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                                                                    EXHIBIT 10.5

                               CAERE CORPORATION

                       1997 NON-OFFICER STOCK OPTION PLAN

                       ADOPTED BY THE BOARD ON MAY 5, 1997

1.      PURPOSES.

        (a) The purpose of the Plan is to provide a means by which selected
Employees of and Consultants to the Company, and its Affiliates, may be given an
opportunity to benefit from increases in value of the stock of the Company
through the granting of Nonstatutory Stock Options, as defined below.

        (b) The Company, by means of the Plan, seeks to retain the services of
persons (other than Directors and Employees serving as Officers of the Company
or its Affiliates) who are now Employees of or Consultants to the Company or its
Affiliates, to secure and retain the services of new Employees and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.

        (c) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422 of the code.

2.      DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.

        (b) "BOARD" means the Board of Directors of the Company.

        (c) "CODE" means the Internal Revenue Code of 1986, as amended.

        (d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

        (e) "COMPANY" means Caere Corporation, a Delaware corporation.

        (f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include those
persons who render services as a Director.

        (g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
service of an individual to the Company, whether as an Employee or Consultant,
is not interrupted or terminated. The Board, in its sole discretion, may
determine whether Continuous Status as an Employee or Consultant shall be
considered interrupted in the case of: (i) any leave of absence

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approved by the Board, including sick leave, military leave, or any other
personal leave; or (ii) transfers between locations of the Company or between
the Company, Affiliates or their successors.

        (h) "DIRECTOR" means a member of the Board.

        (i) "DISABILITY" means permanent and total disability as defined in
Section 22(e)(3) of the Code.

        (j) "EMPLOYEE" means any person employed by the Company or any Affiliate
of the Company. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.

        (k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (l) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company, determined as follows:

                      (1) If the common stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of common stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Company's common stock) on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable.

                      (2) In the absence of such markets for the common stock,
the Fair Market Value shall be determined in good faith by the Board.

        (m) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an incentive stock option pursuant to Section 422 of the Code and the
regulations promulgated thereunder.

        (n) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

        (o) "OPTION" means a stock option granted pursuant to the Plan.

        (p) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.

        (q) "OPTIONEE" means an Employee or Consultant who holds an outstanding
Option.

        (r) "PLAN" means this 1997 Non-Officer Equity Incentive Plan.

3.      ADMINISTRATION.

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        (a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).

        (b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                      (1) To determine from time to time which of the persons
eligible under the Plan shall be granted options; when and how each option shall
be granted; the provisions of each option granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock
pursuant to an option; and the number of shares with respect to which an option
shall be granted to each such person.

                      (2) To construe and interpret the Plan and options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

                      (3) To amend the Plan or an option as provided in Section
11.

                      (4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

        (c) The Board may delegate administration of the Plan to a committee
composed of one or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board (and references in this Plan to the Board shall thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

4.      SHARES SUBJECT TO THE PLAN.

        (a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the number of shares of stock that may be issued pursuant to
options shall not exceed in the aggregate two hundred fifty thousand (250,000)
shares of the Company's common stock. If any Option shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, the stock not acquired under such Option shall revert to and again become
available for issuance under the Plan.

        (b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5.      ELIGIBILITY.

        Options may be granted only to Employees or Consultants who are not (i)
Officers, (ii) Directors, or (iii) then subject to Section 16 of the Exchange
Act.

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6.      OPTION PROVISIONS.

        Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

        (a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

        (b) PRICE. The exercise price of each Nonstatutory Stock Option shall be
not less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment arrangement, (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), except that payment of the common
stock's "par value" (as defined in the Delaware General Corporation Law) shall
not be made by deferred payment or other arrangement, or (C) in any other form
of legal consideration that may be acceptable to the Board.

        In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.

        (d) TRANSFERABILITY. An Option shall not be transferable except by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person, unless
otherwise specified in the Option Agreement, in which case the option may be
transferred upon such terms and conditions as are set forth in the Option
Agreement, as the Board or Committee shall determine in its discretion,
including (without limitation) pursuant to a "domestic relations order" within
the meaning of such rules, regulations or interpretations of the Exchange Act.
Notwithstanding the foregoing, the person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.

        (e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The

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Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria)
as the Board may deem appropriate. The vesting provisions of individual Options
may vary. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.

