Document:

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                                                                    EXHIBIT 10.2

                        WaveSplitter Technologies, Inc

                                1997 STOCK PLAN

SECTION 1. PURPOSE

    The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, to encourage such selected persons to remain in the employ of the
Company and to attract new employees by allowing such persons to purchase Shares
of the Company's Common Stock. The Plan provides for the grant of Options to
purchase Shares. Options granted under the Plan may be Incentive Stock Options
or Nonstatutory Stock Options. Stock Purchase Rights may also be granted under
the Plan.

SECTION 2. DEFINITIONS

     (a)  "Board" means the Board of Directors of the Company.

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

     (c)  "Committee" means a committee of the Board of Directors which is
authorized to administer the Plan under Section 4 herein. In the event the
Company becomes subject to Section 16 of the Exchange Act, the Committee shall
have a membership composition which will enable the Plan to qualify under Rule
16b-3 with regard to Options granted to persons who are subject to Section 16 of
the Exchange Act.

     (d)  "Common Stock" means the Common Stock of the Company.

     (e)  "Company" means WaveSplitter Technologies, Inc.

     (f)  "Consultant" means any person, including an advisor, who is engaged
by the Company or Subsidiary to render consulting or advisory services and is
compensated for such services.

     (g)  "Continuous Status as an Employee" means the absence of any
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
In the case of: sick leave, military leave or any other leave of absence
approved by the Board, provided that such leave is for a period of not more than
ninety (90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
Company policy adopted from time

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to time; or in the case of transfers between locations of the Company or between
the Company, its Subsidiaries or its successor.

     (h)  "Employee" means any person, including officers and directors,
employed by the Company or Subsidiary of the Company. The payment of a
director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.

     (i)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (j)  "Fair Market Value" means, as of any date, the value of Common Stock
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 dosing sales price for such stock (or the closing bid, if no sales were
     reported, as quoted on such system or exchange for the last market trading
     day 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 Nasdaq National Market 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 and low asked prices for
     the Common Stock; or

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

     (k)  "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

     (l)  "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.

     (m)  "Option" means a stock option granted pursuant to the Plan that
entities the holder to purchase Shares.

     (n)  "Optionee Stock" means the Common Stock subject to an Option.

     (o)  "Optionee" means an Employee or Consultant who receives an Option.

     (p)  "Plan" means the WaveSplitter Technologies, Inc. 1997 Stock Plan, as
amended from time to time.

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     (q)  "Purchaser" means an Employee or Consultant who exercises a Stock
Purchase Right.

     (r)  "Restricted Stock" means Shares purchased pursuant to the grant of a
Stock Purchase Right.

     (s)  "Share" means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.

     (t)  "Stock Purchase Right" means the right to purchase Restricted Stock
granted pursuant to Section 11 of the Plan.

     (u)  "Subsidiary" means any corporation of which the Company and/or one or
more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the plan shall be considered a Subsidiary commencing as of such date.

     (v)  "Tax Date" means the date upon which the withholding tax obligation is
determined pursuant to Section 12(b) herein.

SECTION 3. STOCK SUBJECT TO THE PLAN

     Subject to the provisions of Section 13 of the Plan, the maximum aggregate
number of shares which may be optioned and sold under the Plan is 4,142,532/1/
shares of Common Stock. The shares may be authorized, but unissued, or
reacquired Common Stock. If an Option or Stock Purchase Right 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. 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.

SECTION 4. ADMINISTRATION.

    (a)   Committee Membership. The Plan shall be administered by the Committee,
          --------------------
which shall consist of members of the Board. The members of the Committee shall
be appointed by the Board. If no Committee has been appointed, the entire Board
shall constitute the Committee.

    (b)   Powers of the Committee. Subject to the provisions of the Plan and the
          ------------------------
specific duties delegated by the Board, the Committee shall have full authority
and discretion to take the following actions:

____________
1 As amended by the Board of Directors, effective April 6, 2000.

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               (i)    to determine the Fair Market Value of the Common Stock;

               (ii)   to select the officers, Consultants and Employees to whom
     Options and Stock Purchase Rights may from time to time be granted under
     the Plan;

               (iii)  to determine whether and to what extent Options and
     Stock Purchase Rights or any combination thereof, are granted under the
     Plan;

               (iv)   to determine the number of Shares to be covered by each
     such award granted hereunder;

               (v)    to approve forms of agreement for use under the Plan;

               (vi)   to determine the terms and conditions, not inconsistent
     with the terms of the Plan, of any award granted hereunder including, but
     not limited to, the share price and any restriction or limitation, based in
     each case on such factors as the Committee shall determine in its sole
     discretion;

               (vii)  to determine the terms and restrictions applicable to
     Stock Purchase Rights and the Restricted Stock purchased by exercising such
     Stock Purchase Rights; and

               (viii) to make any other such determinations with respect to
     awards under the Plan as it shall deem appropriate.

     (c)  Effect of Committee's Decision.    All decisions, determinations and
          -------------------------------
interpretations of the Committee shall be final and binding on all Optionees and
Purchasers and any other holders of any Options or Stock Purchase Rights.

SECTION 5. ELIGIBILITY.

     (a)  General Rule. Nonstatutory Stock Options and stock Purchase Rights 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 or
Stock Purchase Right may, if he is otherwise eligible, be granted an additional
Option, Options, Stock Purchase Right or Rights.

     (b)  Stock Option Agreement. Each grant of an Option under the Plan shall
          -----------------------
be evidenced by a stock option agreement between the Optionee and the Company.
All stock option agreements shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Committee deems
appropriate. The provisions of the

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various stock option agreements entered into under the Plan are not required to
be identical.

    (c)   Incentive Stock Option Limitation. Each Option shall be designated in
          ----------------------------------
the written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, 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 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.

    (d)   Time of Granting Options The date of grant of an Option shall, for all
          ------------------------
purposes, be the date on which the Committee makes the determination granting
such Option, or such other date as is determined by the Board. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

SECTION 6. TERM OF PLAN.

    The Plan shall become effective on the date of its adoption by the Board
subject to its approval by the shareholders of the Company as described in
Section 17 of the Plan. In the event that the shareholders fail to approve the
Plan within twelve (12) months after its adoption by the Board, any Options or
Stock Purchase Rights granted during such period shall be null and void. The
Plan shall continue in effect for a term often (10) years unless sooner
terminated under Section 14 of the Plan.

SECTION 7. TERM OF OPTION.

    The term of each Option shall be the term stated in the Optionee's option
agreement; provided however, the term shall be no more than 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 Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the option agreement.

SECTION 8. EXERCISE PRICE AND CONSIDERATION.

    (a)   Board Determination. With respect to each Option, the per share
          --------------------
exercise price for the Shares shall be determined by the Board.

    (b)   Incentive Stock Options. In the case of an Incentive Stock Option, the
          ------------------------
exercise price per Share shall be not less than 100% of the Fair Market Value of
such Share on the date of grant. Notwithstanding the above, if an Incentive
Stock Option is granted to an Employee who owns more than ten percent of the
total combined voting

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power of all classes of stock of the Company or any Subsidiary, the exercise
price per Share shall be not less than 110% of the Fair Market Value of such
Share on the date of grant.

    (c)   Nonstatutory Stock Options. The exercise price per Share of a
          ---------------------------
Nonstatutory Stock Option shall not be less than 85% of the Fair Market Value of
such Share on the date of grant. Notwithstanding the above, if a Nonstatutory
Stock Option is granted to a person who owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Subsidiary, the exercise price per Share shall be not less than 110% of the Fair
Market Value of such Share on the date of grant.

    (d)   Consideration. The consideration to be paid for Shares issued upon the
          --------------
exercise of an Option and the method of payment for such Shares shall be
determined by the Committee and, in the case of an Incentive Stock Option, shall
be determined at the time of grant. The consideration to purchase Shares may
consist of, cash, check, recourse or nonrecourse promissory note, the surrender
of other Shares, or any combination of the foregoing methods of payment. In the
case where the exercise price is paid by the surrender of Shares, the Shares
surrendered must (i) 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 (ii) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the new Shares to be acquired.

SECTION 9. EXERCISE OF OPTION.

    (a)   Procedure for Exercise. Any Option granted hereunder shall be
          -----------------------
exercisable at such times and under such conditions as determined by the Board
and as permissible under the terms of the Plan, but in no case at a rate of less
than 20% per year over five (5) years from the date of the Option is granted. An
Option may not be exercised for a fraction of a Share. 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 and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Until the issuance 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 13 of the Plan.

    (b)   Termination of Employment. In the event of termination of an
          --------------------------
Optionee's consulting relationship or Continuous Status as an Employee with the
Company, such Optionee may within ninety (90) days after the date of such
termination (or such other period as set forth in the Option Agreement, but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise the Option to the extent that Optionee was
entitled to exercise it at the date of such

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termination. To the extent that Optionee was not entitled to exercise the Option
at the date of such termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.

    (c)   Disability of Optionee. Notwithstanding the provisions of Section 9(b)
          -----------------------
above, if an Optionee's Consulting relationship or Continuous Status as an
Employee is terminated as a result of disability (as determined by the Board in
accordance with the policies of the Company), Optionee may within six (6) months
from the date of such termination (or such other longer period as set forth in
the Option Agreement, but in no event later than the expiration date of the term
of such Option as set forth in the Option Agreement), exercise the Option to the
extent otherwise entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

    (d)   Death of Optionee. In the event of the death of an Optionee, the
          ------------------
Option may be exercised within twelve (12) months following the date of death,
(but in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), 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 the Optionee was entitled to exercise the Option at the date of
death. To the extent that Optionee was not entitled to exercise the Option at
the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.

    (e)   Rule 16b-3. Options granted to persons subject to Section 16(b) 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.

