Document:

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                                                                    EXHIBIT 4.11

                            LAM RESEARCH CORPORATION

                     PERFORMANCE-BASED RESTRICTED STOCK PLAN

                           (Effective January 1, 1996)
                  AMENDED AND RESTATED AS OF OCTOBER 21, 1999)

                                    SECTION 1
                            ESTABLISHMENT AND PURPOSE

         1.1 Purpose. Lam Research Corporation hereby establishes the Lam
Research Corporation Performance-Based Restricted Stock Plan (the "Plan"). The
Plan is intended to increase shareholder value and advance the success of the
Company by (a) motivating key employees to perform to the best of their
abilities, and (b) increasing the desire of key employees to continue their
employment with the Company. The Plan's goals are to be achieved by providing
such employees with restricted stock awards based on the achievement of goals
relating to the financial performance of the Company. Payments under the Plan
are intended to qualify as performance-based compensation within the meaning of
Code Section 162(m).

         1.2 Effective Date. The Plan is effective January 1, 1996, subject to
the approval of a majority of the shares of the Company's common stock which are
present in person or by proxy and entitled to vote at the 1995 Annual Meeting of
Stockholders.

                                    SECTION 2
                                   DEFINITIONS

         The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:

         2.1 "Actual Award" means, as to any Performance Period, the
cash-denominated bonus amount which is earned by a Participant for such
Performance Period and which is converted into Restricted Stock pursuant to
Section 6.3, subject to Section 2.13 and the Administrator's authority under
Section 5.5 to reduce the award otherwise determined by the Payout Formula.

         2.2 "Administrator" means the Board or any of its Committees as shall
be administering the Plan from time to time pursuant to Section 4 of the Plan.

         2.3 "Board" means the Company's Board of Directors.

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         2.4 "Code" means the Internal Revenue Code of 1986, as amended.

         2.5 "Committee" means a committee, if any, appointed by the Board in
accordance with Section 4.1 to administer the Plan.

         2.6 "Common Stock" means the Common Stock of the Company.

         2.7 "Company" means Lam Research Corporation, a Delaware corporation.

         2.8 "Covered Employee" means a "covered employee" within the meaning of
Section 162(m).

         2.9 "Determination Date" means as to any Performance Period, (a) the
first day of the Performance Period, or (b) if later, the latest date possible
which will not jeopardize qualification of payments under the Plan as
Performance-Based Compensation.

         2.10 "Disability" means a permanent and total disability determined in
accordance with uniform and nondiscriminatory standards adopted by the Committee
from time to time.

         2.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         2.12 "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                  (a) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system 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;

                  (b) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

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

         2.13 "Maximum Award" means as to any Participant for any Plan Year,
[10,000] Shares, which is the maximum amount of Restricted Stock that may be
awarded to a Participant for any Plan Year (the "Plan").

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         2.14 "Participant" means as to any Performance Period, an employee of
the Company who has been selected by the Committee for participation in the Plan
for that Performance Period.

         2.15 "Payout Formula" means as to any Performance Period, the formula
or payout matrix established by the Committee pursuant to Section 5.4 to
determine the Actual Awards (if any) to be paid to Participants. The formula or
matrix may differ from Participant to Participant.

         2.16 "Performance-Based Compensation" means compensation that is
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m).

         2.17 "Performance Goals" means the Company's financial goal(s)
determined by the Committee to be applicable for a Performance Period, based on
earnings, earnings per share, revenue growth or return on equity.

         2.18 "Performance Period" means the quarterly, semi-annual or annual
fiscal period of the Company that is established by the Administrator as the
period over which the Company's financial performance is to be measured for
purposes of the Plan.

         2.19 "Plan" means this Lam Research Corporation Performance-Based
Restricted Stock Plan.

         2.20 "Plan Year" means the 1995 fiscal year of the Company and each
succeeding fiscal year of the Company.

         2.21 "Restricted Stock" means Shares awarded pursuant to Section 6, and
subject to the Company's reacquisition right as specified in the Restricted
Stock Agreement.

         2.22 "Restricted Stock Agreement" means an agreement in the form
approved by the Administrator setting forth the terms and conditions applicable
to the award of Restricted Stock.

         2.23 "Retirement Age" means the attainment of age 60 and the completion
of seven "years of service," as that term is defined under the Company's
Executive Deferred Compensation Plan, as amended from time to time, or any
successor plan thereto.

         2.24 "Section 16 Officer" means an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

         2.25 "Section 162(m)" means Section 162(m) of the Code, or any
successor to Section 162(m), as that Section may be interpreted from time to
time by the Internal Revenue Service, whether by regulation, notice or
otherwise.

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         2.26 "Share" means a share of the Common Stock, as adjusted in
accordance with Section 3.2 of the Plan.

         2.27 "Target Award" means the dollar-denominated target award that
establishes a Participant's bonus opportunity under the Plan for a Performance
Period, as determined by the Administrator in accordance with Section 5.3.

