Document:

EXHIBIT 4-mm

            [FORM OF PHYSICALLY-SETTLED PRE-PAID PURCHASE CONTRACT]

                                 MORGAN STANLEY

     [Insert Designation of Physically-Settled Pre-paid Purchase Contracts]

                PHYSICALLY-SETTLED PRE-PAID PURCHASE CONTRACT(S)

             Physically-Settled Pre-paid Purchase Contracts between

                                 Morgan Stanley

                                      and

                                ----------------
                             or registered assigns,
                       as holder hereunder (the "Holder")

     All capitalized terms used but not defined herein that are defined in the
Unit Agreement (described below) have the meanings set forth therein, and if
not defined therein, have the meaning set forth below.

================================================================================
|      Pre-paid Purchase Contract Property:|                                   |
|------------------------------------------|-----------------------------------|
|                                 Quantity:|                                   |
|------------------------------------------|-----------------------------------|
|                          Settlement Date:|                                   |
|------------------------------------------|-----------------------------------|
|                      Settlement Location:|                                   |
|------------------------------------------|-----------------------------------|
|                     Method of Settlement:|                                   |
|------------------------------------------|-----------------------------------|
|             Authorized Number of Pre-paid|                                   |
|                       Purchase Contracts:|                                   |
|------------------------------------------|-----------------------------------|
|            Aggregate Quantity of Pre-paid|                                   |
|               Purchase Contract Property:|                                   |
|------------------------------------------|-----------------------------------|
|                            Contract Fees:|                                   |
|------------------------------------------|-----------------------------------|
|                 Corporation Acceleration:|                                   |
|------------------------------------------|-----------------------------------|
|                    Holders' Acceleration:|                                   |
|------------------------------------------|-----------------------------------|
|                              Other Terms:|                                   |
================================================================================

<PAGE>

     Morgan Stanley, a corporation duly incorporated and existing under the
laws of the State of Delaware (the "Corporation"), for value received, agrees
to deliver on the Settlement Date, subject to the terms of the Unit Agreement
referred to below and as set forth herein, the Aggregate Quantity of Pre-paid
Purchase Contract Property. The Physically-Settled Pre-paid Purchase
Contract(s) (the "Pre-paid Purchase Contract(s)") evidenced hereby shall not
entitle the Holder to receive the Pre-paid Purchase Contract Property prior to
the Settlement Date.

     The Aggregate Quantity of Pre-paid Purchase Contract Property shall be
delivered to the Settlement Location on the Settlement Date pursuant to the
Method of Settlement.

     [This Purchase Contract is not redeemable prior to maturity.]

     Each Pre-paid Purchase Contract evidenced hereby is one of a duly
authorized issue of not more than the Authorized Number of Pre-paid Purchase
Contracts of the Corporation relating to the delivery of not more than the
Aggregate Quantity of Pre-paid Purchase Contract Property issued under the Unit
Agreement, dated as of August 26, 2003 (the "Unit Agreement"), among the
Corporation, JPMorgan Chase Bank, as Agent (the "Agent") and as Collateral
Agent thereunder, as Warrant Agent (the "Warrant Agent") under the Warrant
Agreement referred to therein, as Trustee (the "Trustee") and Paying Agent
under the Indenture referred to therein, and the holders from time to time of
Units, to which Unit Agreement and supplemental agreements thereto reference is
hereby made for a description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Agent, the Collateral
Agent, the Corporation and the Holders and of the terms upon which the Pre-paid
Purchase Contracts are, and are to be, executed, countersigned, executed on
behalf of the Holder and delivered.

     The Agent may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents in connection with any transfer or exchange
of each Pre-paid Purchase Contract evidenced hereby. No service charge shall be
required for any such registration of transfer or exchange, but the Corporation
and the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection with any registration of transfer or
exchange of Units.