    (f)   Termination; Exceptions. The provisions of this Section 10 shall
          ------------------------
terminate on the closing date of an underwritten public offering of Common Stock
of the Company. The provisions of Section 10(a) shall not apply to a transfer of
any Shares by Holder, either during his or her lifetime or on death to his or
her ancestors, descendants or spouse, or any custodian or trustee for the
account of Holder or Holder's ancestors, descendants or spouse; provided, in
each such case a transferee shall receive and hold such Shares subject to the
provisions and restrictions on transfer under this Section 10 and there shall be
no further transfer of such Shares except in accordance herewith.

    (g)    Effect of Transfers Not in Compliance. The Company shall not be
           --------------------------------------
required to transfer on its books any Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 10,
or to treat as owner of

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such Shares, or to accord the right to vote as such owner or to pay dividends
to, any transferee to whom such Shares shall have been so transferred.

SECTION 11. STOCK PURCHASE RIGHTS AND REPURCHASE OPTION.

    (a)   Rights to Purchase Restricted Stock. Stock Purchase Rights may be
          ------------------------------------
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the Committee
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid (which price shall not be less than 85% of the
Fair Market Value of the Shares as of the date of this offer, or, in the case of
a person owning stock representing more than ten percent (10%) the total
combined Voting Power of all classes of stock of the Company or any Subsidiary,
the price shall not be less than one hundred percent (100%) of the Fair Market
Value of the shares as of the date of the offer), and the time within which such
person must accept such offer, which shall in no event exceed thirty (30) days
from the date of grant of the Stock Purchase Right The offer shall be accepted
by execution of a stock purchase agreement in the form determined by the
Committee.

    (b)   Repurchase Option. Unless the Committee determines otherwise, the
          ------------------
stock purchase agreement shall grant the Company a repurchase option exercisable
upon the voluntary or involuntary termination of the Purchaser's employment with
the Company for any reason (including death- or disability). The purchase price
for unvested Shares repurchased pursuant to the stock purchase agreement shall
be the original price paid by the Purchaser and may be paid by cancellation of
any indebtedness of the purchaser to the Company. The repurchase option with
respect to the Restricted Stock shall lapse at such rate as the Committee may
determine, but in any event at a minimum rate of twenty percent (20%) per year.

    (c)   Other Provisions. The stock purchase agreement shall contain such
          -----------------
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Committee in its sole discretion. In addition, the provisions
of stock purchase agreements need not be the same with respect to each
Purchaser.

    (d)   Rights as a Shareholder. Once the Stock Purchase Right is exercised,
          ------------------------
the Purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

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SECTION 12. WITHHOLDING TAXES.

    (a)   Obligation of Optionees and Purchasers. As a condition to the exercise
          ---------------------------------------
of an Option or Stock Purchase Right, the Optionees and Purchasers shall make
such arrangements as the Committee may require to the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with exercise. The Optionees shall also make such arrangements as the
Committee may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.

    (b)   Stock Withholding to Satisfy Withholding Tax Obligations. At the
          ---------------------------------------------------------
discretion of the Committee, Optionees or Purchasers may satisfy withholding
obligations as provided in this paragraph. When an Optionee or Purchaser incurs
a tax liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee or Purchaser is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee or Purchaser may satisfy the
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued upon exercise of the Option, or the Shares to be issued in
connection with the Stock Purchase Right, if any, that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined (the "Tax Date").

All elections by an Optionee or Purchaser to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the Committee and shall
be subject to the following restrictions:

               (i)   the election must be made on or prior to the Tax Date;

               (ii)  once made, the election shall be irrevocable as to the
     particular Shares of the Option or Stock Purchase Right as to which the
     election is made;

               (iii) all elections shall be subject to the consent or
     disapproval of the Committee;

               (iv)  if the Optionee is subject to Rule 16b-3 of the Exchange
     Act, the election must comply with the applicable provisions of Rule 16b-3
     and shall be subject to 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.

In the event the election to have Shares withheld is made by an Optionee or
Purchaser and no election is filed under Section 83(b) of the Code, the Optionee
or Purchaser shall receive the full number of Shares with respect to which the
Option or

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Stock Purchase Right is exercised, but such Optionee or Purchaser shall be
unconditionally obligated to tender back to the Company the proper number of
Shares at the time when the amount of withholding tax becomes due and payable.

SECTION 13. ADJUSTMENT OF SHARES.

    (a)   Changes in Capitalization or Merger. Subject to any required action by
          ------------------------------------
the shareholders of the Company, the number of Shares covered by each
outstanding Option or Stock Purchase Right, and the number of Shares which have
been authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right, as well as
the price per Share covered by each such outstanding Option or Stock Purchase
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option or Stock Purchase Right.  In
the event of a merger of the Company with or into another corporation, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.

    (b)   Dissolution. Liquidation or Other Merger. In the event of the proposed
          -----------------------------------------
dissolution or liquidation of the Company, or of a merger in which the successor
corporation does not agree to assume the Option or Stock Purchase Right or
substitute an equivalent Option or Stock Purchase Right, the Board shall notify
Optionees and Purchasers at least thirty (30) days prior to such proposed
action. To the extent it has not been previously exercised, the Option or Stock
Purchase Right will terminate immediately prior to the consummation of such
proposed action.

SECTION 14. AMENDMENT AND TERMINATION OF PLAN.

    (a)   Amendment and Termination. The Board may at any time amend, alter,
          --------------------------
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee or
Purchaser under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the

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Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

    (b)   Effect of Amendment or Termination. Any such amendment or termination
          -----------------------------------
of the Plan shall not affect Options and Stock Purchase Rights already granted
and such Options and Stock Purchase Rights shall remain in full force and effect
as if this Plan had not been amended or terminated, unless mutually agreed
otherwise between the Optionee or Purchaser and the Board, which agreement must
be in writing and signed by the Optionee or Purchaser and the Company.

SECTION 15. NONTRANSFERABILITY.

All Options and Stock Purchase Rights granted under the Plan may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of the Optionee or Stock Purchase Rights Holder only by the
Optionee or Stock Purchase Rights Holder.

SECTION 16. ISSUANCE OF SHARES.

    (a)   Legal Requirements. Shares shall not be issued pursuant to the
          -------------------
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right 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 upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.

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

    (c)   Regulatory Approval. The 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 issue or sell such Shares as to which such requisite authority shall not have
been obtained.

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SECTION 17. NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any Option or Stock Purchase Right granted under
the Plan shall confer upon any Optionee, Stock Purchaser Right Holder or
Purchaser any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his right
or the Company's right to terminate his employment or consulting relationship at
any time, with or without cause.

SECTION 18. 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.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law and the rules of any stock exchange upon
which the Common Stock is listed.

SECTION 19. INFORMATION TO HOLDER AND PURCHASERS.

The Company shall provide to each Holder and Purchaser, during the period for
which such Holder has one or more Options or Stock Purchase Rights outstanding,
and in the case of a Purchaser, during the period such individual owns such
Shares, annual financial statements of the Company. The Company shall not be
required to provide such information if the issuance of Options under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.

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                        WAVESPLITTER TECHNOLOGIES, INC.
                                1997 STOCK PLAN
                    STOCK OPTION  AGREEMENT - EARLY EXERCISE

          WaveSplitter Technologies, Inc. (the "Company") hereby grants an
option to purchase Shares of its Common Stock to the optionee named below on the
terms and conditions set forth in this cover sheet, the Company's 1997 Stock
Plan, and all exhibits attached hereto (together, the "Stock Option Agreement"):

      Grant Number:                      ((Grant_No))

      Date of Grant                      ((Grant_Date))

      Vesting Commencement Date          ((VCD))

      Exercise Price Per Share           US((Ex_Price))

      Total Number of Shares Granted     ((No_Shares))

      Type of Option                     __ Incentive stock Option"

                                         ___ Nonqualified Stock Option

      Expiration Date                    ((Exp_Date))

 Exercise and Vesting Schedule:
 ------------------------------

      The option granted hereunder may be exercised, in whole or in part, based
on the vesting schedule as set forth below.

      Twenty-Five percent (25%) of the shares subject to the option shall vest
in the holder thereof on the one year anniversary of the Vesting Commencement
Date and an additional one-forty-eighth (1/48) of the shares subject to the
option shall vest in the holder thereof at the end of each full month
thereafter. The option is subject to special acceleration of vesting upon the
occurrence of certain circumstances, as further described on Attachment A to
                                                             -----------
this cover sheet.

      By signing this cover sheet, you agree that this Stock Option Agreement is
subject to the terms and conditions of this cover sheet, the 1997 Stock Plan and
Exhibits A-D, which are attached hereto and made a part of this document.

OPTIONEE:                               WaveSplitter Technologies, Inc.
                                        a California corporation

_______________________________         By___________________________
((Name))                                Sheau Chen, President
<PAGE>

                                  ATTACHMENT A
                                  ------------

1.  In the event that, in contemplation of, or at any time after a "Change of
Control", your employment with the Company (or its successor) is involuntarily
terminated other than for "Cause" (as such terms are defined below), and:

      (a)  if such termination occurs prior to the one year anniversary of the
Vesting Commencement Date, then one-half (1/2) of the then unvested portion of
the Option will immediately vest; or

      (b)  if such termination occurs on or after the one year anniversary of
the Vesting Commencement Date then all of the then unvested portion of the
Option will immediately vest.

2.  For purposes of the foregoing:

      (a)  Termination for "Cause" means (A) the failure by you substantially to
perform your material duties after a written demand for substantial performance
is delivered to you that specifically identifies the manner in which you have
not substantially performed your duties, (B) the failure (in a material respect)
by you to follow reasonable policies or directives established by the Company
after written notice to you that you are not following such policies or
directives, (C) bad faith conduct that is materially detrimental to the Company,
or (D) the conviction of you of any crime involving the property or the business
of the Company, or any felony.