        (f) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
an Optionee's Continuous Status as an Employee or Consultant terminates (other
than upon the Optionee's death or disability), the Optionee may exercise his or
her Option (to the extent that the Optionee was entitled to exercise it as of
the date of termination) but only within such period of time ending on the
earlier of (i) the date three (3) months following the termination of the
Optionee's Continuous Status as an Employee or Consultant (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

        An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee or Consultant (other than upon the Optionee's death or disability)
would result in liability under Section 16(b) of the Exchange Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the
last date on which such exercise would result in such liability under Section
16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee or Consultant (other than upon the
Optionee's death or disability) would be prohibited at any time solely because
the issuance of shares would violate the registration requirements under the
Act, then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the first paragraph of this subsection 6(f), or
(ii) the expiration of a period of three (3) months after the termination of the
Optionee's Continuous Status as an Employee or Consultant during which the
exercise of the Option would not be in violation of such registration
requirements.

        (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination), but only
within such period of time ending on the earlier of (i) one (1) year following
such termination (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

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        (h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option as of
the date of death) by the Optionee's estate, by a person who acquired the right
to exercise the Option by bequest or inheritance, but only within the period
ending on the earlier of (i) the date eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement), or
(ii) the expiration of the term of such Option as set forth in the Option
Agreement. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the Plan.
If, after death, the Option is not exercised within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.

        (i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee or Consultant to
exercise the Option as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested shares so purchased may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board determines to be appropriate.

7.      COVENANTS OF THE COMPANY.

        (a) During the terms of the options, the Company shall keep available at
all times the number of shares of stock required to satisfy such options.

        (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Option; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act of 1933, as amended (the "Securities Act") either the Plan, any
Option or any stock issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options unless and until such authority is obtained.

8.      USE OF PROCEEDS FROM STOCK.

        Proceeds from the sale of stock pursuant to options shall constitute
general funds of the Company.

9.      MISCELLANEOUS.

        (a) The Board shall have the power to accelerate the time at which an
option may first be exercised or the time during which an option or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in
the Option stating the time at which it may first be exercised or the time
during which it will vest.

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        (b) Neither an Employee or Consultant, nor any person to whom an option
is transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.

        (c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Consultant or other holder of
options any right to continue in the employ of the Company or any Affiliate (or
to continue acting as a Consultant) or shall affect the right of the Company or
any Affiliate to terminate the employment of any Employee with or without cause,
or to terminate the relationship of any Consultant in accordance with the terms
of that Consultant's agreement with the Company or Affiliate to which such
Consultant is providing services.

        (d) SECURITIES LAW COMPLIANCE. The Company may require any person to
whom an option is granted, or any person to whom an option is transferred
pursuant to subsection 6(d), as a condition of exercising or acquiring stock
under any Option, (1) to give written assurances satisfactory to the Company as
to such person's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters,
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (2)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Option has been registered under a
then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may require the holder of the
Option to provide such other representations, written assurances or information
which the Company shall determine is necessary, desirable or appropriate to
comply with applicable securities and other laws as a condition of granting an
option to such person or permitting the holder of the Option to exercise the
Option. The Company may, upon advice of counsel to the Company, place legends on
stock certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.

        (e) WITHHOLDING. To the extent provided by the terms of an option
Agreement, the person to whom an option is granted may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an option by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise or acquisition of stock
under the Option; or

        (3) delivering to the Company owned and unencumbered shares of the
common stock of the Company.

10.     ADJUSTMENTS UPON CHANGES IN STOCK.

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        (a) If any change is made in the stock subject to the Plan, or subject
to any Option, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and the
maximum number of shares subject to the Plan pursuant to subsection 4(a), and
the outstanding options will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding
options. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company.")

        (b) In the event of a Change in Control, (1) any surviving or acquiring
corporation shall assume Options outstanding under the Plan or shall substitute
similar Options for those outstanding under the Plan, or (2) in the event any
surviving or acquiring corporation refuses to assume such Options or to
substitute similar Options for those outstanding under the Plan, (a) with
respect to Options held by persons then performing services as Employees or
Consultants, the vesting of such Options and the time during which such Options
may be exercised shall be accelerated prior to such event and the Options
terminated if not exercised after such acceleration and at or prior to such
event, and (b) with respect to any other Options outstanding under the Plan,
such Options shall be terminated if not exercised prior to such event.