     Upon registration of transfer of this Pre-paid Purchase Contract, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee, except as may be required by the Agent pursuant to the
Unit Agreement), under the terms of the Unit Agreement and the Pre-paid
Purchase Contracts evidenced hereby and the transferor shall be released from
the

                                       2
<PAGE>

obligations under the Pre-paid Purchase Contracts hereby. The Corporation
covenants and agrees, and the Holder, by his acceptance hereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.

     The extent to which, and the terms upon which, any property (other than
the Pre-paid Purchase Contract Property) is deliverable with respect to the
Pre-paid Purchase Contracts evidenced hereby is described above under "Contract
Fees". The extent to which, and the terms upon which, the Corporation may
accelerate the obligations of the Corporation evidenced hereby is described
above under "Corporation Acceleration". The extent to which, and the terms upon
which, the Holders of such Pre-paid Purchase Contracts may accelerate the
obligations of the Corporation is described above under "Holders'
Acceleration".

     Subject to certain exceptions, the terms of the Pre-paid Purchase
Contracts and the provisions of the Unit Agreement may be amended with the
consent of the Holders of not less than a majority of the affected Outstanding
Purchase Contracts and certain Purchase Contract Defaults may be waived with
the consent of the Holders of a majority of the affected Outstanding Purchase
Contracts. Without the consent of any Holder of Units, the terms of the Unit
Agreement and the Pre-paid Purchase Contracts may be amended to, among other
things, cure any ambiguity, to correct or supplement any provision in the Unit
Agreement or the Pre-paid Purchase Contract, to add to covenants of the
Corporation, Collateral Agent or Agent or to make any other provisions with
respect to matters or questions arising under the Unit Agreement or the
Pre-paid Purchase Contracts that do not adversely affect the interests of the
Holders in any material respect.

     Holders of the Pre-paid Purchase Contracts may not enforce the Unit
Agreement or such Pre-paid Purchase Contracts except as provided in the Unit
Agreement.

     Any incorporator, or past, present or future stockholder, officer,
attorney-in-fact or director, as such, of the Corporation or of any successor
corporation shall not have any liability for any obligations of the Corporation
under the Pre-paid Purchase Contracts or the Unit Agreement or for any claim
based on, with respect to or by reason of such obligations or their creation.
The Holder by his acceptance hereof waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Pre-paid
Purchase Contracts.

     The Pre-paid Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.

     Prior to due presentment of a Unit Certificate or Pre-paid Purchase
Contract for registration of transfer, the Corporation, the Trustee, the Agent,
the Warrant Agent and the Collateral Agent, and any agent of the Corporation,
the Trustee, the Agent, the Warrant Agent and the Collateral Agent may treat
the Person in whose name this Pre-paid Purchase Contract is registered as a
party to the Pre-paid Purchase Contracts evidenced hereby for the purpose of
performance

                                       3
<PAGE>

of such Pre-paid Purchase Contracts and for all other purposes whatsoever, and
neither the Corporation, the Trustee, the Agent, the Warrant Agent and the
Collateral Agent nor any such agent shall be affected by notice to the
contrary.

     The Holder, by his acceptance hereof, authorizes the Agent to execute the
Pre-paid Purchase Contracts evidenced hereby on his behalf, authorizes and
directs the Agent on his behalf to take such other action, and covenants and
agrees to take such other action, as may be necessary or appropriate, or as may
be required by the Agent, to effectuate the provisions of the Unit Agreement
relating to the settlement or delivery of the Pre-paid Purchase Contract
Property, appoints the agent as his attorney-in-fact for any and all such
purposes, and agrees to be bound by the terms thereof.

     The Pre-paid Purchase Contracts shall not, prior to the performance
thereof, entitle the Holder to any of the rights of a holder of the Pre-paid
Purchase Contract Property.

     No provision of this Pre-paid Purchase Contract or of the Unit Agreement
shall alter or impair the obligation of the Corporation, which is absolute and
unconditional, to deliver the Pre-paid Purchase Contract Property.