      (b)  A "Change of Control" shall be deemed to have occurred if (i) the
Company sells or otherwise disposes of all or substantially all of its assets;
(ii) there is a merger or consolidation of the Company with any other
corporation or corporations, if the shareholders of the Company, as a group, do
not hold, immediately after such event, more than 50% of the voting power of the
surviving or successor corporation; or (iii) a person or entity (exclusive of
persons who are now officers and directors of the Company), including any
"person" as such term is used In Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act), becomes the "beneficial owner" (as
defined in the Exchange Act) of capital stock of the Company representing 40% or
more of the combined voting power of the voting securities of the Company.
<PAGE>

                                   EXHIBIT A

                             STOCK OPTION AGREEMENT

Type of Option

The type of option which you have been granted is designated on the cover sheet.
If designated as an Incentive Stock Option, this option is intended to be an
incentive stock option under section 422 of the Internal Revenue Code (the
"Code") and will be interpreted accordingly.

Vesting

You may exercise this Option during its term in accordance with the exercise
schedule set out in the cover sheet and the applicable provisions of the Plan
and this Stock Option Agreement. In the event of your death, disability or other
termination of employment or consulting relationship, the exercisability of the
Option is governed by the applicable provisions of the Plan and this Stock
Option Agreement.

Early Exercise with Restricted Stock Purchase Agreement

Notwithstanding the vesting schedule described in the coversheet or the
provisions of the foregoing paragraph, you may exercise this Option during its
term at any time as to shares that have not vested (the "Unvested Shares"),
provided that at the time of such exercise you deliver to the Company, in
addition to the other exercise documentation required hereby, an executed copy
of the Restricted Stock Purchase Agreement attached as Exhibit D, along with its
attachments, as applicable (the "Restricted Stock Agreement"), whereby, among
other things, you agree to grant to the Company certain repurchase rights, at
cost, with respect to the Unvested Shares, as more fully set forth therein,
which repurchase rights shall lapse over time with respect to the Unvested
Shares in accordance with the vesting schedule set forth on the coversheet (an
"Early Exercise with Repurchase Agreement").

Term

Your option may be exercised only within the term set out in the cover sheet,
and may be exercised during such term only in accordance with the Plan and this
Stock Option Agreement In any event, your Option wilt expire on the day before
the 10th anniversary of the Date of Grant, as shown on the cover sheet It will
expire earlier if your Company service terminates, as described below.
<PAGE>

Regular Termination

In the event of the termination of your consulting relationship or Continuous
Status as an Employee for any reason other than death or disability, you may, to
the extent otherwise so entitled at the date of such termination, exercise this
Option within 90 days after your termination. To the extent that you were not
entitled to exercise this Option at the date of such termination, or if you do
not exercise your Option within the 90 day period specified above, your Option
will terminate.

Death

In the event of your death, the Option may be exercised at any time within
twelve (12) months following the date of death by your estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that you could exercise the Option at the date of death.

Disability

If your service with the Company (or any Subsidiary) terminates because of your
disability, you may, but only within six (6) months from the date of termination
of employment, exercise the Option to the extent otherwise so entitled at the
date of such termination.

Restrictions on Exercise

The Company will not permit you to exercise this Option if the issuance of
Shares at that time would violate any law or regulation.

Notice of Exercise

When you wish to exercise this Option, you must notify the Company by filing the
proper "Notice of Exercise" form (attached hereto as Exhibit C) at the address
given on the form. Your notice must specify how many Shares you wish to
purchase. Your notice must also specify how your Shares should be registered (in
your name only or in your and your spouse's names as community property or as
joint tenants with right of survivorship). The notice will be effective when it
is received by the Company. If someone else wants to exercise this Option after
your death, that person must prove to the Company's satisfaction that he or she
is entitled to do so. In the event of an Early Exercise with Repurchase
Agreement, you must also execute and deliver the Restricted Stock Purchase
Agreement in the form attached hereto as Exhibit D. along with Exhibits D-2, D-3
and D-4.

Form of Payment

Your Notice of Exercise must be accompanied by payment of the aggregate purchase
price as to all Shares you wish to purchase. Payment of the purchase price shall
be by cash or personal check.
<PAGE>

Tax Matters; Withholding

The Company cannot possibly summarize or advise you regarding all of the
detailed potential tax implications that may arise in connection with an
exercise of this option or the sale of the shares. Accordingly, you are strongly
advised to consult a tax advisor before exercising this Option or disposing of
the shares. You will not be allowed to exercise this Option unless you make
acceptable arrangements to pay any withholding or other taxes that may be due as
a result of the Option exercise or the sale of shares acquired upon exercise of
this Option and the sale of the shares.

Representations

If the Shares you intend to purchase have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised, the
Company may require you to (i) deliver to the Company your Investment
Representation Statement (attached as Exhibit B), which may contain, among other
things, an agreement to refrain from sales of the Shares for up to 180 days
immediately following an underwritten initial public offering, and (ii) read the
applicable rules of the Commissioner of Corporations attached to such Investment
Representation Statement, if applicable.

Right of First Refusal

In the event that you propose to sell, pledge or otherwise transfer to a third
party any Shares acquired under this Stock Option Agreement, or any interest in
such Shares, the Company shall have the "Right of First Refusal" with respect to
all (and not less than all) of such Shares. If you desire to transfer Shares
acquired under this Agreement, you must give a written notice to the Company
describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee. The Company shall have the right to purchase all, and not
less than all of the Shares on the terms of the proposal described In the notice
by delivery of a notice of exercise of the Right of First Refusal within 30 days
after the date when the notice was received by the Company.

If the Company fails to exercise its Right of First Refusal within 30 days after
the date when it received the notice, you may, not later than three (3) months
following receipt of the notice by the Company, conclude a transfer of the
Shares on the terms and conditions described in the notice. If the Company
exercises its Right of First Refusal, the parties shall consummate the sale of
the Shares within 30 days after the date when the Company received the notice.
The Company's Right of First Refusal shall terminate in the event that Stock is
listed on an established stock exchange or is quoted regularly on the Nasdaq
National Market.

Transfer of Option
<PAGE>

Prior to your death, only you may exercise this Option. You cannot transfer or
assign this Option. For instance, you may not sell this Option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, dispose of this option in your
will.

Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse or former spouse, nor
is the Company obligated to recognize such individual's interest in your Option
in any other way.

No Employment Rights

Your Option or this Agreement does not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserves the right to terminate your service at any time and for
any reason.

Shareholder Rights

You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option Shares has been issued. No adjustments are
made for dividends or other rights if the applicable record date occurs before
your stock certificate is issued, except as described in the Plan.

Adjustments

In the event of a stock split, a stock dividend or a similar change in the
Company stock, the number of Shares covered by this Option and the exercise
price per share may be adjusted pursuant to the Plan. In the event of the
proposed dissolution or liquidation of the Company, or of a merger in which the
successor corporation does not agree to assume the Option or Stock Purchase
Right or substitute an equivalent Option or Stock Purchase Right, the Board
shall notify Optionees and Purchasers at least thirty (30) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
or Stock Purchase Right will terminate immediately prior to the consummation of
such proposed action.

Legends

All certificates representing the Shares issued upon exercise of this Option
shall, where applicable, have endorsed thereon the following legends:

    "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
    RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET
    FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
    HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH
    AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND
    WILL BE FURNISHED UPON WRITTEN
<PAGE>

    REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF
    THE SHARES REPRESENTED BY THIS CERTIFICATE."

    "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
    SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
    OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF
    UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
    COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."

Applicable Law

This Agreement will be interpreted and enforced under the laws of the State of
California.

The Plan and Other Agreements

The text of the Plan is incorporated in this Stock Option Agreement by
reference. Certain capitalized terms used in this Agreement are defined in the
Plan.

This Stock Option Agreement (along with all exhibits and attachments) and the
Plan constitute the entire understanding between you and the Company regarding
this Option. Any prior agreements, commitments or negotiations concerning this
Option are superseded.

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
<PAGE>

                                   EXHIBIT B

                      INVESTMENT REPRESENTATION STATEMENT

OPTIONEE :  ((Name))

COMPANY :   WAVESPLITTER TECHNOLOGIES, INC.

SECURITY :  COMMON STOCK

AMOUNT :

DATE     :

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

         (a)   Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the securities. Optionee is
acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

         (b)   Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the securities. Optionee understands that the certificate evidencing the
securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
<PAGE>

         (c)   Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the Optionee,
such exercise will be exempt from registration under the Securities Act. In the
event the Company later becomes subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter
the securities exempt under Rule 701 may be resold, subject to the satisfaction
of certain of the conditions specified by Rule 144, including among other
things: (1) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934); and, in the case of an
affiliate, (2) the availability of certain public information about the Company,
and the amount of securities being sold during any three month period not
exceeding the limitations specified in Rule 144(e), if applicable.

    In the event that the Company does not qualify under Rule 701 at the time of
exercise of the Option, then the securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things: (1) the resale occurring not less than one year after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold: and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than two years, (2) the availability of certain
public information about the Company, (3) the sale being made through a broker
in an unsolicited "broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act of
1934), and (4) the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.

         (d)   Optionee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by Optionee (other than those
shares included in the registration) without the prior written consent of the
Company or the underwriters managing such initial underwritten public offering
of the Company's securities for one hundred eighty (180) days from the effective
date of such registration, and (2) further agrees to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
                 -------- -------
who own stock in the Company also agree to such restrictions.

         (e)   Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a
<PAGE>

substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.

         (f)   Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.