                                    SECTION 3
                            STOCK SUBJECT TO THE PLAN

         3.1 Number of Shares. Subject to the provisions of Section 3.2 of the
Plan, the maximum aggregate number of Shares that may be issued under the Plan
is 150,000 Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock. If Shares are forfeited to the Company pursuant to a Restricted
Stock Agreement, such Shares, unless the Plan shall have been terminated, shall
be returned to the Plan and shall become available for reissuance under the
Plan; provided, however, that any such Shares shall not return to the Plan if
the Participant to whom they were originally issued received the benefits of
ownership of such Shares (other than voting), as interpreted from time to time
by the Securities and Exchange Commission in the context of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3").

         3.2 Adjustments in Awards and Authorized Shares. In the event of any
recapitalization, stock dividend, stock split, reverse stock split, split-up,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company, the Administrator shall adjust the number and
class of Shares that may be delivered under the Plan, the number and class of
Shares subject to outstanding awards, and any applicable numerical Share limits
in such manner as the Administrator in its sole discretion shall determine to be
appropriate to prevent the dilution or diminution of such awards.

                                    SECTION 4
                           ADMINISTRATION OF THE PLAN

         4.1 Composition of Administrator. The Board may establish a Committee
to administer the Plan, and may establish different Committees with respect to
(a) Participants who are Section 16 Officers, (b) Participants who are Covered
Employees, and (c) Participants who are neither Section 16 Officers nor Covered
Employees. With respect to participation by Section 16 Officers, the Plan shall
be administered in such a manner as to permit the Plan and awards hereunder to
comply with Rule 16b-3 as it applies to a plan intended to qualify thereunder as
a discretionary grant or award plan. With respect to participants who are
Covered Employees, the Plan shall be administered by two or more "outside
directors" within the meaning of Section 162(m) in such a manner as to permit
payments under the Plan to qualify as Performance-Based Compensation.

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         4.2 Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the discretion and
authority necessary or appropriate to administer the Plan and to interpret the
provisions of the Plan, consistent with the requirements of Rule 16b-3, as
applicable, and with the qualification of payments under the Plan as
Performance-Based Compensation with respect to Participants who are Covered
Employees. Any determination, decision or action of the Administrator in
connection with the construction, interpretation, administration or application
of the Plan shall be final, conclusive and binding upon all persons, and shall
be given the maximum deference permitted by law.

                                    SECTION 5
              SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

         5.1 Selection of Participants. On or prior to the Determination Date,
the Administrator, in its sole discretion, shall select the employees of the
Company who shall be Participants for the Performance Period. In selecting
Participants, the Administrator shall choose employees whose responsibilities
are likely to significantly influence the financial performance of the Company.
No person shall be automatically entitled to participate in the Plan in any
given Performance Period.

         5.2 Determination of Performance Goals. On or prior to the
Determination Date, the Administrator shall establish written Performance Goals
for the Performance Period.

         5.3 Determination of Target Awards. On or prior to the Determination
Date, the Administrator shall establish a written Target Award for the
Performance Period for each Participant.

         5.4 Determination of Payout Formula or Formulae. On or prior to the
Determination Date, the Administrator shall establish a Payout Formula or
Formulae for purposes of determining the Actual Award, if any, payable to each
Participant. Each Payout Formula shall (a) be in writing, (b) be based on a
comparison of actual performance to the Performance Goals, (c) provide for the
payment of a Participant's Target Award if the Performance Goals for the
Performance Period are achieved, and (d) provide for an Actual Award greater
than or less than the Participant's Target Award, depending upon the extent to
which actual performance exceeds or falls below the Performance Goals.

         5.5 Determination of Actual Awards. After the end of each Performance
Period, the Administrator shall certify in writing the extent to which the
Performance Goals applicable to each Participant for the Performance Period were
achieved or exceeded. The Actual Award for each Participant shall be determined
by applying the Payout Formula to the level of actual performance which has been
certified by the Administrator. Notwithstanding any contrary provision of the
Plan: (a) the Administrator, in its sole discretion, may eliminate or reduce the

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Actual Award payable to any Participant below that which otherwise would be
payable under the Payout formula; (b) if a Participant terminates employment
with the Company prior to the end of a Performance Period, he or she shall not
be entitled to the payment of an Actual Award for the Performance Period; and
(c) no Participant's Actual Award under the Plan may exceed the Maximum Award.

                                    SECTION 6
                                PAYMENT OF AWARDS

         6.1 Right to Receive Payment. Nothing in this Plan shall be construed
to create a trust or to establish or evidence any Participant's claim of any
right other than as an unsecured general creditor with respect to any payment to
which he or she may be entitled under the Plan.

         6.2 Timing and Payment of Awards. Payment of each Actual Award shall be
made as soon as practicable after the end of the Performance Period during which
the award was earned.

