     below:

                                       7
<PAGE>   8

               1.1.2.1 Full payment in United States dollars in cash or cash
     equivalents;

               1.1.2.2 Full payment in shares of Stock valued at Fair Market
     Value on the date the Option is exercised and held for the requisite period
     necessary to avoid a charge to the Company's earnings for financial
     reporting purposes;

               1.1.2.3 A combination of shares of Stock valued at Fair Market
     Value on the date the Option is exercised and held for the requisite period
     necessary to avoid a charge to the Company's earnings for financial
     reporting purposes, and cash or cash equivalents, equal in the aggregate to
     the Option price;

               1.1.2.4 Full payment through a broker-dealer sale and remittance
     procedure pursuant to which the Optionee (i) shall provide irrevocable
     instructions to a designated brokerage firm to effect the immediate sale of
     the purchased shares and remit to the Company, out of the sale proceeds
     available on the settlement date, sufficient funds to cover the aggregate
     Option price payable for the purchased shares plus all applicable Federal,
     state and local income and employment taxes required to be withheld by the
     Company in connection with such purchase and (ii) shall provide directives
     to the Company to deliver the certificates for the purchased shares
     directly to such brokerage firm in order to complete the sale transaction;
     or

               1.1.2.5 Such other lawful consideration as the Committee shall
     determine.

         1.2 Manner of Exercise of Options. Each Option granted under the
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as shall be determined by the Committee and set forth in
the instrument evidencing such Option. However, no Option may be exercised after
the expiration of ten (10) years from the date such Option is granted. During
the lifetime of the Optionee, Incentive Options shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee other than
a transfer of the Option by will or by the laws of descent and distribution
following the Optionee's death. However, Nonstatutory Options may, in connection
with the Optionee's estate plan, be assigned in whole or in part during the
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Committee may deem appropriate. Options
may be exercised by written notice to the Company in such terms as the Committee
shall specify.

                                       8
<PAGE>   9

         1.3 Stockholder Rights. An Option holder shall have none of the rights
of a stockholder with respect to any shares issuable under the Plan until such
individual shall have been issued a stock certificate for the shares.

         1.4 Dollar Limitation. The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of the Stock for which one or more
Options granted to any employee under this Plan (or any other option plan of the
Company or its parent or Subsidiary corporations) may for the first time become
exercisable as incentive stock options under the Federal tax laws 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 stock options
under the Federal tax laws shall be applied on the basis of the order in which
such Options are granted. Should the number of shares of Stock for which any
Incentive Option first becomes exercisable in any calendar year exceed the
applicable One Hundred Thousand Dollar ($100,000) limitation, then the Option
may nevertheless be exercised in that calendar year for the excess number of
shares as a nonstatutory option under the Federal tax laws.

         1.5 Termination of Service.

               1.5.1 Except to the extent otherwise provided in paragraph 1.5.4
     below, the following provisions shall govern the exercise period applicable
     to any outstanding Options under this Discretionary Option Grant Program
     held by the Optionee at the time of cessation of Service or death.

               - Should the Optionee cease to remain in Service for any reason
     other than death or permanent disability, then the period during which each
     outstanding Option held by such Optionee is to remain exercisable shall be
     limited to the three-month period following the date of such cessation of
     Service. However, the Committee shall have the discretion to provide for a
     longer post-Service exercise period (not to exceed the expiration date of
     the maximum Option term) in the event the Optionee ceases Service by reason
     of retirement at or after attainments of age sixty-five (65).

               - In the event such Service terminates by reason of permanent
     disability (as defined in Code Section 22 (e) (3)) or should the Optionee
     die while holding one or more outstanding Options, then the period during
     which each such Option is to remain exercisable shall be limited to the
     twelve (12)-month period following the date of the Optionee's cessation of
     Service or death unless the Committee determines in writing otherwise.
     During the limited exercise period following the Optionee's death, the
     Option may be exercised by the personal

                                       9
<PAGE>   10

     representative of the Optionee's estate or by the person or persons to
     whom the Option is transferred pursuant to the Optionee's will or in
     accordance with the laws of descent and distribution.