                                    Signature of Optionee:

                                    _________________________________

                                    Date:_________________, ____
<PAGE>

                                   EXHIBIT C

                               NOTICE OF EXERCISE

WAVESPLITTER TECHNOLOGIES, INC.
46430 Fremont Boulevard
Fremont, CA 94538
Attention: Chief Financial Officer

     1.   Exercise of Option.  Effective as of today, _______, ___, the
          -------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_____ shares of the Common Stock (the "Shares") of wavesplitter technologies,
Inc. (the "Company") under and pursuant to the 1997 Stock Plan, as amended (the
"Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option Agreement dated
((Grant_Date)) (the "Option Agreement").
                     ----------------

     2.   Representations of Optionee. Optionee acknowledges that Optionee
          ----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

     3.   Rights as Shareholder. Until the stock certificate evidencing such
          ----------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. 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 12 of the Plan. Thereafter, Optionee
shall enjoy rights as a shareholder until such time as Optionee disposes of the
Shares.

     4.   Company's Right of First Refusal. Optionee understands and
          ---------------------------------
acknowledges that the Shares are subject to certain right of first refusal
provisions under the terms of the Plan and Option Agreement.

     5.   Tax Consultation. Optionee understands that Optionee may suffer
          -----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
<PAGE>

     6.   Restrictive Legends and Stop-Transfer Orders.
          ---------------------------------------------

          (A) Legends. Optionee understands and agrees that the Company shall
              --------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:

          THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
          FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE
          SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
          AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
          AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
          RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
          WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
          CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
          PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

          (B) Stop-Transfer Notices. Optionee agrees that, in order to ensure
              ----------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (C) Refusal to Transfer. The Company shall not be required (i) to
              --------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     7.   Successors and Assigns. The Company may assign any of its rights under
          -----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     8.   Interpretation. Any dispute regarding the interpretation of this
          ---------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.

     9.   Governing Law; Severabilitv. This Agreement shall be governed by and
          ----------------------------
construed in accordance with the laws of the State of California excluding that
body of
<PAGE>

law pertaining to conflicts of law. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.

     10.  Notices. Any notice required or permitted hereunder shall be given in
          --------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     11.  Further Instruments. The parties agree to execute such further
          --------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12.  Delivery of Payment. Optionee herewith delivers to the Company the
          --------------------
full Exercise Price for the Shares.

     13.  Entire Agreement. The Plan and Notice of Grant/Option Agreement are
          -----------------
incorporated herein by reference. This Notice, the Plan, the Option Agreement
(along with all other attachments to the Option Agreement that are executed and
delivered along with this Notice, if any) and the Investment Representation
Statement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and is governed by California law except
for that body of law pertaining to conflict of laws.

Submitted by:                         Accepted by:
OPTIONEE:                             WAVESPLITTER TECHNOLOGIES, INC.
A California corporation              By:_________________________
((Name))
_____________________________         Its:_________________________

_____________________________         ____________________________

_____________________________         ____________________________
(address)                             (address)
_____________________________         _____________________________
<PAGE>

                                   EXHIBIT D

                       WAVESPLITTER TECHNOLOGIES, INC.

                                STOCK 1997 PLAN

                          RESTRICTED STOCK PURCHASE

                                   AGREEMENT

THIS AGREEMENT is made between ((Name)) (the "Purchaser") and WaveSplitter
Technologies, Inc., a California corporation (the "Company") as of___________,

                                   RECITALS
                                   --------

Pursuant to the exercise of the stock option (grant number ((Grant_No))) granted
to Purchaser under the Company's 1997 Stock Plan (the "Plan") and pursuant to
the Stock Option Agreement (the "Option Agreement") dated ((Grant_Date)) by and
between the Company and Purchaser with respect to such grant, which Plan and
Option Agreement are hereby incorporated by reference. Purchaser has elected to
purchase _____ of those shares which have not become vested under the vesting
schedule set forth in the Option Agreement (the "Unvested Shares"). The Unvested
Shares and the shares subject to the Option Agreement which have become vested
are sometimes collectively referred to herein as the "Shares".

As a condition to Purchaser's election to exercise the Option as to the Unvested
Shares, Purchase hereby executes and delivers this Restricted Stock Purchase
Agreement, which sets forth certain rights and obligations of the parties with
respect to the Unvested Shares acquired upon exercise of the Option.

     1.   Repurchase Option.
          ------------------

            (a)  If Purchaser's status as an Employee, Consultant or director,
as applicable, is terminated for any or no reason, including for cause or
without cause, death or disability, the Company shall have the right and option
to purchase from Purchaser, or Purchaser's personal representative, as the case
may be, all or any portion of the Purchaser's Then-Unvested Shares (as defined
below) as of the date of such termination at the original exercise price paid by
the Purchaser for such Shares (the "Repurchase Option"), which repurchase price
may be paid in cash, by cancellation of indebtedness under the Note, or a
combination. The term "Then-Unvested Shares" as used herein shall mean that
portion of the Unvested Shares
<PAGE>

that remain unvested on such termination date in accordance with the vesting
schedule set forth in the cover sheet to the Option Agreement.

    (b)   Upon the occurrence of a termination, the Company may exercise its
Repurchase Option by delivering personally or by registered mail, to Purchaser
(or his transferee or legal representative, as the case may be), within ninety
(90) days of the termination, a notice in writing indicating the Company's
intention to exercise the Repurchase Option and setting forth a date for closing
not later than thirty (30) days from the mailing of such notice. The closing
shall take place at the Company's office. At the closing, the holder of the
certificates for the Then-Unvested Shares being transferred shall deliver the
stock certificate or certificates evidencng the Then-Unvested Shares, and the
Company shall deliver the purchase price therefor.

            (c)  At its option, the Company may elect to make payment for the
Then-Unvested Shares to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company's
office.

            (d)  If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety (90) days following
the termination, the Repurchase Option shall terminate.

            (e)  The Repurchase Option shall terminate in accordance with the
vesting schedule in Optionee's Option Agreement.

     2.   Transferability of the Shares; Escrow.
          --------------------------------------

            (a)  Purchaser hereby authorizes and directs the secretary of the
Company, or such other person designated by the Company, to transfer the Then-
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

            (b)  To insure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 1, Purchaser hereby appoints the secretary, or any other person
designated by the Company as escrow agent, as its attomey-in-fact to sell,
assign and transfer unto the Company, such Unvested Shares, if any, repurchased
by the Company pursuant to the Repurchase Option and shall, upon execution of
this Agreement, deliver and deposit with the secretary of the Company, or such
other person designated by the Company, the share certificates representing the
Unvested Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit D-2. The Unvested Shares and stock assignment shall
                   ------------
be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of
the Company and Purchaser attached as Exhibit D-3 hereto, until the Company
                                      -----------
exercises its purchase right as provided in Section 1, until such Unvested
Shares are vested, or until such
<PAGE>

time as this Agreement no longer is in effect. As a further condition to the
Company's obligations under this Agreement, the spouse of the Purchaser, if any,
shall execute and deliver to the Company the Consent of Spouse attached hereto
as Exhibit D-4. Upon vesting of the Unvested Shares, the escrow agent shall
   ------------
promptly upon written request, or periodically without written request, deliver
to the Purchaser the certificate or certificates representing such Shares in the
escrow agent's possession belonging to the Purchaser, and the escrow agent shall
be discharged of all further obligations hereunder, provided, however, that the
escrow agent shall nevertheless retain such certificate or certificates as
escrow agent if so required pursuant to other restrictions imposed pursuant to
this Agreement.

            (c)  The Company, or its designee, shall not be liable for any act
it may do or omit to do with respect to holding the Shares in escrow and while
acting in good faith and in the exercise of its judgment.

            (d)  Purchaser shall not sell, transfer, pledge, hypothecate or
otherwise dispose of any of the Unvested Shares which remain subject to the
Company's Repurchase Option. Notwithstanding the foregoing, upon prior written
consent of the Company (which consent shall not be unreasonably withheld), the
Purchaser may assign or transfer Unvested Shares for family planning, tax
planning or estate planning, or other such purposes, provided the transferee
agrees to be bound by all obligations of the Purchaser, and the Company is
reasonably secure that such obligations remain enforceable against the
transferee.

            (e)  Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser with respect to any Unvested Shares
purchased by Purchaser and shall acknowledge the same by signing a copy of this
Agreement.

      3.  Ownership, Voting Rights, Duties. This Agreement shall not affect in
          ---------------------------------
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.

     4.   Legends. The share certificate evidencing the Shares issued hereunder
          --------
may be endorsed with the legend substantially to the following effect (in
addition to any legend required under applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
<PAGE>

     5.   Adjustment for Stock Split. All references to the number of Shares
          ---------------------------
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.

     6.   Notices. Notices required hereunder shall be given in person or by
          --------
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.

     7.   Survival of Terms. This Agreement shall apply to and bind Purchaser
          ------------------
and the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.

     8.   Section 83(b) Election. Purchaser hereby acknowledges that he or she
          -----------------------
has been informed that, with respect to the exercise of an Option for unvested
Shares, an election may be filed by the Purchaser with the Internal Revenue
Service, within 30 days of the purchase of the Shares, electing pursuant to
         --------------
Section 83(b) of the Code to be taxed currently on any difference between the
purchase price of the Shares and their Fair Market Value on the date of
purchase. In the case of a Nonstatutory Stock Option, this will result in a
recognition of taxable income to the Purchaser on the date of exercise, measured
by the excess, if any, of the fair market value of the Shares, at the time the
Option is exercised over the purchase price for the Shares. Absent such an
election, taxable income will be measured and recognized by Purchaser at the
time or times on which the Company's Repurchase Option lapses. In the case of an
Incentive Stock Option, such an election will result in a recognition of income
to the Purchaser for alternative minimum tax purposes on the date of exercise,
measured by the excess, if any, of the fair market value of the Shares, at the
time the option is exercised, over the purchase price for the Shares. Absent
such an election, alternative minimum taxable income will be measured and
recognized by Purchaser at the time or times on which the Company's Repurchase
Option lapses. Purchaser is strongly encouraged to seek the advice of his or her
own tax consultants in connection with the purchase of the Shares and the
advisability of filing of the Election under Section 83(b) of the Code. A form
of Election under Section 83(b) is attached hereto as Exhibit D-5 for reference.
                                                      -----------

PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF-PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.