         6.3 Form of Payment. Each Actual Award shall be paid in the form of
Restricted Stock. The number of Shares shall be determined by dividing the
cash-denominated value of the Actual Award by the Fair Market Value of a Share
on the last day of the Performance Period, rounded up to the nearest whole
Share. The payment of the Actual Award shall be evidenced by a Notice of Award
of Restricted Stock that, together with a Restricted Stock Agreement, shall
specify the applicable vesting restrictions, the amount of Restricted Stock
awarded, and such other terms and conditions as the Administrator, in its sole
discretion, shall determine.

         6.4 Termination of Employment; Acceleration of Vesting. In the event a
Participant's status as an employee of the Company terminates for any or no
reason, any unvested Restricted Stock previously awarded to the Participant
shall be forfeited to the Company without consideration to the Participant;
provided that, in the event a Participant reaches Retirement Age, the
Participant shall become 100% vested in all of his or her Restricted Stock and
such Shares shall no longer be subject to the Company's reacquisition option
contained in the Restricted Stock Agreement; provided further, that in the event
the Participant's employment with the Company terminates as a result of his or
her death or Disability, the Administrator may, in its sole discretion, vest all
or any portion of any of his or her unvested Restricted Stock. Any Restricted
Stock that is forfeited pursuant to this Section 6.4 shall again become
available for award under this Plan in accordance with Section 3.1.

         6.5 Stock Withholding to Satisfy Tax Withholding Obligations. When a
Participant incurs tax liability in connection with the acquisition or vesting
of Shares under the Plan, which tax liability is subject to tax withholding
under applicable tax laws, and the Participant is obligated to pay the Company
an amount required to be withheld under applicable tax laws, the Participant may
satisfy the withholding tax obligation by electing to have the Company withhold,
from the Shares acquired under the Plan that have vested, that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares

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to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose shall be made in writing in a form acceptable to the
Administrator and shall be subject to such uniform and nondiscriminatory
restrictions and limitations as the Administrator may specify.

                                    SECTION 7
                               STOCK OPTION GRANTS

         7.1 Authority to Grant Stock Options. The Administrator may, in its
discretion, grant to Participants that it selects options to purchase Shares
under the Plan.

         Unless otherwise determined by the Administrator:

                  (a) The term of an option shall not exceed ten years from the
date of grant;

                  (b) The number of Shares subject to options granted to any
individual Participant in any Plan Year shall not exceed 10,000;

                  (c) The per-Share exercise price of an option shall be at
least the Fair Market Value of a Share on the date the option is granted;

                  (d) The selection of a Participant to receive an option shall
be deemed to satisfy the selection requirements of Section 5.1;

                  (e) Setting the exercise price of an option at no less than
the Fair Market Value of a Share on the date the option is granted and execution
in due course of a written option agreement with the Participant shall be deemed
to be the determination of a written Performance Goal satisfying the
requirements of Section 5.2;

                  (f) Determining the number of Shares subject to an option
shall be deemed to be the determination of a Target Award and Payout Formula
satisfying the requirements of Sections 5.3 and 5.4; and

                  (g) The period from grant to exercise (or expiration) of the
option shall be deemed to be the Performance Period, and confirmation by the
Administrator to the Participant following an exercise of the option shall be
deemed to be the written certification required by Section 5.5.

         7.2 Application of 1991 and 1997 Stock Plans. Unless otherwise
determined by the Administrator, other terms of each option and option grant
shall be consistent with options granted pursuant to the Company's 1991 Stock
Option Plan or 1997 Stock Incentive Plan.

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                                    SECTION 8
                               GENERAL PROVISIONS

         8.1 Nonassignability. A Participant shall have no right to assign or
transfer any interest under this Plan.

         8.2 No Effect on Employment. The establishment and subsequent operation
of the Plan, including eligibility as a Participant, shall not be construed as
conferring any legal or other rights upon any Participant for the continuation
of his or her employment for any Performance Period or any other period.
Employment with the Company is on an at will basis only, unless provided
differently in Participant's employment contract, if any, with the Company. The
Company expressly reserves the right, which may be exercised at any time and
without regard to when during a Performance Period such exercise occurs, to
terminate any individual's employment with or without cause, and to treat him or
her without regard to the effect which such treatment might have upon him or her
as a Participant.

         8.3 Indemnification. Each person who is or shall have been a member of
the Administrator shall be indemnified and held harmless by the Company against
and from (a) any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or a failure to act
under the Plan, and (b) from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights or indemnification to
which such persons may be entitled under the Company's certificate of
incorporation or bylaws, by contract, as a matter of law, or otherwise, or under
any power that the Company may have to indemnify them and hold them harmless.

         8.4 Beneficiary Designations. If permitted by the Administrator, a
Participant may name a beneficiary or beneficiaries to whom any vested but
unpaid amount due to Participant under the Plan shall be paid in the event of
the Participant's death. Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Administrator. In the absence of any such
designation, any amounts remaining unpaid at the Participant's death shall be
paid to the Participant's estate.