               - Under no circumstances, however, shall any such Option be
     exercisable after the specified expiration date of the Option term.

               1.5.2 During the post-Service exercise period, the Option may not
     be exercised for more than the number of shares of Stock in which the
     Optionee is vested at the time of cessation of Service. Upon the expiration
     of such post-Service 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,
     each Option shall immediately terminate and cease to be outstanding, at the
     time of the Optionee's cessation of Service, with respect to any option
     shares for which such Option is not otherwise at that time exercisable or
     in which the Optionee is not otherwise at that time vested.

               1.5.3 Should (i) the Optionee's Service be terminated for
     misconduct (including, but not limited to, any act of dishonesty, willful
     misconduct, fraud or embezzlement) or (ii) the Optionee make any
     unauthorized use or disclosure of confidential information or trade secrets
     of the Company or its Subsidiaries, then in any such event all outstanding
     Options held by the Optionee under this Discretionary Option Grant Program
     shall terminate immediately and cease to be outstanding.

               1.5.4 The Committee shall have full power and authority to extend
     the period of time for which the Option is to remain exercisable following
     the Optionee's cessation of Service or death from the limited post-Service
     exercise period specified in the instrument evidencing such grant to such
     greater period of time as the Committee shall deem appropriate under the
     circumstances. In no event, however, shall such Option be exercisable after
     the specified expiration date of the Option term.

               1.5.5 The Committee shall have complete discretion, exercisable
     either at the time the Option is granted or at any time the Option remains
     outstanding, to permit one or more Options granted under this Discretionary
     Option Grant Program to be exercised not only for the number of shares for
     which each such Option is exercisable at the time of the Optionee's
     cessation of Service but also for one or more subsequent installments of
     purchasable shares for which the Option would otherwise have become
     exercisable had such cessation of Service not occurred.

                                       10
<PAGE>   11

         2. Corporate Transactions/Changes in Control.

         2.1 Option Acceleration. Each Option which is outstanding under this
Discretionary Option Grant Program at the time of a Corporate Transaction shall
automatically accelerate so that each such Option shall, immediately prior to
the specified effective date for such Corporate Transaction, become fully
exercisable with respect to the total number of shares of Stock at the time
subject to such Option and may be exercised for all or any portion of such
shares. However, an outstanding Option under this Discretionary Option Grant
Program shall not so accelerate if and to the extent: (i) such Option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such Option is to be replaced with a cash incentive program of the
successor corporation which preserves the option spread existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such Option, or (iii) the acceleration
of such Option is subject to other limitations imposed by the Committee at the
time of the Option grant. The determination of option comparability under clause
(i) above shall be made by the Committee and its determination shall be final,
binding and conclusive. The Committee shall also have full power and authority
to grant Options under the Plan which are to automatically accelerate in whole
or in part upon the termination of the Optionee's Service following a Corporate
Transaction in which those Options are assumed or replaced.

         2.2 Termination of Options. Immediately following the consummation of
the Corporate Transaction, all outstanding Options under this Discretionary
Option Grant Program shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation or its parent company.

         2.3 Option Adjustments. Each outstanding Option under this
Discretionary Option Grant Program which is assumed in connection with the
Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and kind of securities which would have been issued to
the Option holder, in consummation of such Corporate Transaction, had such
person exercised the Option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option price payable per
share, provided the aggregate Option price payable for such securities shall
remain the same. In addition, the class and kind of securities available for
issuance under the Plan on both an aggregate and per participant basis following
the consummation of the Corporate Transaction shall be appropriately adjusted.

         2.4 Change in Control. The Committee shall have the discretionary
authority, exercisable either at the time the Option is granted or at any time
while the Option remains outstanding, to provide for the automatic acceleration
of one or more outstanding Options under this Discretionary Option Grant Program
upon the occurrence of a Change in Control. The Committee shall also have full
power and authority to condition any such Option acceleration upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.

                                       11
<PAGE>   12

         2.5 Option Continuation. Any Options accelerated in connection with the
Change in Control shall remain fully exercisable until the expiration or sooner
termination of the Option term or the surrender of such Option in accordance
with Section 4 of this Article Two.