     9.   Representations. Purchaser has reviewed with his own tax advisors the
          ----------------
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement.  Purchaser is relying solely on
such advisors and not on any statements or representations of the Company or any
of its agents. Purchaser understands that he (and not the Company) shall be
responsible
<PAGE>

for his own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.

     10.  Governing Law. This Agreement shall be governed by the internal
          --------------
substantive laws, but not the choice of law rules, of California.

     Purchaser represents that he has read this Agreement and is familiar with
its terms and provisions. Purchaser hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement.

     IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set
forth above.

                            "COMPANY"

                            WAVESPLITTER TECHNOLOGIES, INC.

                                 By:_____________________________

                                 Title:__________________________

                                 "PURCHASER"

                                 Signature ______________________

                                 Printed Name____________________

                                 Soc. Sec. No. __________________

                                 Address:________________________
<PAGE>

                                  Exhibit D-2
                                  -----------

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED I, ((Name)), hereby sell, assign and transfer unto
WaveSplitter Technologies, Inc. _______________ (______) shares of the Common
Stock of WaveSplitter Technologies, Inc. standing in my name of the books of
said corporation represented by Certificate No.___ herewith and do hereby
irrevocably constitute and appoint __________________ to transfer the said stock
on the books of the within named corporation with full power of substitution in
the premises.

This Stock Assignment may be used only in accordance with the Restricted Stock
Purchase Agreement by and between WaveSplitter Technologies, Inc. and the
undersigned dated ________, ___.

Dated: ________________, ___________

                                 Signature:_____________________

                                 ((Name))_______________________

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE>

                                  Exhibit D-3
                                  -----------

                           JOINT ESCROW INSTRUCTIONS
                           -------------------------

                                                     _______,  ____

The Law Office of Robert D. Cochran
2105 Woodside Road
Woodside, CA 94062
Attention: Robert D. Cochran, Esq.
Secretary

Dear Secretary:

As Escrow Agent for both WaveSplitter Technologies, Inc. (the "Company"), and
the undersigned purchaser of stock of the Company (the "Purchaser"), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Restricted Stock Purchase Agreement ("Agreement")
between the Company and the undersigned, in accordance with the following
instructions:

     1.   In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.

     2.   At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, cancellation of indebtedness, if applicable, or some combination
thereof) for the number of shares of stock being purchased pursuant to the
exercise of the Company's repurchase option.

     3.   Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to
<PAGE>

complete any transaction herein contemplated, including but not limited to the
filing with any applicable state blue sky authority of any required applications
for consent to, or notice of transfer of, the securities. Subject to the
provisions of this paragraph 3, Purchaser shall exercise all rights and
privileges of a stockholder of the Company while the stock is held by you.

     4.   Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 120 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

     5.   If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.

     6.   Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

     7.   You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

     8.   You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
<PAGE>

     9.   You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

     10.  You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

     11.  You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

     12.  Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each the Company. In the event of any such termination, the
Company shall have the right, in its sole discretion, to appoint a successor
Escrow Agent.

     13.  If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

     14.  It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

     15.  Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.

          COMPANY:   WaveSplitter Technologies, Inc.
                     46430 Fremont Blvd.
                     Fremont., CA 94538
                     Attention: Chief Financial Officer
<PAGE>

         PURCHASER:    _______________________

                       _______________________

                       _______________________

         ESCROW AGENT: The Law Office of Robert D. Cochran
                       2105 Woodside Road
                       Woodside, CA 94062
                       Attention: Robert D. Cochran, Esq.

     16.  By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

     17.  This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

     18.  These Joint Escrow Instructions shall be governed by the internal
substantive laws, but not the choice of law rules, of California.

                            WAVESPLITTER TECHNOLOGIES, INC.

                            _____________________________________
                            Bruce Pollock, Chief Financial Officer

                            PURCHASER

                            _____________________________________
                            ((Name))

                            ESCROW AGENT

                            ____________________________________
                            Robert D. Cochran
<PAGE>

                                  Exhibit D-4
                                  -----------

                               CONSENT OF SPOUSE
                               -----------------

     1. ____________. spouse of ((Name)), have read and approve the foregoing

Agreement. In consideration of granting of the right to my spouse to purchase
shares of WaveSplitter Technologies, Inc., as set forth in the Agreement, I
hereby appoint my spouse as my attomey-in-fact in respect to the exercise of any
rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.

Dated: _________, ____

                            _____________________________________
                            Signature of Spouse
<PAGE>

                                  Exhibit D-5
                                  -----------

                     ELECTION UNDER SECTION 83(b) OF THE
                     -----------------------------------
                         INTERNAL REVENUE CODE OF 1986
                         -----------------------------

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
or alternative minimum taxable income, as the case may be, for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:

1.   The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

     Name of Taxpayer:  ((Name))

     Name of Spouse:    _______________________

     Address:           _______________________

                        _______________________

     Tax I.D. No. of Taxpayer:  ________________________

     Tax I.D. No. of Spouse:    ________________________

     Taxable year:              ________________________

2.   The property with respect to which the election is made is described as
     follows: ________ shares (the "Shares") of the Common Stock of WaveSplitter
     Technologies, Inc., a California corporation (the "Company").

3.   The date on which the property was transferred is: ________, __.

4.   The property is subject to the following restrictions:

     The Shares may not be transferred and are subject to forfeiture under the
     terms of an agreement between the taxpayer and the Company. These
     restrictions lapse upon the satisfaction of certain conditions contained in
     such agreement.

5.   The fair market value at the time of transfer, determined without regard to
     any restriction other than a restriction which by its terms will never
     lapse, of such property is:
     $_____________.
<PAGE>

6.   The amount (if any) paid for such property is:
     $_____________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
--------------------------------------------------------------------------
except with the consent of the Commissioner.
--------------------------------------------

Dated: _________________   Taxpayer ((Name)) _________________________

Dated: _________________   Spouse of Taxpayer ________________________<PAGE>

                                                                     EXHIIT 10.3

                                    FORM OF
                        WAVESPLITTER TECHNOLOGIES, INC.
                           2000 STOCK INCENTIVE PLAN

Section 1.  Purpose of Plan.

               The name of this plan is the WaveSplitter Technologies, Inc. 2000
Stock Incentive Plan (the "Plan"). The Plan was adopted by the Board (as
hereinafter defined) on September 28, 2000 and approved by the stockholders of
the Company (as hereinafter defined) on ___________. The purpose of the Plan is
to enable the Company (as hereinafter defined) and its Related Companies (as
hereinafter defined) to attract, retain and reward employees, directors,
advisors and consultants and to strengthen the existing mutuality of interests
between such persons and the Company's stockholders. To accomplish the
foregoing, the Plan provides that the Company may grant Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Dividend
Equivalents and Other Awards (each as hereinafter defined). The Plan is
intended, to the extent applicable, to satisfy the requirements of section
162(m) of the Code (as hereinafter defined) and shall be interpreted in a manner
consistent with the requirements thereof.

Section 2.  Definitions.

               For purposes of the Plan, the following terms shall be defined as
set forth below:

               (a)     "Award" means an award of Incentive Stock Options,
                        -----
Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Dividend
Equivalents or Other Awards under the Plan.

               (b)     "Award Agreement" means, with respect to each Award, the
                        ---------------
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

               (c)     "Board" means the board of directors of the Company.
                        -----

               (d)     "Cause" means, unless otherwise provided in an Award
                        -----
Agreement, (1) the willful and continued failure by the Participant to
substantially perform his or her duties and obligations to the Company,
including without
<PAGE>

limitation repeated refusal to follow the reasonable directions of the employer
or supervisor, knowing violation of law in the course of performance of the
duties of Participant's employment or service with the Company, repeated or
excessive absences from work without a reasonable excuse; (2) fraud or material
dishonesty against the Company; or (3) the commission of acts constituting, the
indictment or conviction of, or plea of guilty or nolo contendere for, the
commission of a felony or a crime involving material dishonesty. Determination
of Cause shall be made by the Committee in its sole discretion.

          (e)  "Change in Capitalization" means any increase, reduction, or
                ------------------------
change or exchange of Shares for a different number or kind of shares or other
securities or property by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, issuance of warrants or rights, stock
dividend, stock split or reverse stock split, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise; or any other
corporate action, such as declaration of a special dividend, that affects the
capitalization of the Company.

          (f)  "Change in Control" means the first to occur of any one of the
                -----------------
events set forth in the following paragraphs, provided, however, that the first
underwritten initial public offering of Shares of the Company shall not
constitute a Change in Control:

          (i)  any Person is or becomes the "Beneficial Owner" (as defined in
               Rule 13d-3 under the Exchange Act), directly or indirectly, of
               securities of the Company (not including in the securities
               Beneficially Owned by such Person any securities acquired
               directly from the Company) representing 35% or more of the
               Company's then outstanding securities, excluding any Person who
               becomes such a Beneficial Owner in connection with a transaction
               described in clause (A) of paragraph (iii) hereof; or

          (ii) the following individuals cease for any reason to constitute a
               majority of the number of directors then serving: individuals
               who, on the Effective Date (as defined in Section 15), constitute
               the Board and any new director (other than a director whose
               initial assumption of office is in connection with an actual or
               threatened election contest, including but not limited to a
               consent solicitation, relating to the election of directors of

                                       2
<PAGE>

               the Company) whose appointment or election by the Board or
               nomination for election by the Company's stockholders was
               approved or recommended by a vote of at least two-thirds (2/3) of
               the directors then still in office who either were directors on
               the Effective Date or whose appointment, election or nomination
               for election was previously so approved or recommended; or

        (iii)  there is consummated a merger or consolidation of the Company
               with any other corporation other than (A) a merger or
               consolidation which results in the directors of the Company
               immediately prior to such merger or consolidation continuing to
               constitute at least a majority of the board of directors of the
               Company, the surviving entity or any parent thereof, or (B) a
               merger or consolidation effected to implement a recapitalization
               of the Company (or similar transaction) in which no Person is or
               becomes the Beneficial Owner, directly or indirectly, of
               securities of the Company (not including in the securities
               Beneficially Owned by such Person any securities acquired
               directly from the Company) representing 35% or more of the
               combined voting power of the Company's then outstanding
               securities; or

        (iv)   the stockholders of the Company approve a plan of complete
               liquidation or dissolution of the Company or there is consummated
               an agreement for the sale or disposition by the Company of all or
               substantially all of the Company's assets, other than a sale or
               disposition by the Company of all or substantially all of the
               Company's assets to an entity at least a majority of the board of
               directors of which comprises individuals who were directors of
               the Company immediately prior to such sale or disposition.