         8.5 Severability; Governing Law. If any provision of the Plan is found
to be invalid or unenforceable, such provision shall not affect the other
provisions of the Plan, and the Plan shall be construed in all respects as if
such invalid provision had been omitted. The provisions of

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the Plan shall be governed by and construed in accordance with the laws of the
State of California, with the exception of California's conflict of laws
provisions.

         8.6 Affiliates of the Company. Requirements referring to employment
with the Company or payment of awards may, in the Committee's discretion, be
performed through the Company or any affiliate of the Company.

                                    SECTION 9
                            AMENDMENT AND TERMINATION

         9.1 Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan, as it may deem advisable; provided that, to the
extent necessary and desirable to comply with Rule 16b-3, Section 162(m), or any
other applicable law, the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as is required.

         9.2 Affect of Amendment or Termination. Any such amendment, alteration,
suspension or termination of the Plan shall not impair the rights of any
Participant under any award (or right to receive an award), unless such
Participant consents in writing to such amendment, alteration, suspension or
termination. Such awards shall remain in full force and effect as if this Plan
had not been amended or terminated.

                                   SECTION 10
                      COMPLIANCE WITH LAWS AND REGULATIONS

         Shares shall not be issued with respect to an award hereunder unless
the issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or quotation system upon
which the Shares may then be listed or quoted, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.
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 non-issuance or sale of such Shares
as to which such requisite authority shall not have been obtained.

                                   SECTION 11
                              SHAREHOLDER APPROVAL

         The Plan, the grant of Share awards and the acquisition of Shares shall
be subject to approval by the holders of a majority of the Shares of Common
Stock of the Company represented (in person or by proxy) and voting at a
meeting. Such approval shall be solicited substantially in accordance with
Section 14(a) of the Exchange Act and the rules and regulations

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promulgated thereunder within such time as is required by Rule 16b-3, Section
162(m), or other applicable law.

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                                                                    EXHIBIT 4.12

                            LAM RESEARCH CORPORATION
                             1999 STOCK OPTION PLAN

                 AMENDED AND RESTATED EFFECTIVE OCTOBER 21, 1999

SECTION 1  PURPOSE OF PLAN

         This 1999 Stock Option Plan (the "Plan") is adopted as of November 5,
1998 (the "Effective Date"). The purpose of the Plan is to enable Lam Research
Corporation, a Delaware corporation (the "Company"), to attract and retain
highly qualified personnel who will contribute to the Company's success by their
ability, ingenuity and industry by allowing eligible individuals to acquire or
increase proprietary interests in the Company as an incentive to remain in the
service of the Company.

SECTION 2  DEFINITIONS

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

                  (a) "Administrator" means the Board, or if and to the extent
         the Board does not administer the Plan, the Committee appointed by the
         Board to administer the Plan.

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

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

                  (d) "Committee" means the Stock Committee of the Board or any
         Committee the Board may subsequently appoint to administer the Plan. If
         at any time or to any extent the Board shall not administer the Plan,
         then the functions of the Board or Administrator specified in the Plan
         shall be exercised by the Committee.

                  (e) "Designated Subsidiaries" means the Subsidiaries that have
         been designated by the Board or Administrator from time to time in its
         sole discretion, whose Employees are thereon eligible to participate in
         this Plan.

                  (f) "Date of Grant" means the date on which the award of a
         Stock Option is effective.

                  (g) "Disability" means the inability of a Participant to
         perform substantially his or her duties and responsibilities to the
         Company by reason of a physical or mental disability or infirmity (i)
         for a continuous period of six months, or (ii) at such earlier time as
         the Participant submits medical evidence satisfactory to the
         Administrator that he or she has a physical or mental disability or
         infirmity which will likely prevent him or her from returning to the
         performance of his or her work duties for six months or longer. The
         date of such Disability shall be the date of interruption of or
         separation from employment with the Company due to such Disability or
         the day on which the Participant submits such satisfactory medical
         evidence establishing such Disability, as the case may be.

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                  (h) "Employee" means any person who is customarily and
         continuously employed for at least 20 hours per week by the Company or
         one of its Designated Subsidiaries. Unless the Administrator makes a
         contrary determination, the Employees of the Company shall, for all
         purposes of this Plan, be those individuals who satisfy the customary
         employment criteria set forth above and are carried as employees by the
         Company or a Designated Subsidiary for regular payroll purposes;
         provided however, that an Employee's continuous employment shall not be
         considered interrupted in the case of a leave of absence agreed to in
         writing by the Company, where such leave is for a period of not more
         than 90 days or where re-employment upon the expiration of any such
         leave is guaranteed by contract or statute.

                  (i) "Fair Market Value" means, as of any given date, with
         respect to any Stock Option award granted hereunder, and at the
         discretion of the Administrator, any of the following: (i) if the Stock
         is publicly traded, the closing sale price of the Stock on such date as
         reported in the Wall Street Journal, or the average of the closing
         price of the Stock on each day on which the Stock was traded over a
         period of up to twenty trading days immediately prior to such date,
         (ii) the fair market value of the Stock as determined in accordance
         with a method prescribed in the agreement evidencing any award
         hereunder, or (iii) the fair market value of the Stock as otherwise
         determined by the Administrator in the good faith exercise of its
         discretion.