        (c) For purposes of this Plan, "Change in Control" means: (1) a
dissolution, liquidation, or sale of all or substantially all of the assets of
the Company, (2) a merger or consolidation in which the Company is not the
surviving corporation, (3) a reverse merger in which the Company is the
surviving corporation but Shares outstanding immediately preceding the merger
are converted by virtue of the merger into other property, whether in the form
of securities, cash or otherwise, or (4) the acquisition by any person, entity
or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or
any comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any Affiliate of the
Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of securities
of the Company representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors.

11.     AMENDMENT OF THE PLAN AND OPTIONS.

        (a) The Board at any time, and from time to time, may amend the Plan.

        (b) The Board, in its sole discretion, may submit the Plan and/or any
amendment to the Plan for stockholder approval.

        (c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide those eligible
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder.

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        (d) Rights and obligations under any Option granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.

        (e) The Board at any time, and from time to time, may amend the terms of
any one or more Option; provided, however, that the rights and obligations under
any Option shall not be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom the Option was granted and (ii) such
person consents in writing.

12.     TERMINATION OR SUSPENSION OF THE PLAN.

        (a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate at the time all of the shares
reserved for issuance under the Plan have been issued. No options may be granted
under the Plan while the Plan is suspended or after it is terminated.

        (b) Rights and obligations under any Option granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except
with the written consent of the person to whom the Option was granted.

13.     EFFECTIVE DATE OF PLAN.

        The Plan shall become effective on May 5, 1997.

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                                                                    Exhibit 10.6

                        CALERA RECOGNITION SYSTEMS, INC.

                             1993 STOCK OPTION PLAN

                     (As adopted by the Board of Directors
                on June 8, 1993 and approved by the shareholders
                on June 8, 1993 and amended on October 28, 1993)

      1.    Purposes of the Plan.  The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.

            Options granted hereunder may be either "incentive stock options",
as defined in Section 422 of the Code or "non-statutory stock options", at the
discretion of the Administrator and as reflected in the terms of the written
option agreement.

      2.    Definitions.  As used herein, the following definitions shall apply:

            (a)   "Administrator" shall mean the Board or any of its committees
as shall be administering the Plan, in accordance with Section 4 hereof.

            (b)   "Applicable Laws" shall mean the legal requirements relating
to the administration of stock option and equity incentive plans under
applicable state corporate and securities laws and under the Code.

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

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

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

            (f)   "Company" shall mean CALERA RECOGNITION SYSTEMS, INC., a
California corporation.

            (g)   "Committee" shall mean a Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan.

            (h)   "Consultant" shall mean any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services and any director of the Company whether
compensated for such service or not, provided, however, that if and in the
event that the Company registers any class of its equity securities pursuant to
the Exchange Act, the term Consultant shall thereafter not include directors
who are not compensated for their consulting services or who are paid only
standard directors' compensation by the Company. The term "Consultant" shall
include a sales representative only if such person renders additional
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services other than as a sale representative to the Company, as determined by
the Board, and is compensated for such services.

            (i)   "Continuous Status as an Employee or Consultant" shall mean
that the employment or consulting relationship with the Company is not
terminated or interrupted. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; provided, however, that such leave
is for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.

            (j)   "Director" shall mean a member of the Board.

            (k)   "Employee" shall mean any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of standard directors' compensation by the Company shall not be
sufficient to constitute "employment" by the Company.

            (l)   "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

            (m)   "Incentive Stock Option" shall mean an Option that qualifies
as an incentive stock option within the meaning of Section 422 of the Code.

            (n)   "Nonstatutory Stock Option" shall mean an Option that does not
qualify as an Incentive Stock Option.

            (o)   "Officer" shall mean an "officer" as defined in Rule 16a-1(f)
promulgated under the Exchange Act.

            (p)   "Option" shall mean a stock option granted pursuant to the
Plan.

            (q)   "Option Agreement" shall mean the written agreement
evidencing Options granted under the Plan.

            (r)   "Optioned Stock" shall mean the Common Stock subject to an
Option.

            (s)   "Optionee" shall mean an Employee or Consultant who receives
an Option.

            (t)   "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

            (u)   "Plan" shall mean this 1993 Stock Option Plan.

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            (v)   "Share" shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.

            (w)   "Subsidiary" shall mean a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f) of the Code.