         2.6 ISO Limitation. The exercisability as incentive stock options under
the Federal tax laws of any Options accelerated under this Section 2 in
connection with a Corporate Transaction or Change in Control shall remain
subject to the dollar limitation of paragraph 1.4 of this Article Two.

         2.7 Right to Modify Corporate Structure. The grant of Options under
this Plan shall in no way effect the right of the Company to adjust, reclassify,
reorganize, or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets.

         3. Cancellation and New Grant of Options. The Committee 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 this Discretionary Option Grant Program and to grant in substitution
therefor new Options under the Plan covering the same or different number and
kind of shares of Stock but having an Option price per share not less than the
Fair Market Value of the option Stock on the new grant date.

         4. Surrender of Options for Cash or Stock.

         4.1 Surrender Right. One or more Optionees may be granted the right,
exercisable upon such terms and conditions as the Committee may establish, to
surrender all or part of an unexercised Option under this Discretionary Option
Grant Program in exchange for a distribution from the Company in an amount equal
to the excess of (i) the Fair Market Value (on the Option surrender date) of the
number of shares in which the Optionee is at the time vested under the
surrendered Option (or surrendered portion thereof) over (ii) the aggregate
Option price payable for such vested shares.

         4.2 Approval. No such Option surrender shall be effective unless it is
approved by the Committee. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section 4 may be made in shares of Stock valued at Fair Market Value on the
Option surrender date, in cash or partly in shares and partly in cash, as the
Committee shall in its sole discretion deem appropriate.

         4.3 Limited Rights. One or more officers of the Company subject to the
short-swing profit restrictions of the Federal securities laws may, in the
Committee's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding Options under this Discretionary Option Grant
Program. Upon the occurrence of a Hostile Take-Over, each such officer 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

                                       12
<PAGE>   13

to the Company, to the extent the Option is at the time exercisable for vested
shares of Stock. In return for the surrendered Option, the officer shall be
entitled to a cash distribution from the Company in an amount equal to the
excess of (i) the Take-Over Price of the shares of Stock which are at the time
vested under each surrendered Option (or surrendered portion) over (ii) the
aggregate Option price payable for such vested shares. Such cash distribution
shall be paid within five (5) days following the Option surrender date. The
Committee shall pre-approve, at the time the limited right is granted, the
subsequent exercise of that right in accordance with the terms of the grant and
provisions of this paragraph 4.3 of Article Two. No additional approval of the
Committee or the Board shall be required at the time of the actual Option
surrender and cash distribution. The balance of the Option (if any) shall
continue in full force and effect in accordance with the instrument evidencing
such grant.

                                  ARTICLE THREE
                             STOCK ISSUANCE PROGRAM

         1. Terms and Conditions of Direct Stock Issuances. Notwithstanding any
other provision in the Plan to the contrary, no further Stock Issuances shall be
made after the Effective Date. Stock may be issued under this Stock Issuance
Program, either through direct and immediate purchases without any intervening
Option grants or as unvested shares issued upon the exercise of immediately
exercisable Options granted under Article Two. The issued shares shall be
evidenced by a Stock Issuance Agreement ("Issuance Agreement") that complies
with the following terms and conditions:

         1.1 Consideration.

               1.1.1 Stock drawn from the Company's authorized but unissued
     shares of Stock ("Newly Issued Shares") shall be issued for one or more of
     the following items of consideration which the Committee may deem
     appropriate in each individual instance:

               (i) cash or cash equivalents (such as a personal check or bank
     draft) paid the Company;

               (ii) a promissory note payable to the Company's order in one or
     more installments, which may be subject to cancellation in whole or in part
     upon terms and conditions established by the Committee; or

               (iii) past services rendered to the Company or any Subsidiary.

               1.1.2 Newly Issued Shares must be issued for consideration with a
     value not less than one-hundred percent (100%) of the Fair Market Value of
     such shares at the time of issuance.