                  (j) "Parent Corporation" means any corporation (other 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.

                  (k) "Participant" means any Employee determined to be eligible
         to be awarded Stock Options under this Plan.

                  (l) "Stock" means the common stock, par value $0.001 per share
         (the "Common Stock"), of the Company.

                  (m) "Stock Option" means any option to purchase shares of
         Stock granted pursuant to this Plan. Each Stock Option shall be a
         non-qualified stock option which, as of the time such Stock Option is
         granted, shall not be treated as an Incentive Stock Option within the
         meaning of Section 422 of the Code.

                  (n) "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 OF PLAN

         The Administrator shall have full authority (subject to the provisions
of this Plan) to establish such rules and regulations as it deems appropriate
for the proper administration of this Plan, and to make such determinations and
interpretations concerning this Plan and Stock Options awarded under this Plan
as it deems necessary or advisable.

         In particular, the Administrator shall have the authority, consistent
with the terms of the Plan:

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                  (a) to select those Employees who shall be Participants;

                  (b) to determine whether and to what extent Stock Options are
         to be awarded hereunder to Participants;

                  (c) to determine the number of shares of Stock to be covered
         by each such Stock Option awarded hereunder, including the maximum term
         for which a Stock Option is to be outstanding;

                  (d) to determine the terms and conditions of any Stock Option
         awarded hereunder; and

                  (e) to determine the terms and conditions which shall govern
         all written instruments evidencing the Stock Options awarded to
         Participants.

The Administrator shall have the authority, in its discretion, to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
Plan as it shall from time to time deem advisable; to interpret the terms and
provisions of the Plan and any Stock Option awarded under the Plan (and any
agreements relating thereto); and otherwise to supervise the administration of
the Plan. All decisions made by the Administrator pursuant to the
administration, interpretation and execution of the Plan shall be final and
binding on all persons, including the Company and the Participants.

SECTION 4  STOCK SUBJECT TO PLAN

         The total number of shares of Stock reserved and available for issuance
under the Plan shall be four million (4,000,000), subject to adjustment from
time to time in accordance with this Section, or as provided by amendment of the
Board. The shares may be authorized but unissued shares of Common Stock or
reacquired shares of Common Stock, including shares repurchased by the Company
on the open market or in private purchases.

        To the extent that (i) a Stock Option expires or is otherwise terminated
without being exercised, or (ii) any shares of Stock awarded hereunder are
forfeited, such shares shall again be available for issuance in connection with
future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock 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 under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure of the
Company affecting the Stock, a substitution or adjustment shall be made in (i)
the aggregate number of shares reserved for issuance under the Plan, and/or (ii)
the kind, number and class of shares and option price of shares subject to
outstanding Stock Options granted under the Plan, as may be determined by the
Administrator, in its sole discretion. Such other substitutions or adjustments
shall be made as may be determined by the Administrator, in its sole discretion.
In connection with any event described in this paragraph, the Administrator may
provide, in its discretion, for the cancellation of any outstanding grants and
payment in cash or other property therefor. The adjustments determined by the
Administrator shall be final, binding, and conclusive.

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SECTION 5  ELIGIBILITY

         Unless otherwise designated by the Administrator, Participants eligible
to be awarded Stock Options under the Plan include Employees whose services
contribute to the management, growth or financial success of the Company (or a
Parent Corporation or a Subsidiary), or consultants, advisors or independent
contractors who provide valuable services to the Company (or a Parent
Corporation or a Subsidiary). Any Member of the Board or member of the Company's
senior management (which specifically includes, but is not limited to, all
"officers" of the Company, as that term is intended under Rule 16(b) of the
Securities Exchange Act of 1934, as amended ("Rule 16(b)")), and any principal
stockholder otherwise an eligible Employee, consultant, advisor or independent
contractor of the Company, is not eligible to be awarded Stock Options under
this Plan.

SECTION 6  DISCRETIONARY GRANTS OF STOCK OPTIONS

        Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve, and the provisions of Stock Option
awards need not be the same with respect to each optionee. Recipients of Stock
Options shall enter into an option agreement with the Company, in such form as
the Administrator shall determine, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and provisions
regarding exercisability of the option awarded thereunder. More than one option
may be awarded to the same optionee and be outstanding concurrently hereunder.

         Stock Options awarded under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:

                  (a) Option Price. The option price per share of Stock
         purchasable under a Stock Option shall be determined by the
         Administrator in its sole discretion as of the Date of Grant but shall
         not be less than 100% of the Fair Market Value of the Stock on such
         date.

                  (b) Option Term. The term of each Stock Option shall be fixed
         by the Administrator, but no Stock Option shall be exercisable more
         than ten years after the date such Stock Option is granted.