      3.    Stock Subject to the Plan.  Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 3,000,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

            If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.

      4.    Administration of the Plan.

            (a)   Procedure:  The Plan shall be administered by the Board or a
Committee, as described herein.

                  (i)   Subject to subsection (ii) of this Section 4(a), the
Board may administer the Plan itself or may appoint a Committee consisting of
not less than two members of the Board to serve as Administrator and administer
the Plan, subject to such terms and conditions as the Board may prescribe.
Members of the Administrator who are either eligible for Options or have been
granted Options may vote on any matters affecting the administration of the
Plan or the grant of any Options pursuant to the Plan, except that no such
member shall act upon the granting of an Option to himself or herself, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Administrator during which action is taken with respect to the
granting of Options to him or her.

                  (ii)  Notwithstanding the foregoing subsection (i), if and in
the event the Company registers any class of its equity securities pursuant to
Section 12 of the Exchange Act, the Plan shall, from the effective date of such
registration until six months after the termination of such registration, be
administered by (A) the Board, if the Board may administer the Plan in
compliance with the rules governing a plan intended to qualify as a
discretionary grant or award plan under Rule 16b-3, or (B) a Committee appointed
by the Board to administer the Plan, which Committee shall be constituted (1) in
such a manner as to permit the Plan to comply with the rules governing a plan
intended to qualify as a discretionary grant or award plan under Rule 16b-3 and
(II) in such a manner as to satisfy the Applicable Laws.

                  (iii)  In the event that a Committee is appointed pursuant to
subsection (i) or (ii) of this Section 4, such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of any

                                      -3-
<PAGE>   4
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint additional members in substitution therefor, fill
vacancies (however caused) or remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the Applicable Laws
and, in the case of a Committee appointed under subsection (ii), to the extent
permitted by Rule 16b-3 as it applies to a plan intended to qualify thereunder
as a discretionary grant or award plan.

            (b)   Powers of the Administrator.  Subject to the provisions of
the Plan, the Administrator shall have the authority, in its discretion: (i) to
grant Incentive Stock Options or Nonstatutory Stock Options; (ii) to determine,
upon review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which exercise price shall
be determined in accordance with Section 8(a) of the Plan; (iv) to determine
the Employees and Consultants to whom, and the time or times at which, Options
shall be granted and the number of shares to be subject to each Option; (v) to
interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vii) to determine the terms and conditions of each
Option granted (which need not be identical) and, subject to Section 13 hereof,
to modify or amend each Option; (viii) to accelerate or, subject to Section 13
hereof, to defer the exercise date of any Option; (ix) to authorize any person
to execute on behalf of the Company any instrument required to effectuate the
grant of an Option previously granted by the Administrator; (x) to reduce, in
the Administrator's sole discretion, the exercise price of any Option to the
then current fair market value, as determined in accordance with Section 8(b),
if the fair market value of the Common Stock covered by such Option shall have
declined since the date the Option was granted; (xi) subject to Section 9
hereof, to extend the period during which an Option may be exercised by the
Optionee following termination of Continuous Status as an Employee or
Consultant beyond the period set forth in the Option Agreement evidencing such
Option; and (xii) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

            (c)   Effect of Administrator's Decision.  All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options granted under the
Plan.

      5.    Eligibility; Type of Options; No Employment Rights.

            (a)   Eligibility.  Nonstatutory Stock Options may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option may, if
otherwise eligible, be granted additional Options.

            (b)   Type of Options.  Each Option shall be designated in the
Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designation, to the extent that the
aggregate fair market value of the Shares with respect to which options
designated as incentive stock options are exercisable for the first time by any
Optionee

                                      -4-
<PAGE>   5
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess options shall be treated as
nonstatutory stock options. For purposes of this Section 5(b), incentive stock
options shall be taken into account in the order in which they were granted,
and the fair market value of the Shares shall be determined as of the time the
option with respect to such Shares is granted.

            (c)   No Right to Continued Service.  The Plan shall not confer
upon any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way
with his or her right or the Company's right to terminate his or her employment
or consulting relationship at any time, with or without cause. The vesting of
Shares pursuant to an Option is earned only by continuing service as an
Employee or Consultant and not through the act of being hired, being granted an
Option or acquiring Shares thereunder.