          (g)  "Code" means the Internal Revenue Code of 1986, as amended from
                ----
time to time, or any successor thereto.

          (h)  "Committee" means the committee established by the Board to
                ---------
administer the Plan. The composition of the Committee shall at all times consist
solely of persons who are (i) "Nonemployee Directors" as defined in Rule 16b-3

                                       3
<PAGE>

issued under the Exchange Act, and (ii) unless otherwise determined by the
Board, "outside directors" as defined in section 162(m) of the Code.

          (i)  "Common Stock" means the common stock, par value $.001 per share,
                ------------
of the Company.

          (j)  "Company" means WaveSplitter Technologies, Inc., a Delaware
                -------
corporation (or any successor corporation).

          (k)  "Disability" means (1) any physical or mental condition that
                ----------
would qualify a Participant for a disability benefit under any long-term
disability plan maintained by the Company; (2) when used in connection with the
exercise of an Incentive Stock Option following termination of employment,
disability within the meaning of section 22(e)(3) of the Code; or (3) such other
condition as may be determined in the sole discretion of the Committee to
constitute Disability.

          (l)  "Dividend Equivalent" means a right granted under Section 9 to
                -------------------
receive cash, Shares, or other property equal in value to dividends paid with
respect to a specified number of Shares. Dividend Equivalents may be awarded on
a free-standing basis or in connection with another Award, and may be paid
currently or on a deferred basis.

          (m)  "Eligible Recipient" means an officer, director, employee,
                ------------------
consultant or advisor of the Company or of any Parent or Related Company.

          (n)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
                ------------
amended from time to time.

          (o)  "Exercise Price" means the per share price at which a holder of
                --------------
an Option may purchase the Shares issuable upon exercise of the Option.

          (p)  "Fair Market Value" as of a particular date shall mean the fair
                -----------------
market value of a Share as determined by the Committee in its sole discretion;
provided that (i) if the Shares are admitted to trading on a national securities
exchange, fair market value of a Share on any date shall be the closing sale
price reported for such Share on such exchange on the last day preceding such
date on which a sale was reported, (ii) if the Shares are admitted to quotation
on the National Association of Securities Dealers Automated Quotation ("Nasdaq")
System or other comparable quotation system and has been designated as a
National Market System

                                       4
<PAGE>

("NMS") security, fair market value of a Share on any date shall be the closing
sale price reported for such Share on such system on the last date preceding
such date on which a sale was reported, or (iii) if the Shares are admitted to
quotation on the Nasdaq System but have not been designated as an NMS security,
fair market value of a Share on any date shall be the average of the highest bid
and lowest asked prices of such Share on such system on the last date preceding
such date on which both bid and ask prices were reported.

          (q)  "Immediate Family" shall mean any child, stepchild, grandchild,
                ----------------
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
daughter-in-law, son-in-law, brother-in-law, or sister-in-law, including
adoptive relationships and any person sharing the employee's household (other
than a tenant or employee).

          (r)  "Incentive Stock Option" shall mean an Option that is an
                ----------------------
"incentive stock option" within the meaning of section 422 of the Code, or any
successor provision, and that is designated by the Committee as an Incentive
Stock Option.

          (s)  "Nonqualified Stock Option" means any Option that is not an
                -------------------------
Incentive Stock Option, including any Option that provides (as of the time such
Option is granted) that it will not be treated as an Incentive Stock Option.

          (t)  "Option" means an Incentive Stock Option, a Nonqualified Stock
                ------
Option, or either or both of them, as the context requires.

          (u)  "Other Award" means an Award granted pursuant to Section 10
                -----------
hereof.

          (v)  "Parent" means any corporation (other than the Company) in an
                ------
unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50% or
more of the combined voting power of all classes of stock in one of the other
corporations in the chain.

          (w)  "Participant" means any Eligible Recipient selected by the
                -----------
Committee, pursuant to the Committee's authority in Section 3 hereof, to receive
Awards. A Participant who receives the grant of an Option is sometimes referred
to herein as "Optionee."

                                       5
<PAGE>

          (x)  "Person" shall have the meaning given in Section 3(a)(9) of the
                ------
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

          (y)  "Plan" means this WaveSplitter Technologies, Inc. 2000 Stock
                ----
Incentive Plan.

          (z)  "Related Company" means any corporation, partnership, joint
                ---------------
venture or other entity in which the Company owns, directly or indirectly, at
least a 20% beneficial ownership interest.

          (aa) "Restricted Stock" means Shares subject to certain restrictions
                ----------------
granted pursuant to Section 8 hereof.

          (ab) "Restricted Stock Units" means the right to receive in cash or
                ----------------------
Shares the Fair Market Value of a Share of Company Stock granted pursuant to
Section 8 hereof.

          (ac) "Shares" means shares of Common Stock and any successor security.
                ------

          (ad) "Subsidiary" means any corporation (other than the Company)
                ----------
in an unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

Section 3.  Administration.

          (a)  The Plan shall be administered by the Committee, which shall
serve at the pleasure of the Board. Pursuant to the terms of the Plan, and
except as provided in Section 7(k), the Committee shall have the power and
authority, without limitation:

                                       6
<PAGE>

               (i)   to select those Eligible Recipients who shall be
     Participants;

               (ii)  to determine whether and to what extent Options or awards
     of Restricted Stock, Restricted Stock Units, Dividend Equivalents or Other
     Awards are to be granted hereunder to Participants;

               (iii) to determine the number of Shares to be covered by each
     Award granted hereunder;

               (iv)  to determine the terms and conditions, not inconsistent
     with the terms of the Plan, of each Award granted hereunder;

               (v)   to determine the terms and conditions, not inconsistent
     with the terms of the Plan, which shall govern all written instruments
     evidencing Options or awards of Restricted Stock, Restricted Stock Units,
     Dividend Equivalents or Other Awards granted hereunder;

               (vi)  to adopt, alter and repeal such administrative rules,
     guidelines and practices governing the Plan as it shall from time to time
     deem advisable; and

               (vii) to interpret the terms and provisions of the Plan and any
     Award issued under the Plan (and any Award Agreement relating thereto) in
     its sole discretion and to otherwise supervise the administration of the
     Plan.

        (b)  The Committee may, in its absolute discretion, without amendment to
the Plan, (i) accelerate the date on which any Option granted under the Plan
becomes exercisable, waive or amend the operation of Plan provisions respecting
exercise after termination of employment or otherwise adjust any of the terms of
such Option, and (ii) accelerate the lapse of restrictions, or waive any
condition imposed hereunder, with respect to any share of Restricted Stock or
Restricted Stock Unit or otherwise adjust any of the terms applicable to any
such Award; provided that no action under this Section 3(b) shall adversely
affect any outstanding Award without the consent of the holder thereof.

                                       7
<PAGE>

          (c)  All decisions made by the Committee pursuant to the provisions of
the Plan shall be final, conclusive and binding on all persons, including the
Company and the Participants. No member of the Board or the Committee, nor any
officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

Section 4.  Shares Reserved for Issuance Under the Plan.

          (a) The total number of Shares reserved and available for issuance
under the Plan shall be 16,000,000 Shares, provided, however, that on the first
day of each fiscal year of the Company (beginning in 2002) such number shall be
increased by an amount equal to the lesser of (i) 4,000,000 Shares or (ii) 4% of
the number of outstanding Shares on the last trading day of the immediately
preceding fiscal year. Such Shares may consist, in whole or in part, of
authorized and unissued Shares or treasury shares.

          (b)  To the extent that (i) an Option expires or is otherwise
cancelled or terminated without being exercised, or (ii) any Shares subject to
any award of Restricted Stock, Restricted Stock Units, Dividend Equivalents or
Other Awards are forfeited, such Shares shall again be available for issuance in
connection with future Awards granted under the Plan. If any Shares have been
pledged as collateral for indebtedness incurred by a Participant in connection
with the exercise of an Option and such Shares are returned to the Company in
satisfaction of such indebtedness, such Shares shall again be available for
issuance in connection with future Awards granted under the Plan.

          (c)  The aggregate number of Shares with respect to which Awards may
be granted to any individual Optionee during any fiscal year shall not exceed
50% of the Shares outstanding in that fiscal year.

                                       8
<PAGE>

Section 5.  Equitable Adjustments; Change in Control

          (a)  In the event of any Change in Capitalization, an equitable
substitution or proportionate adjustment shall be made in (i) the aggregate
number and/or kind of Shares reserved for issuance under the Plan, (ii) the
kind, number and/or Exercise Price of Shares or other property subject to
outstanding Options granted under the Plan, and (iii) the kind, number and/or
purchase price of Shares or other property subject to outstanding awards of
Restricted Stock, Restricted Stock Units, Dividend Equivalents and Other Awards
granted under the Plan, in each case as may be determined by the Committee, in
its sole discretion. Such other equitable substitutions or adjustments shall be
made as may be determined by the Committee, in its sole discretion. Without
limiting the generality of the foregoing, in connection with a Change in
Capitalization, the Committee may provide, in its sole discretion, for the
cancellation of any outstanding Awards in exchange for payment in cash or other
property of the Fair Market Value of the Shares covered by such Awards, reduced,
in the case of Options, by the exercise price thereof.