                  (c) Exercisability. Stock Options shall be exercisable at such
         time or times and subject to such terms and conditions as shall be
         determined by the Administrator at or after grant. The Administrator
         may provide, in its discretion, that any Stock Option shall be
         exercisable only in installments, and the Administrator may waive such
         installment exercise provisions at any time in whole or in part based
         on such factors as the Administrator may determine, in its sole
         discretion, including, but not limited to, in connection with any
         "change in control" of the Company, as defined in any stock option
         agreement or otherwise.

                  (d) Method of Exercise. Subject to Section 6(c), above, Stock
         Options may be exercised in whole or in part at any time during the
         option period, by giving written notice of exercise to the Company
         specifying the number of shares to be purchased, accompanied by payment
         in full of the option exercise price, as provided below or as otherwise
         determined by the Administrator. As determined by the Administrator, in
         its sole discretion, payment in whole or

                                       4
<PAGE>   5

         in part may also be made by means of any cashless exercise procedure
         approved by the Administrator. An optionee shall generally have the
         rights to dividends and any other rights of a stockholder with respect
         to the Stock subject to the Stock Option, including the right to vote
         any such Stock, only after the optionee has given written notice of
         exercise, has paid in full for such shares, and, if requested, has
         given the representation described in paragraph (a) of Section 9,
         below. The option exercise price shall be immediately due upon exercise
         of the Stock Option and shall be payable in one or a combination of the
         following forms:

                           (i)    cash or check payable to the Company drawn on
                                  good and sufficient funds;

                           (ii)   shares of Common Stock held by the optionee
                                  for the period necessary to avoid a charge to
                                  the Company's earnings for financial reporting
                                  purposes and valued at Fair Market Value on
                                  the exercise date; or

                           (iii)  a broker-dealer sale-and-remittance procedure
                                  pursuant to which the optionee shall provide
                                  irrevocable written instructions (x) to a
                                  designated brokerage firm to effect the
                                  immediate sale of the option shares and remit
                                  to the Company, from the sale proceeds
                                  available on the settlement date, sufficient
                                  funds to cover the aggregate option exercise
                                  price, plus all income and employment taxes
                                  required to be withheld by the Company in
                                  connection with the exercise and (y) to the
                                  Company to deliver the certificates for the
                                  purchased shares directly to the brokerage
                                  firm to complete the transaction.

                  (e) Re-Pricing of Options. The Administrator may require the
         voluntary surrender of all or a portion of any Stock Option granted
         under the Plan as a condition precedent to the award of a new Stock
         Option. Subject to the provisions of the Plan, such new Stock Option
         shall be exercisable at the price, during such period and on such other
         terms and conditions as are specified by the Administrator at the time
         the new Stock Option is granted. Upon their surrender, Stock Options
         shall be canceled and the shares previously subject to such canceled
         Stock Options shall again be available for awards of Stock Options and
         other awards hereunder.

                  (f) Loans. The Company may make loans available to Stock
         Option holders in connection with the exercise of outstanding options
         granted under the Plan, as the Administrator, in its discretion, may
         determine. Such loans shall (i) be evidenced by promissory notes
         entered into by the Stock Option holders in favor of the Company, (ii)
         be subject to the terms and conditions set forth in this Section and
         such other terms and conditions, not inconsistent with the Plan, as the
         Administrator shall determine, (iii) bear interest, if any, at such
         rate as the Administrator shall determine, and (iv) be subject to Board
         approval (or to approval by the Administrator to the extent the Board
         may delegate such authority). In no event may the principal amount of
         any such loan exceed the sum of (x) the exercise price less the par
         value (if any) of the shares of Stock covered by the Stock Option, or
         portion thereof, exercised by the holder, and (y) any Federal, state,
         and local income tax attributable to such exercise. The initial term of
         the loan, the schedule of payments of principal and interest under the
         loan, the extent to which the loan is to be with or without recourse
         against the holder with respect to principal or interest and the
         conditions upon which the loan will become payable in the event of the
         holder's termination of employment shall be determined by the
         Administrator. Unless the Administrator

                                       5
<PAGE>   6

         determines otherwise, when a loan is made, shares of Stock having a
         Fair Market Value at least equal to the principal amount of the loan
         shall be pledged by the holder 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
         Administrator, in its discretion; provided, however, 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.

                  (g) Non-Transferability of Options. Unless otherwise provided
         herein or as otherwise determined by the Administrator, no Stock Option
         shall be transferable by the optionee, and all Stock Options shall be
         exercisable, during the optionee's lifetime, only by the optionee.

                  (h) Termination of Employment or Service. If an optionee's
         employment with or service as an Employee, consultant, advisor or
         independent contractor to the Company terminates by reason of death,
         Disability or for any other reason, the Stock Option may thereafter be
         exercised as provided below, or as otherwise provided in the applicable
         award agreement or determined by the Administrator.