      6.    Duration of Plan.  The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the affirmative vote
of the holders of a majority of the outstanding shares of the Company's stock
entitled to vote on the adoption of the Plan and present (or represented) at a
duly held meeting of the shareholders. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 13 of the Plan.

      7.    Term of Options.  The term of each Option shall be ten (10) years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement. However, in the case of an Option granted to an Optionee who,
at the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary (a "10% Shareholder"), the term of the Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the Option Agreement.

      8.    Exercise Price and Consideration.

            (a)   Exercise Price.  The per Share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be such price as is
determined by the Board, but shall be subject to the following:

                  (i)   In the case of an Incentive Stock Option

                        (A)   granted to an Employee who, at the time of the
grant of such Incentive Stock Option, is a 10% Shareholder, the per Share
exercise price shall be no less than 110% of the fair market value per Share on
the date of grant.

                        (B)   granted to any Employee, the per Share exercise
price shall be no less than 100% of the fair market value per Share on the date
of grant.

                                      -5-
<PAGE>   6
                  (ii)  In the case of a Nonstatutory Stock Option

                        (A)   granted to an Employee or Consultant who, at the
time of the grant of such Option, is a 10% Shareholder, the per Share exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of the grant.

                        (B)   granted to any Employee or Consultant, the per
Share exercise price shall be no less than 85% of the fair market value per
Share on the date of grant.

            (b)   Fair Market Value.  The fair market value shall be determined
by the Administrator in good faith and in its discretion; provided, however,
that if there is a public market for the Common Stock, the fair market value of
Common Stock shall be determined as follows:

                  (i)   If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its fair market value shall be the closing or last
sale price for such stock (or the closing bid, if no sales were reported, as
quoted on such exchange or system) for the last market trading day that ended
prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

                  (ii)  If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof), or regularly quoted by a recognized
securities dealer but selling prices are not reported, its fair market value
shall be the mean between the high bid and low asked prices for the Common
Stock for the last market trading day that ended prior to the time of
determination.

            (c)   Form of Consideration.  The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator and may consist entirely of
(i) cash, (ii) check, (iii) promissory note, (iv) other Shares which (x) in the
case of Shares acquired upon exercise of an option, either have been owned by
the Optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a fair market
value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (v) delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale or loan proceeds
required to pay the exercise price, or (vi) such other consideration and method
of payment for the issuance of Shares to the extent permitted under Sections
408 and 409 of the California General Corporation Law. In making its
determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected
to benefit the Company.

                                      -6-
<PAGE>   7
      9.    Exercise of Option.

            (a)   Procedure for Exercise; Rights as a Shareholder.  Any Option
granted hereunder shall be exercisable at such times and under such conditions
as are determined by the Administrator and set forth in the Option Agreement,
including performance criteria with respect to the Company and/or the Optionee,
and as shall be permissible under the terms of the Plan.

            An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date
the stock certificate is issued, except as provided in Section 11 of the Plan.
An Option may not be exercised for a fraction of a Share.

            Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

            (b)   Termination of Status as an Employee or Consultant.  In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time, not exceeding twelve (12) months, as is determined by the
Administrator) after the date of such termination (but in no event later than
the date of expiration of the term of such Option as set forth in the Option
Agreement), exercise any Option held to the extent that such Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option (which he or she
was entitled to exercise) within the time specified herein, the Option shall
terminate.

            (c)   Disability of Optionee.  Notwithstanding the provisions of
Section 9(b) above, in the event an Optionee is unable to continue his or her
employment or consulting relationship with the Company as a result of his or
her disability, such Optionee may, but only within twelve (12) months from the
date of termination, exercise any Option held to the extent that such Optionee
was entitled to exercise it at the date of such termination. To the extent
that the Optionee was not entitled to exercise the Option at the date of
termination, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

                                      -7-
<PAGE>   8
            (d)   Death of Optionee.  In the event of the death of an Optionee:

                  (i)   during the term of the Option and while the Optionee is
an Employee or Consultant of the Company and has been in Continuous Status as an
Employee or Consultant since the date of grant of the Option, the Option may be
exercised, at any time within twelve (12) months following the date of death, by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only as to (A) the number of Shares
subject to the Option as to which the right to exercise had accrued to the
Optionee a the date of death, plus (B) 50% of the number of Shares subject to
the Option as to which the right to exercise had not yet accrued to the Optionee
at the date of death; or

                  (ii)  within thirty (30) days after the termination of
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within twelve (12) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.