               1.1.3 Shares of Stock reacquired by the Company and held as
     treasury shares ("Treasury Shares") may be issued for such

                                       13
<PAGE>   14

     consideration (including one or more of the items of consideration
     specified in paragraph 1.1.1. of this Article Three) as the Committee may
     deem appropriate. Treasury Shares may, in lieu of any cash consideration,
     be issued subject to such vesting requirements tied to the Participant's
     period of future Service or the Company's attainment of specified
     performance objectives as the Committee may establish at the time of
     issuance.

         1.2 Vesting Provisions.

               1.2.1 The issued Stock may, in the absolute discretion of the
     Committee, be fully and immediately vested upon issuance or may vest in one
     or more installments over the Participant's period of Service. The elements
     of the vesting schedule applicable to any unvested shares of Stock, namely:

               (i) the Service period to be completed by the Participant or the
     performance objectives to be achieved by the Company,

               (ii) the number of installments in which the shares are to vest,

               (iii) the interval or intervals (if any) which are to lapse
     between installments, and

               (iv) the effect which death, disability or other event designated
     by the Committee is to have upon the vesting schedule,

shall be determined by the Committee and incorporated into the Issuance
Agreement executed by the Company and the Participant at the time such unvested
shares are issued.

         1.3 Stockholder Rights. The Participant shall have full stockholder
rights with respect to any shares of Stock issued to him or her under this Stock
Issuance Program, whether or not his or her 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. Any new, additional or
different shares of Stock 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 by reason of any Stock dividend,
Stock split, reclassification of Stock or other similar change in the Company's
capital structure or by reason of any Corporate Transaction shall be issued,
subject to (i) the same vesting requirements applicable to his or her unvested
shares and (ii) such escrow arrangements as the Committee shall deem
appropriate.

         1.4 Termination of Service.

               1.4.1 Should the Participant cease to remain in Service while
     holding one or more unvested shares of Stock, then those shares

                                       14
<PAGE>   15

     shall be immediately surrendered to the Company 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 promissory note), the Company 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 such surrendered
     shares. The surrendered shares may, at the Committee's discretion, be
     retained by the Company as Treasury Shares or may be retired to authorized
     but unissued share status.

               1.4.2 The Committee may in its discretion elect to waive the
     surrender and cancellation of one or more unvested shares of Stock (or
     other assets attributable thereto) which would otherwise occur upon the
     non-completion of the vesting schedule applicable to such shares. Such
     waiver shall result in the immediate vesting of the Participant's interest
     in the shares of 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.

         2. Corporate Transactions/Changes in Control.

         2.1 All unvested shares of Stock outstanding under this Stock Issuance
Program shall immediately vest in full upon the occurrence of a Corporate
Transaction, except to the extent the Committee imposes limitations in the
Issuance Agreement which preclude such accelerated vesting in whole or in part.

         2.2 The Committee shall have the discretionary authority, exercisable
either at the time the unvested shares are issued or at any time while those
shares remain outstanding, to provide for the immediate and automatic vesting of
one or more unvested shares of Stock outstanding under this Stock Issuance
Program at the time of a Change in Control. The Committee shall also have full
power and authority to condition any such accelerated vesting upon the
subsequent termination of the Participant's Service within a specified period
following the Change in Control.

         3. Transfer Restrictions/Share Escrow.

         3.1 Unvested shares may, in the Committee's discretion, be held in
escrow by the Company until the Participant's interest in such shares vests or
may be issued directly to the Participant with restrictive legends on the
certificates evidencing such unvested shares.

         3.2 The Participant shall have no right to transfer any unvested shares
of Stock issued to him or her under this Stock Issuance Program. For purposes of
this restriction, the term "transfer" shall include (without limitation) any
sale, pledge,

                                       15
<PAGE>   16

assignment, encumbrance, gift or other disposition of such shares,
whether voluntary or involuntary. Upon any such attempted transfer, the unvested
shares shall immediately be cancelled, and neither the Participant nor the
proposed transferee shall have any rights with respect to those shares. However,
the Participant shall have the right to make a gift of unvested shares acquired
under this Stock Issuance Program to his or her spouse or issue, including
adopted children, or to a trust established for such spouse or issue, provided
the donee of such shares delivers to the Company a written agreement to be bound
by all the provisions of the Plan and the Issuance Agreement applicable to the
gifted shares.