                  If an optionee's employment with or service to the Company is
         terminated:

                           (i)    for or without cause (and whether termination
                                  is voluntary or involuntary), each
                                  then-outstanding unexercised Stock Option
                                  vested and held by the optionee as of the
                                  termination date shall expire within thirty
                                  (30) days of such termination;

                           (ii)   by reason of Disability, each then-outstanding
                                  unexercised Stock Option vested and held by
                                  the optionee as of the termination date shall
                                  expire within six (6) months of such
                                  termination date; and

                           (iii)  by reason of the optionee's death during
                                  employment, or if the optionee dies during the
                                  three (3) month period after termination of
                                  his or her employment (or such other shorter
                                  period of time as may be determined by the
                                  Administrator), where such termination is
                                  other than for cause or by reason of
                                  Disability, each then-outstanding unexercised
                                  Stock Option vested and held by the optionee
                                  as of the termination date shall expire within
                                  six (6) months of such termination date. After
                                  the optionee's death, the Stock Option may be
                                  exercised by the personal representative of
                                  the optionee's estate or by the person(s) to
                                  whom the option is transferred pursuant to the
                                  optionee's will or in accordance with the laws
                                  of descent and distribution.

         Following termination of the optionee's employment or service, a Stock
         Option shall not be exercisable to any greater extent than on the
         termination date; provided, however, that the Administrator shall have
         complete discretion, at any time while the Stock Option remains
         outstanding, to permit the Stock Option to be exercised, not only with
         respect to the number of shares for which the Stock Option is
         exercisable at the time of the termination, but also with

                                       6
<PAGE>   7

         respect to one or more subsequent installments of purchasable shares
         for which the Stock Option would otherwise have become exercisable had
         termination not occurred.

SECTION 7  AMENDMENT AND TERMINATION OF PLAN

         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 Stock Option theretofore awarded without such
Participant's consent. The Administrator may amend the terms of any Stock Option
theretofore awarded, prospectively or retroactively, but, as herein provided, no
such amendment shall impair the rights of any Participant without his or her
consent.

SECTION 8  GENERAL PROVISIONS

                  (a) The Administrator may require each person purchasing
         shares pursuant to the exercise of a Stock Option 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 which the Administrator deems
         appropriate to reflect any restrictions on transfer.

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

                  (c) 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.

                  (d) Each Participant shall, no later than the date as of which
         the value of a stock option exercise first becomes includable in the
         gross income of the Participant for Federal income tax purposes, pay to
         the Company, or make arrangements satisfactory to the Administrator
         regarding payment of, any Federal, state, or local taxes of any kind
         required by law (as determined by the Administrator, in its sole
         discretion) to be withheld with respect to the award. The obligations
         of the Company under the Plan shall be conditional on the making of
         such payments or arrangements, and the Company shall, to the extent
         permitted by law, have the right to deduct any such taxes from any
         payment of any kind otherwise due to the Participant.

SECTION 9  NON-LIABILITY

         No member of the Board or the Administrator, nor any officer or
employee of the Company acting on behalf of the Board or the Administrator,
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 Administrator 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.

                                       7
<PAGE>   8

SECTION 10  TERM OF PLAN

         No Stock Option award shall be awarded pursuant to the Plan on or after
the tenth anniversary of the Effective Date, but awards theretofore awarded may
extend and be exercisable beyond that date.

SECTION 11  CORPORATE TRANSACTIONS/CHANGES OF CONTROL

                  (a) In the event of any of the following stockholder-approved
         transactions (a "Corporate Transaction"):

                           (i)    a merger or consolidation in which the Company
                                  is not the surviving entity, except for a
                                  transaction whose principal purpose is to
                                  change the State of the Company's
                                  incorporation,

                           (ii)   the sale, transfer, or other disposition of
                                  all or substantially all of the assets of the
                                  Company in liquidation or dissolution, or

                           (iii)  any "reverse" merger in which the Company is
                                  the surviving entity but in which securities
                                  possessing more than 50% of the total combined
                                  voting power of the Company's outstanding
                                  securities are transferred to holders other
                                  than those who owned such voting power
                                  immediately before the merger,

         then immediately before the effective date of the Corporate
         Transaction, each Stock Option granted under this Plan shall become
         fully exercisable ("accelerate") with respect to the total number of
         shares of Common Stock then subject to the Stock Option. However, a
         Stock Option shall not accelerate if and to the extent: (i) the Stock
         Option is, in connection with the Corporate Transaction, either to be
         assumed by the successor corporation or parent thereof or to be
         replaced by an option on equivalent terms to purchase shares of the
         capital stock of the successor corporation or parent thereof, or (ii)
         acceleration of the Stock Option is subject to other limitations
         imposed by the Administrator at the Date of Grant. The determination of
         equivalence under clause (i) above shall be made by the Administrator
         and shall be final, binding, and conclusive as to all parties.

                  (b) Upon consummation of the Corporate Transaction, all Stock
         Options granted under this Plan shall terminate and cease to be
         outstanding, except to the extent assumed by the successor (or
         surviving) corporation or its parent company.