          (b)  In the event of a Change of Control, unless an Award is assumed
or an equivalent award or right is substituted therefor, such Awards shall
become fully vested and exercisable and all restrictions on the vesting or
exercisability of such Awards shall lapse as of the date of the Change of
Control. Notwithstanding the foregoing, the Committee may, in its sole
discretion, at the time of grant or any time thereafter, accelerate vesting
and/or exercisability or provide for the lapsing in whole or in part of any or
all restrictions on vesting or exercisability of any Award granted pursuant to
this Plan in the event of a Change in Control.

Section 6.  Eligibility.

          The Participants under the Plan shall be selected from time to time by
the Committee, in its sole discretion, from among Eligible Recipients. The
Committee shall have the authority to grant to any Eligible Recipient Incentive
Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock
Units, Dividend Equivalents or Other Awards, provided that directors of the
Company or any Parent or Related Company who are not employees of the Company or
of any Parent or Related Company, and consultants or advisors to the Company or
to any Parent or Related Company may not be granted Incentive Stock Options and
further provided that Incentive Stock Options may not be granted to an employee
of a Related Company if such Related Company is not a Subsidiary.

                                       9
<PAGE>

Section 7.  Options.

          (a)  General. Options may be granted alone or in addition to other
               -------
Awards granted under the Plan. Any Option granted under the Plan shall be
evidenced by an Award Agreement in such form as the Committee may from time to
time approve. The provisions of each Option need not be the same with respect to
each Participant. Participants who are granted Options shall enter into an Award
Agreement with the Company, in such form as the Committee shall determine, which
Award Agreement shall set forth, among other things, the Exercise Price of the
Option, the term of the Option and provisions regarding exercisability and
vesting of the Option granted thereunder. The Options granted under the Plan may
be of two types: (i) Incentive Stock Options and (ii) Nonqualified Stock
Options. To the extent that any Option does not qualify as an Incentive Stock
Option, it shall constitute a separate Nonqualified Stock Option. More than one
Option may be granted to the same Participant and be outstanding concurrently
hereunder. Options granted under the Plan shall be subject to the terms and
conditions set forth in paragraphs (b)-(j) of this Section 7 and the Award
Agreement shall contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem desirable.

          (b)  Exercise Price. The per share Exercise Price of Shares
               --------------
purchasable under an Option shall be determined by the Committee in its sole
discretion at the time of grant but shall not, in the case of Incentive Stock
Options, be less than 100% of the Fair Market Value per Share on such date (110%
of the Fair Market Value per Share on such date if, on such date, the Eligible
Recipient owns (or is deemed to own under the Code) stock possessing more than
ten percent (a "Ten Percent Owner") of the total combined voting power of all
classes of Common Stock).

          (c)  Option Term. The term of each Option shall be fixed by the
               -----------
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted. If the Eligible Participant is a Ten Percent Owner, an
Incentive Stock Option may not be exercisable after the expiration of five years
from the date such Incentive Stock Option is granted.

          (d)  Exercisability. Options shall be exercisable at such time or
               --------------
times and subject to such terms and conditions, including the attainment of
preestablished corporate performance goals, as shall be determined by the
Committee in the

                                       10
<PAGE>

Award Agreement or after the time of grant, provided that no action under this
Section 7(d) following the time of grant shall adversely affect any outstanding
Option without the consent of the holder thereof. The Committee may also provide
that any Option shall be exercisable only in installments, and the Committee may
waive such installment exercise provisions at any time, in whole or in part,
based on such factors as the Committee may determine in its sole discretion.

          The Committee may provide at the time of grant or anytime thereafter,
in its sole discretion, that any Option shall be exercisable with respect to
Shares that otherwise would not then be exercisable, provided that, in
connection with such exercise, the Optionee enters into a form of Restricted
Stock Award Agreement approved by the Committee.

          (e)  Method of Exercise. Options may be exercised in whole or in part
               ------------------
by giving written notice of exercise to the Company specifying the number of
Shares to be purchased, accompanied by payment in full of the aggregate Exercise
Price of the Shares so purchased in cash or its equivalent, as determined by the
Committee. As determined by the Committee, in its sole discretion, payment in
whole or in part may also be made (i) by means of any cashless exercise
procedure approved by the Committee, (ii) in the form of unrestricted Shares or
Restricted Stock already owned by the Optionee which, (x) in the case of
unrestricted Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and (y) has a Fair
Market Value on the date of surrender equal to the aggregate option price of the
Shares as to which such Option shall be exercised, provided that, in the case of
an Incentive Stock Option, the right to make payment in the form of already
owned Shares or Restricted Stock may be authorized only at the time of grant,
(iii) loans pursuant to paragraph (g) of this Section 7, (iv) any other form of
consideration approved by the Committee and permitted by applicable law or (v)
any combination of the foregoing. If payment of the Exercise Price is made in
whole or in part in the form of Restricted Stock, the Shares received upon the
exercise of such Option shall be restricted in accordance with the original
terms of the Restricted Stock award in question, except that the Committee may
direct that such restrictions shall apply only to that number of Shares equal to
the number of Shares surrendered upon the exercise of such Option.

          (f)  Rights as Stockholder. An Optionee shall have no rights to
               ---------------------
dividends or any other rights of a stockholder with respect to the Shares
subject to the Option until the Optionee has given written notice of exercise,
has paid in full for such Shares, has satisfied the requirements of Section 13
hereof and, if re-

                                       11
<PAGE>

quested, has given the representation described in paragraph (b) of Section 14
hereof.

          (g)  Loans. The Company or any Parent or Related Company may make
               -----
loans available to Optionees for the payment of the exercise price of
outstanding Options. Such loans shall (i) be evidenced by promissory notes
entered into by the Optionees in favor of the Company or any Parent or Related
Company, (ii) bear interest at the applicable federal interest rate or such
other rate as the Committee shall determine, (iii) be subject to such other
terms and conditions, not inconsistent with the Plan, as the Committee shall
determine, and (iv) be subject to Committee approval. Unless the Committee
determines otherwise, when a loan is made, Shares having an aggregate Fair
Market Value at least equal to the principal amount of the loan shall be pledged
by the Optionee to the Company as security for payment of the unpaid balance of
the loan, and such pledge shall be evidenced by a pledge agreement, the terms of
which shall be determined by the Committee, in its sole discretion; provided
that each loan shall comply with all applicable laws, regulations and rules of
the Board of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction.

          (h)  Nontransferability of Options. The Optionee shall not be
               -----------------------------
permitted to sell, transfer, pledge or assign any Option other than by will and
the laws of descent and distribution (including, with respect to a Nonqualified
Stock Option only, by instrument to an inter vivos or testamentary trust in
which the Options are to be passed to beneficiaries upon the death of the
Participant) and all Options shall be exercisable during the Participant's
lifetime only by the Participant, in each case, except as set forth in the
following two sentences. During an Optionee's lifetime, the Committee may, in
its discretion, permit the transfer, assignment or other encumbrance of an
outstanding Option if such Option is a Nonqualified Stock Option or an Incentive
Stock Option that the Committee and the Participant intend to change to a
Nonqualified Stock Option. Subject to the approval of the Committee and to any
conditions that the Committee may prescribe, an Optionee may, upon providing
written notice to the Company, elect to transfer any or all Options described in
the preceding sentence to members of his or her Immediate Family, provided that
no such transfer by any Participant may be made in exchange for consideration.

          (i)  Termination of Employment or Service. Unless otherwise provided
               ------------------------------------
in an Award Agreement, if an Optionee's employment with, or service as a
director, consultant or advisor to, the Company or to any Parent or Related Com-

                                       12
<PAGE>

pany terminates for any reason other than Cause, (i) Options granted to such
Participant, to the extent that they are exercisable at the time of such
termination, shall remain exercisable until the date set forth in the Award
Agreement, or such later date as is otherwise determined by the Committee, but
in no event shall such exercise period be less than 30 days after such
termination (six months in the case of termination by reason of death or
Disability), on which date they shall expire, and (ii) Options granted to such
Optionee, to the extent that they were not exercisable at the time of such
termination, shall expire on the date of such termination. The 30-day period
described in the preceding sentence (i) shall be extended to six months from the
date of such termination in the event of the Optionee's death or Disability
during such 30-day period. Notwithstanding the foregoing, no Option shall be
exercisable after the expiration of its term. Unless provided in an Award
Agreement or in the Committee's discretion any time thereafter, in the event of
the termination of an Optionee's employment for Cause, all outstanding Options
granted to such Participant shall expire on the date of such termination.

          (j)  Limitation on Incentive Stock Options. To the extent that the
               -------------------------------------
aggregate Fair Market Value of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year under the Plan and any other stock option plan of the Company shall exceed
$100,000, such Options shall be treated as Nonqualified Stock Options. Such Fair
Market Value shall be determined as of the date on which each such Incentive
Stock Option is granted.

          (k)  Automatic Grants of Stock Options to Non-Employee Directors. The
               -----------------------------------------------------------
Company shall grant Nonqualified Stock Options to non-employee directors of the
Company pursuant to this Section 7(k), which grants shall be automatic and
nondiscretionary and otherwise subject to the terms and conditions set forth in
this Section 7(k) and the terms of the Plan ("Automatic Non-Employee Director
Options"). Upon initial election to the Board each non-employee director shall
be automatically granted a Nonqualified Stock Option to purchase 40,000 Shares
(an "Initial Option"). Commencing on the Company=s first annual meeting of
stockholders immediately following the Effective Date, each non-employee
director shall be automatically granted a Nonqualified Stock Option to purchase
10,000 Shares (the "Annual Options") on the date immediately following the
Company's annual meeting of stockholders; provided, that he or she is then a
director of the Company and, provided, further, that as of such date, such
director shall have served on the Board for at least the preceding six (6)
months.