                                  ARTICLE FOUR
                         AUTOMATIC OPTION GRANT PROGRAM

         1. Eligibility.

         As of the Effective Date, the Automatic Option Grant Program is
terminated and no further option grants shall be made after such date.

         2. Terms and Conditions of Automatic Option Grants.

         2.1 Grant Dates. Prior to the Effective Date, option grants were made
under this Article Four on the dates specified below:

               2.1.1 Each individual who was serving as an Eligible Director on
     the date of the 1994 Annual Stockholders Meeting was automatically granted,
     on such date, a Nonstatutory Option to purchase 15,000 shares of Stock upon
     the terms and conditions of this Article Four.

               2.1.2 Each individual who first became an Eligible Director on or
     after the date of the 1994 Annual Meeting and before March 4, 1997, whether
     through election by the Company's stockholders or appointment by the Board,
     was automatically granted, at the time of such initial election or
     appointment, a Nonstatutory Option to purchase 15,000 shares of Stock upon
     the terms and conditions of this Article Four.

               2.1.3 Each individual who first becomes an Eligible Director on
     or after March 4, 1997, whether through election by the Company's
     stockholders or appointment by the Board, shall automatically be granted,
     at the time of such initial election or appointment, a Nonstatutory Option
     to purchase 8,000 shares of Stock* upon the terms and conditions of this
     Article Four.

               2.1.4 An Eligible Director serving as a non-employee Board member
     on March 4, 1997 shall, at each Annual Stockholders Meeting at which he or
     she is to continue to serve as a non-employee Board member, beginning with
     the Annual Stockholders Meeting held in the calendar year in which the last
     installment of the shares of Stock

                                       16
<PAGE>   17

     subject to his or her initial 15,000-share automatic Option grant under
     paragraph 2.1.1 or 2.1.2 vests, automatically be granted a Non-Statutory
     Option to purchase an additional 2,667 shares of Stock.

               2.1.5 An Eligible Director who first joins the Board as a
     non-employee Board member at any time after March 4, 1997 shall, at each
     Annual Stockholders Meeting at which he or she is to continue to serve as a
     non-employee Board member, beginning with the Annual Stockholders Meeting
     held in the calendar year in which the third installment of the shares of
     Stock subject to his or her initial 8,000-share automatic Option grant
     under paragraph 2.1.3 vests, automatically be granted a Non-Statutory
     Option to purchase an additional 2,667 shares of Stock.

               2.1.6 There shall be no limit on the number of such 2,667-share**
     Option grants which any one Eligible Director may receive over his or her
     period of continued Board service.

     2.2 Adjustments. The number of shares for which the automatic Option grants
are to be made to Eligible Directors shall be subject to periodic adjustment
pursuant to the applicable provisions of paragraph 6.3 of Article One.

     2.3 Option Price. The Option price per share of Stock of each automatic
Option grant made under this Article Four shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Stock on the automatic grant date.

     2.4 Option Term. Each automatic Option grant under this Article Four shall
have a maximum term of ten (10) years measured from the automatic grant date.

     2.5 Exercisability/Vesting. Each automatic Option grant shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the Option shall be subject to repurchase by the Company, at the
Option price paid per share, upon the Optionee's cessation of Board service
prior to vesting in those shares in accordance with the schedule below:

               2.5.1 Each initial automatic Option grant made pursuant to
     paragraph 2.1.1, 2.1.2 or 2.1.3 of this Article Four in effect prior to the
     Effective Date shall vest, and the Company's repurchase right shall lapse,
     in a series of five (5) successive equal annual installments over the
     Optionee's period of continued Service as a Board member, with the first
     such installment to vest upon Optionee's completion of one (1) year of
     Board service measured from the automatic grant date.