                  (c) Each Stock Option granted under this Plan that is replaced
         by an equivalent option in a Corporate Transaction or that otherwise
         continues in effect shall be appropriately adjusted, immediately after
         the Corporate Transaction, to apply to the number and class of
         securities that would have been issued in the Corporate Transaction to
         an actual holder of the number of shares of Common Stock that were
         subject to the Stock Option immediately before the Corporate
         Transaction. Appropriate adjustment shall also be made to the Option
         Price payable per share; provided that the aggregate Option Price
         payable for such securities shall remain the same. In addition, the
         class and number of securities available for issuance under this Plan
         following the consummation of the Corporate Transaction shall be
         appropriately adjusted.

                                       8
<PAGE>   9

                  (d) The Administrator shall have full discretionary authority,
         exercisable either in advance of, or at the time of, a Change in
         Control, to provide for the automatic acceleration of Stock Options
         granted under this Plan upon the occurrence of the Change in Control.
         The Administrator shall also have full discretionary authority to
         condition any such acceleration upon the subsequent termination of the
         optionee's service to the Company (or a parent or subsidiary) within a
         specified period after the Change in Control. Any Stock Option
         accelerated in connection with the Change in Control shall remain fully
         exercisable until the expiration of the option term. For all purposes
         of this Plan, a Change in Control shall mean a change in control of the
         Company of a nature that would be required to be reported in response
         to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
         Securities Exchange Act of 1934, as amended (the "Exchange Act"),
         whether or not the Company is then subject to such reporting
         requirement, other than a Corporate Transaction; provided that, without
         limitation, a Change in Control shall be deemed to have occurred if:

                           (i)    any individual, partnership, firm,
                                  corporation, association, trust,
                                  unincorporated organization or other entity,
                                  or any syndicate or group deemed to be a
                                  "person" under Section 14(d) (2) of the
                                  Exchange Act, is or becomes the "beneficial
                                  owner" (as defined in Rule 13d-3 of the
                                  General Rules and Regulations under the
                                  Exchange Act), directly or indirectly, of
                                  securities of the Company representing 40% or
                                  more of the combined voting power of the
                                  Company's then-outstanding securities entitled
                                  to vote in the election of directors of the
                                  Company, pursuant to a tender or exchange
                                  offer that the Board does not recommend that
                                  the Company's stockholders accept; or

                           (ii)   during any period of two consecutive years,
                                  individuals who at the beginning of such
                                  period constituted the Board and any new
                                  members of the Board, whose election by the
                                  Board or nomination for election by the
                                  Company's stockholders was approved by a vote
                                  of at least three-quarters of the directors
                                  then in office who either were directors at
                                  the beginning of the period or whose election
                                  or nomination for election was previously so
                                  approved, cease for any reason to constitute a
                                  majority thereof.

                  (e) The grant of Stock Options under this Plan shall not
         affect the right of the Company to adjust, reclassify, reorganize, or
         otherwise change its capital or business structure or to merge,
         consolidate, dissolve, liquidate, or sell or transfer all or any part
         of its business or assets.

SECTION 12  MISCELLANEOUS

                  (a) Use of Proceeds. Any cash proceeds received by the Company
         from the sale of shares pursuant to Stock Options granted under this
         Plan may be used for general corporate purposes.

                  (b) Regulatory Approvals. The implementation of this Plan, the
         awarding of any Stock Option hereunder, and the issuance of Stock upon
         the exercise or surrender of any such

                                       9
<PAGE>   10

         Stock Option shall be subject to and conditional upon the procurement
         by the Company of all approvals and permits required by regulatory
         authorities having jurisdiction over this Plan, Stock Options granted
         under it, and Stock issued pursuant to it.

                  (c) Securities Laws. No shares of Common Stock or other assets
         shall be issued or delivered under this Plan unless and until there
         shall have been compliance with all applicable requirements of federal
         and state securities laws, including the filing and effectiveness of a
         Form S-8 registration statement for the shares of Common Stock issuable
         under this Plan, and all applicable listing requirements of any
         securities exchange on which stock of the same class is then listed.

                  (d) No Employment Rights. Neither the action of the Company in
         establishing this Plan, nor any action taken by the Administrator
         hereunder, nor any provision of this Plan, shall be construed so as to
         grant or offer any individual the right to remain in the employ or
         service of the Company (or any parent or subsidiary corporation) for
         any period, and the Company (or any parent or subsidiary corporation
         retaining the services of such individual) may terminate such
         individual's employment or service at any time and for any reason, with
         or without cause.

                  (e) Assignment. Except as otherwise provided in this Plan, the
         right to acquire Common Stock or other assets under this Plan may not
         be assigned, encumbered, or otherwise transferred by any optionee.

                  (f) Governing Law. The provisions of this Plan shall be
         governed by the laws of the State of California, as such laws are
         applied to contracts entered into and performed in that State. The
         provisions of this Plan shall inure to the benefit of, and be binding
         upon, the Company and its successors or assigns, and the optionees, the
         legal representatives of their respective estates, their respective
         heirs or legatees, and their permitted assignees.

                                       10

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