                                       13
<PAGE>

          The term of each Automatic Non-Employee Director Option shall be five
(5) years, and the per Share Exercise Price of an Automatic Non-Employee
Director Option shall be no less than 100% of the Fair Market Value on the date
of grant, provided, however, in no event shall the Exercise Price of an
Automatic Non-Employee Director Option be less than the par value (if any) of
the Shares. Each Initial Option shall become vested and exercisable as to one-
third (a) of the Shares of the Initial Option on the first anniversary of the
date of grant, and shall become vested and exercisable as to an additional one-
third (a) of the Shares of the Initial Option on each of the subsequent two (2)
anniversaries of the date of grant. Each Annual Option shall become fully vested
and exercisable as to all of the Shares of the Annual Option on the first
anniversary of the date of grant of such Option.

          In the event that the number of Shares available for grant under the
Plan is not sufficient to accommodate the Automatic Non-Employee Director
Options, then the remaining Shares available for Automatic Non-Employee Director
Options shall be granted to non-employee directors on a pro-rata basis. No
further grants shall be made until such time, if any, as additional Shares
become available for grant under the Plan through action of the Board and/or the
stockholders of the Company to increase the number of Shares that may be issued
under the Plan or through cancellation or expiration of Awards previously
granted hereunder.

Section 8.  Restricted Stock and Restricted Stock Units.

          (a)  General. Awards of Restricted Stock and Restricted Stock Units
               -------
may be issued either alone or in addition to other Awards granted under the Plan
and shall be evidenced by an Award Agreement. The Committee shall determine the
Eligible Recipients to whom, and the time or times at which, Awards of
Restricted Stock and Restricted Stock Units shall be made; the number of Shares
and/or Units to be awarded; the price, if any, to be paid by the Participant for
the acquisition of Restricted Stock; and the Restricted Period (as defined in
Section 8(d)) applicable to awards of Restricted Stock and Restricted Stock
Units. The provisions of the awards of Restricted Stock or Restricted Stock
Units need not be the same with respect to each Participant.

          (b)  Purchase Price. The price per Share, if any, that a Participant
               --------------
must pay for Shares purchasable under an award of Restricted Stock shall be
determined by the Committee in its sole discretion at the time of grant.

                                       14
<PAGE>

          (c)  Awards and Certificates. The prospective recipient of an Award of
               -----------------------
Restricted Stock shall not have any rights with respect to any such Award,
unless and until such recipient has executed an Award Agreement evidencing the
Award and delivered a fully executed copy thereof to the Company, within such
period as the Committee may specify after the award date. Each Participant who
is granted an award of Restricted Stock shall be issued a stock certificate in
respect of such shares of Restricted Stock, which certificate shall be
registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to any such
Award; provided that the Company may require that the stock certificates
evidencing Restricted Stock granted hereunder be held in the custody of the
Company until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have delivered
a stock power, endorsed in blank, relating to the Shares covered by such Award.

          (d)  Nontransferability. The Awards of Restricted Stock and Restricted
               ------------------
Stock Units granted pursuant to this Section 8 shall be subject to the
restrictions on transferability set forth in this paragraph (d). During such
period as may be set by the Committee in the Award Agreement (the "Restricted
Period"), the Participant shall not be permitted to sell, transfer, pledge,
hypothecate or assign shares of Restricted Stock or Restricted Stock Units
awarded under the Plan except by will or the laws of descent and distribution;
provided that the Committee may, in its sole discretion, provide for the lapse
of such restrictions in installments and may accelerate or waive such
restrictions in whole or in part based on such factors and such circumstances as
the Committee may determine in its sole discretion. The Committee may also
impose such other restrictions and conditions, including the achievement of
preestablished corporate performance goals, on awarded Restricted Stock and
Restricted Stock Units as it deems appropriate. In no event shall the Restricted
Period end with respect to a Restricted Stock Award or Restricted Unit Award
prior to the satisfaction by the Participant of any liability arising under
Section 13 hereof. Any attempt to dispose of any Restricted Shares in
contravention of any such restrictions shall be null and void and without
effect.

          (e)  Rights as a Stockholder. Except as provided in Section 8(c) or as
               -----------------------
otherwise provided in an Award Agreement, the Participant shall possess all
incidents of ownership with respect to Shares of Restricted Stock during the
Restricted Period, including the right to receive or reinvest dividends with
respect to such Shares and to vote such Shares. Certificates for unrestricted
Shares shall be delivered to the Participant promptly after, and only after, the
Restricted Period shall

                                       15
<PAGE>

expire without forfeiture in respect of such awards of Restricted Stock except
as the Committee, in its sole discretion, shall otherwise determine. A
Participant who is awarded Restricted Stock Units shall possess no incidents of
ownership with respect to the Units, provided that the Award Agreement may
provide for payments in lieu of dividends to such Participant.

          (f)  Termination of Employment. The rights of Participants granted
               -------------------------
Awards of Restricted Stock or Restricted Stock Units upon termination of
employment or service as a director, consultant or advisor to the Company or to
any Parent or Related Company for any reason during the Restricted Period shall
be set forth in the Award Agreement governing such Awards.

          (g)  Loans. In the sole discretion of the Committee, loans may be made
               -----
to Participants in connection with the purchase of Restricted Stock under
substantially the same terms and conditions as provided in Section 7(g) of the
Plan with respect to the exercise of Options.

          (h)  Early Exercise Options. The Committee shall award Restricted
               ----------------------
Stock to a Participant upon the Participant's early exercise of an Option.
Unless otherwise determined by the Committee, the lapse of restrictions with
respect to such Restricted Stock shall occur on the same schedule as the Option
for which the Restricted Stock was exercised.

Section 9.  Dividend Equivalents.

          The Committee is authorized to grant Dividend Equivalents to Eligible
Recipients. The Committee may provide, at the date of grant or thereafter, that
Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Shares, or other investment
vehicles as the Committee may specify, provided that Dividend Equivalents (other
than freestanding Dividend Equivalents) shall be subject to all conditions and
restrictions of the underlying Awards to which they relate.

Section 10. Other Awards.

          Other forms of Awards ("Other Awards") valued in whole or in part by
reference to, or otherwise based on, Common Stock may be granted either alone or
in addition to other Awards under the Plan. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to determine the
persons to

                                       16
<PAGE>

whom and the time or times at which such Other Awards shall be granted, the
number of Shares to be granted pursuant to such Other Awards and all other
conditions of such Other Awards.

Section 11.  Amendment and Termination.

          The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any Award theretofore granted without such Participant's
consent. Unless the Board determines otherwise, the Board shall obtain approval
of the Company's stockholders for any amendment that would require such approval
in order to satisfy the requirements of section 162(m), section 422 of the Code,
stock exchange rules or other applicable law. The Committee may amend the terms
of any Award theretofore granted, prospectively or retroactively, but, subject
to Section 5 of the Plan, no such amendment shall impair the rights of any
Participant without his or her consent.

Section 12.  Unfunded Status of Plan.

          The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

Section 13.  Withholding Taxes.

          Whenever cash is to be paid pursuant to an Award, the Company shall
have the right to deduct therefrom an amount sufficient to satisfy any federal,
state, local and other withholding tax requirements related thereto. Whenever
Shares are to be delivered pursuant to an Award, the Company shall have the
right to require the Participant to remit to the Company in cash an amount
sufficient to satisfy any federal, state, local and other withholding tax
requirements related thereto. With the approval of the Committee, a Participant
may satisfy the foregoing requirement by electing to have the Company withhold
from delivery Shares or by delivering already owned unrestricted Shares, in each
case, having a value equal to the minimum amount of tax required to be withheld.
Such Shares shall be valued at their Fair Market Value on the date as of which
the amount of tax to be withheld is determined. Fractional share amounts shall
be settled in cash. Such an election may

                                       17
<PAGE>

be made with respect to all or any portion of the Shares to be delivered
pursuant to an Award.

Section 14.  General Provisions.

          (a)  Shares shall not be issued pursuant to the exercise of any Award
granted hereunder unless the exercise of such Award 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 and the requirements of any stock exchange upon which
the Common Stock may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

          (b)  The Committee may require each person acquiring Shares to
represent to and agree with the Company in writing that such person is acquiring
the Shares without a view to distribution thereof. The certificates for such
Shares may include any legend that the Committee deems appropriate to reflect
any restrictions on transfer.

          (c)  All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock may then be listed, and any applicable federal or state securities law.
The Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

          (d)  Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval, if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. Neither the adoption
of the Plan nor the granting of any Award to an Eligible Recipient shall confer
upon any Eligible Recipient any right to continued employment or service with
the Company or any Parent or Related Company, as the case may be, nor shall it
interfere in any way with the right of the Company or any Parent or Related
Company to terminate the employment or service of any of its Eligible Recipients
at any time.

Section 15.  Stockholder Approval; Effective Date of Plan.

                                       18
<PAGE>

          (a)  The grant of any Award hereunder shall be contingent upon
stockholder approval of the Plan being obtained within 12 months before or after
the date the Board adopts the Plan.

          (b) Subject to the approval of the Plan by the stockholders of the
Company within twelve (12) months before or after the date the Plan is adopted
by the Board, the Plan shall be effective as of _________ (the "Effective
Date").

Section 16.  Term of Plan.

          No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but Awards theretofore granted may extend
beyond that date.

Section 17.  Governing Law.

          The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware, without giving effect to
the conflict of laws principles thereof.

                                       19

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