               2.5.2 Each annual Automatic Option grant made pursuant to
     paragraph 2.1.4 or 2.1.5 of Article Four in effect prior to the Effective
     Date shall vest, and the Company's repurchase right shall lapse, in a
     series of five (5) successive equal annual installments over the Optionee's
     period

                                       17
<PAGE>   18

     of continued Service as a Board member, with the first such installment to
     vest upon Optionee's completion of one (1) year of Board service measured
     from the automatic grant date.

               2.5.3 Vesting of the option shares granted under this Article
     Four shall be subject to the acceleration provisions of Section 3 of this
     Article Four. No Option grant made under this Automatic Option Grant
     Program on or after March 4, 1997 shall vest on an accelerated basis upon
     the Optionee's cessation of Board service by reason of death or permanent
     disability. Accordingly, no additional option shares shall vest after the
     Optionee's cessation of Board service.

     2.6 Payment. The Option price shall be payable in one of the alternative
forms specified in paragraph 1.1.2 of Article Two. To the extent the Option is
exercised for any unvested shares, the Optionee must execute and deliver to the
Company a Stock issuance agreement for those unvested shares which provides the
Company with the right to repurchase, at the Option price paid per share, any
unvested shares held by the Optionee at the time of cessation of Board service
and which precludes the sale, transfer or other disposition of any shares
purchased under the Option, to the extent those shares are subject to the
Company's repurchase right.

     2.7 Limited Transferability. An automatic Option grant may, in connection
with the Optionee's estate plan, be assigned in whole or in part during the
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the persons or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Committee may deem appropriate.

          2.8 Termination of Board Service.

               2.8.1 Should the Optionee cease service as a Board member for any
     reason other than death or permanent disability, while holding any
     automatic Option grant under this Article Four, then such individual shall
     have a six (6)-month period following the date of such cessation of Board
     service in which to exercise that Option for any or all of the option
     shares in which the Optionee is vested at the time of such cessation of
     Board service.

               2.8.2 Should the Optionee die while in Board service or within
     six (6) months after cessation of Board service, then any automatic Option
     grant held by the Optionee at the time of death may subsequently be
     exercised, for any or all of the option shares in which the Optionee is
     vested at the time of his or her cessation of Board service (less any
     option shares subsequently purchased by the Optionee prior to death), by
     the

                                       18
<PAGE>   19

     personal representative of the Optionee's estate or by the person or
     persons to whom the Option is transferred pursuant to the Optionee's will
     or in accordance with the laws of descent and distribution. The right to
     exercise each such Option shall lapse upon the expiration of the twelve
     (12)-month period measured from the date of the Optionee's death.

               2.8.3 Should the Optionee become permanently disabled (as defined
     in Code Section 22(e)(3)) and cease to serve as a Board member by reason of
     such disability, then the Optionee shall have a twelve (12)-month period
     following such cessation of Board service in which to exercise his or her
     outstanding automatic Option grants for any or all of the option shares in
     which the Optionee is vested at the time of his or her cessation of Board
     service.

               2.8.4 Upon the Optionee's cessation of Board service for any
     reason, his or her outstanding automatic Option grants shall immediately
     terminate and cease to remain outstanding with respect to any option shares
     in which the Optionee is not otherwise at that time vested under those
     Options.

               2.8.5 In no event shall any automatic Option grant under this
     Article Four remain exercisable after the expiration date of the ten
     (10)-year Option term. Upon the expiration of the applicable post-Service
     exercise period under paragraphs 2.8.1 through 2.8.3 above or (if earlier)
     upon the expiration of the ten (10)-year Option term, the automatic Option
     grant shall terminate and cease to remain outstanding for any option shares
     in which the Optionee was vested at the time of his or her cessation of
     Board Service but for which such Option was not otherwise exercised.

         2.9 Stockholder Rights. The holder of an automatic Option grant under
this Article Four shall have none of the rights of a stockholder with respect to
any shares subject to that Option until such individual shall have exercised the
Option and paid the Option price for the purchased shares.

         2.10 Remaining Terms. The remaining terms and conditions of each
automatic Option grant shall be as set forth in the form Automatic Stock Option
Agreement attached as Exhibit A to the Plan.