            (e)   Rule 16b-3.  Options granted to persons subject to Section 16
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

      10.   Non-Transferability of Options.  Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will, by the laws of descent or distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder, and may be exercised,
during the lifetime of the Optionee, only by the Optionee or by a transferee
permitted by this Section 10.

      11.   Adjustments Upon Changes in Capitalization or Merger.

            (a)   Changes in Capitalization.  Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split or the payment of a stock dividend with respect to the
Common Stock or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as

                                      -8-
<PAGE>   9
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.

            (b)   Dissolution or Liquidation.  In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee a least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.

            (c)   Merger or Sale of Assets.  In the event of a proposed merger
of the Company with or into another corporation, or the sale of all or
substantially all of the assets of the Company, the Option shall be assumed or
an equivalent option shall be substituted by the successor corporation or a
Parent or Subsidiary of such successor corporation. In the event that such
successor corporation refuses to assume the Option or to substitute an
equivalent option, the Optionee shall have the right to exercise the Option as
to the number of Shares which were exercisable immediately prior to such merger
or sale of assets. The Option shall be deemed to be assumed if, following the
merger or sale of assets, the Option confers the right to purchase, for each
share of Optioned Stock subject to the Option immediately prior to the merger
or sale of assets, the consideration (whether stock, cash or other securities
or property) received in the merger or sale of assets by holders of Common
Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration received
in the merger or sale of assets was not solely Common Stock of the successor
corporation or its Parent, the Board of Directors may, with the consent of the
successor corporation and the Optionee, provide for the consideration to be
received upon exercise of the Option to be solely Common Stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger; provided
further, that with respect to a sale of assets, the consideration per Share
shall be determined by dividing (x) the aggregate consideration paid to the
Company by the purchaser for the assets by (y) the number of Shares outstanding
on the closing date for such sale of assets, computed on an as-if-converted and
fully diluted basis. If the Administrator makes an Option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of thirty (30) days from the date of such notice, and
the Option will terminate upon the expiration of such period.

      12.   Time of Granting Options.  The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the
determination granting such Option. Notice of the determination shall be given
to each Employee and Consultant to whom an Option is so granted within a
reasonable time after the date of such grant.

                                      -9-
<PAGE>   10
      13.   Amendment and Termination of the Plan.

            (a)   Amendment and Termination.  The Board may at any time amend,
alter, suspend or terminate the Plan. In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act (but only at such
time as the Company has a class of its equity securities registered pursuant to
Section 12 of the Exchange Act), or with Section 422 of the Code (or any other
applicable law or regulation), the Company shall obtain shareholder approval of
any such Plan amendment in such a manner and to such a degree as is required.

            (b)   Effect of Amendment or Termination.  Any such amendment,
alteration, suspension, or termination of the Plan shall not impair the rights
of any Optionee under any grant theretofore made, without his or her consent;
such Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Company, which agreement must be in writing and signed by the Optionee and
the Company.

      14.   Conditions Upon Issuance of Shares.

            (a)   Compliance with Laws.  Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange or quotation system upon which the Shares
may then be listed (or, if the Company's Common Stock is quoted on the NASDAQ
System or the NASDAQ National Market System, the rules of the National
Association of Securities Dealers, Inc.), and shall further subject to the
approval of counsel for the Company with respect to such compliance.

            (b)   Investment Representation.  As a condition to the exercise of
an Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to well or
distribute each Shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.

            (c)   Lack of Regulatory Authority.  Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issued or sell such Shares as to which such requisite
authority shall not have been obtained.

      15.   Reservation of Shares.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

                                      -10-
<PAGE>   11
      16.   Option Agreement.  Options shall be evidenced by Option Agreements
in such form as the Administrator shall approve.

      17.   Shareholder Approval.  Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted by the Board. Such shareholder approval
shall be obtained to the degree and in the manner required under applicable
state and federal law.

      18.   Information to Optionees and Purchasers.  The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, during the period such Optionee or purchaser has one or more Options
outstanding, and, in the case of an individual who acquires Shares pursuant to
the Plan, during the period such individual owns such Shares, copies of all
annual reports and other information which are provided to all shareholders of
the Company. The Company shall not be required to provide such information to
key employees whose duties in connection with the Company assure their access
to equivalent information.

                                      -11-

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