         3. Corporate Transactions/Changes in Control/Hostile Take-Overs.

         3.1 In the event of any Corporate Transaction, the shares of Stock at
the time subject to each outstanding Option under this Article Four but not
otherwise vested shall automatically vest in full, and the Company's repurchase
right with respect to those shares shall terminate, so that each such Option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the shares of Stock at the time
subject to that Option and may be exercised for all or any portion of such
shares as fully vested shares of Stock. Immediately following the

                                       19
<PAGE>   20

consummation of the Corporate Transaction, all automatic Option grants under
this Article Four shall terminate and cease to remain outstanding.

         3.2 In connection with any Change in Control, the shares of Stock at
the time subject to each outstanding Option under this Article Four but not
otherwise vested shall automatically vest in full, and the Company's repurchase
right with respect to those shares shall terminate, so that each such Option
shall, immediately prior to the occurrence of such Change in Control, become
fully exercisable for all of the shares of Stock at the time subject to that
Option and may be exercised for all or any portion of such shares as fully
vested shares of Stock. Each such Option shall remain so exercisable until the
expiration or sooner termination of the Option term.

         3.3 Upon the occurrence of a Hostile Take-Over, the Optionee shall have
a thirty (30)-day period in which to surrender to the Company any Option granted
to him or her under this Article Four. The Optionee shall in return be entitled
to a cash distribution from the Company in an amount equal to the excess of (i)
the Take-Over Price of the shares of Stock at the time subject to the
surrendered Option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate Option price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the Option to the Company. Stockholder approval of the March 4,
1997 restatement of the Plan shall constitute preapproval of each option
surrender right subsequently granted under the Automatic Option Grant Program
and the subsequent exercise of that right in accordance with the terms and
provisions of this paragraph 3.3 of Article Three. No additional approval of the
Committee or the Board shall be required in connection with such Option
surrender and cash distribution. The shares of Stock subject to each Option
surrendered in connection with the Hostile Take-Over shall not be available for
subsequent issuance under the Plan.

         3.4 The automatic Option grants outstanding under this Article Four
shall in no way affect the right of the Company 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.

                                  ARTICLE FIVE
                                  MISCELLANEOUS

         1. Installment Payments, Loans and Guarantees of Loans.

         1.1 The Committee may, in its discretion, assist any Optionee or
Participant (other than an Optionee or Participant who is a non-employee member
of the Board) in the exercise of one or more Options granted to such Optionee or
the purchase of one or more shares of Stock issued to such Participant under the
Plan, including the satisfaction of any Federal, state and local income and
employment tax obligations arising therefrom, by (i) authorizing the extension
of a loan from the Company to such Optionee or Participant, (ii) permitting the
Optionee or Participant to pay the Option price or purchase price for the
purchased Stock in installments over a period of years or (iii) authorizing a
guarantee by the Company of a third-party loan to the Optionee or

                                       20
<PAGE>   21

Participant. The terms of any loan, installment method of payment or guarantee
(including the interest rate and terms of repayment) shall be upon such terms as
the Committee specifies in the applicable Option or Issuance Agreement or
otherwise deems appropriate under the circumstances. Loans, installment payments
and guarantees may be granted with or without security or collateral. However,
the maximum credit available to the Optionee or Participant may not exceed the
Option or purchase price of the acquired shares (less the par value of such
shares) plus any Federal, state and local income and employment tax liability
incurred by the Optionee or Participant in connection with the acquisition of
such shares.

         1.2 The Committee may, in its absolute discretion, determine that one
or more loans extended under this financial assistance program shall be subject
to forgiveness by the Company in whole or in part upon such terms and conditions
as the Committee may deem appropriate.

         2. Amendment of the Plan. The Board shall have complete and exclusive
power and authority to amend or modify the Plan, and the Committee may amend or
modify the terms of any outstanding Options or unvested Stock issuances under
the Plan in any or all aspects whatsoever not inconsistent with the terms of the
Plan. However, no such amendment or modification shall adversely affect rights
and obligations with respect to Options at the time outstanding under the Plan,
nor adversely affect the rights of any Participant with respect to Stock issued
under the Plan prior to such action, unless the Optionee or Participant consents
to such amendment. In addition, certain amendments may require stockholder
approval pursuant to applicable laws or regulations.

         3. Use of Proceeds. Any cash proceeds received by the Company from the
sale of shares pursuant to Option grants or direct Stock issuances under the
Plan shall be used for general corporate business.

         4. Withholding.

         4.1 The Company's obligation to deliver shares of Stock upon the
exercise of Options for such shares or upon the direct 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.

         4.2 The Committee may, in its discretion and in accordance with the
provisions of this Section 4 and such supplemental rules as the Committee may
from time to time adopt (including applicable safe-harbor provisions of SEC Rule
16b-3), provide any or all holders of Nonstatutory Options (other than the
automatic Option grants made pursuant to Article Four of the Plan) or unvested
shares under the Stock Issuance Program with the right to use shares of Stock in
satisfaction of all or part of the Federal, state and local income and
employment tax liabilities incurred by such holders in connection with the
exercise of their Options or the vesting of their shares (the "Taxes"). Such
right may be provided to any such holder in either or both of the following
formats:

                                       21
<PAGE>   22

               4.2.1 Stock Withholding. The holder of the Nonstatutory Option or
     unvested shares may be provided with the election to have the Company
     withhold, from the shares of Stock otherwise issuable upon the exercise of
     such Nonstatutory Option or the vesting of such shares, a portion of those
     shares with an aggregate Fair Market Value equal to the percentage of the
     applicable Taxes (not to exceed one hundred percent (100%)) designated by
     the holder.

               4.2.2 Stock Delivery. The Committee may, in its discretion,
     provide the holder of the Nonstatutory Option or the unvested shares with
     the election to deliver to the Company, at the time the Nonstatutory Option
     is exercised or the shares vest, one or more shares of Stock already held
     by such individual with an aggregate Fair Market Value equal to the
     percentage of the Taxes incurred in connection with such Option exercise or
     share vesting (not to exceed one hundred percent (100%)) designated by the
     holder.

         5. Regulatory Approvals. The implementation of the Plan, the granting
of any Option hereunder and the issuance of Stock upon the exercise or surrender
of any such Option or as a direct issuance under the Plan shall be subject to
the Company's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Options granted under it and
the Stock issued pursuant to it.

         6. No Employment Rights. Nothing in the Plan shall confer upon the
Optionee or the Participant any right to continue in the Service of the Company
(or any Subsidiary employing or retaining such Optionee or Participant) for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any such Subsidiary) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
the Service of the Optionee or Participant at any time for any reason
whatsoever, with or without cause.

         7. Certain Outstanding Options.

         7.1 Each Option granted under the Company's Original Plan or the 1980
Burr-Brown Research Corporation Executive Stock Plan which was outstanding on
the Effective Date of this Plan was incorporated into this Plan and treated as
an outstanding Option under this Plan, but each such Option continues to be
governed solely by the terms and conditions of the instrument evidencing such
grant, and nothing in this Plan shall be deemed to affect or otherwise modify
the rights or obligations of the holders of such Options with respect to their
acquisition of shares of Stock thereunder.

         7.2 One or more provisions of this Plan, including the Option/vesting
acceleration provisions applicable in the event of a Corporate Transaction or
Change in Control or the limited surrender rights exercisable in the event of a
Hostile Take-Over, may, in the Committee's discretion, be extended to one or
more Options which were outstanding under the Company's Original Plan or the
1980 Burr-Brown Research

                                       22
<PAGE>   23

Corporation Executive Stock Plan on the Effective Date of this Plan but which do
not otherwise provide for such benefits.

         IN WITNESS WHEREOF, this Restatement of the BURR-BROWN CORPORATION 1993
STOCK INCENTIVE PLAN is hereby declared effective and is executed as of the
Effective Date on behalf of the Company by its hereunto duly authorized officer.

                                           TEXAS INSTRUMENTS
                                           TUCSON CORPORATION

                                           By: /s/ M. SAMUEL SELF
                                               ------------------

                                           Title: Treasurer
                                                 ----------------

                                       23

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