     No Pre-paid Purchase Contract evidenced hereby shall be valid or
obligatory for any purpose until countersigned and executed on behalf of the
Holder by the Agent, pursuant to the Unit Agreement.

                                       4
<PAGE>

         IN WITNESS WHEREOF, Morgan Stanley has caused this instrument to be
duly executed.

                                           MORGAN STANLEY

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

JPMORGAN CHASE BANK,
  as Agent, and as attorney-in-fact of the
  Holder hereof

By:
    ---------------------------------
    Authorized Officer

Countersigned

JPMORGAN CHASE BANK,
  as Agent

By:
    ---------------------------------
    Authorized Officer

                                       5EXHIBIT 4.1

                             1998 STOCK OPTION PLAN

                                       OF

                       MULTILINK TECHNOLOGY CORPORATION,

               (as amended on January 27, 1999 and July 10, 2000)

     Section 1.01. Purpose. The purpose of this 1998 Stock Option Plan of
Multilink Technology Corporation (the "Plan") is to promote the growth and
general prosperity of Multilink Technology Corporation, a California
corporation (the "Company"), by permitting the Company to grant options to
purchase shares of the Company's Class A Common Stock ("Shares"). The Plan is
designed to help attract and retain superior personnel for positions of
substantial responsibility with the Company and to provide directors, officers
and key employees with an additional incentive to contribute to the success of
the Company. Options granted pursuant to the provisions of the Plan may be
either "incentive stock options," within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-statutory stock
options, as determined by the Plan Administrator and set forth in the stock
option agreements. Options granted under this Plan must be labeled either as an
"Incentive Stock Option" or a "Non-Statutory Stock Option." As used in the
Plan, the terms "parent corporation" and "subsidiary corporation" shall have
the meanings set forth in subsections (e) and (f), respectively, of Section 424
of the Code.

     Section 2.01. Administration. The Plan will be administered by the Board
of Directors of the Company (the "Board of Directors") or, if the Board of
Directors so determines, by a committee appointed by the Board of Directors
from among its members (such committee administering the Plan being hereinafter
referred to as the "Committee"; and the Board of Directors or the Committee
administering the Plan, as the case may be, being hereinafter referred to as
the "Plan Administrator"). If the Board of Directors designates a Committee to
administer the Plan, the Committee (which may include members of the
compensation committee of the Board of Directors, if any) shall be comprised
solely of not less than two members who shall be (i) "disinterested persons"
within the meaning of Rule 16b-3 (or any successor rule) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (ii)
unless otherwise determined by the Board of Directors, "outside directors"
within the meaning of Section 162(m) of the Code.

     Section 2.02. Authority of Plan Administrator. The Plan Administrator is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make such determinations and interpretations and to take such action in
connection with the Plan and any options granted hereunder as it deems
necessary or advisable. All determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants and their
legal representatives. No member of the Board of the Directors, no member of
the Committee and no employee of the Company shall be liable for any act or
failure to act hereunder, except in circumstances involving his or her bad
faith, gross negligence or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties in
connection with the administration

<PAGE>

of this Plan have been delegated. The Company shall indemnify members of the
Plan Administrator and any agent of the Plan Administrator who is an employee
of the Company, against any and all liabilities or expenses to which they may
be subjected by reason of any act or failure to act with respect to their
duties on behalf of the Plan, except in circumstances involving such person's
bad faith, gross negligence or willful misconduct.

     The Plan Administrator may delegate to one or more of its members, or to
one or more agents, such administrative duties as it may deem advisable, and
the Plan Administrator, or any person to whom it has delegated duties as
aforesaid, may employ one or more persons to render advice with respect to any
responsibility the Plan Administrator or such person may have under the Plan.
The Plan Administrator may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Plan Administrator in the engagement of such
counsel, consultant or agent shall be paid by the Company, or the subsidiary
whose employees have benefited from the Plan as determined by the Plan
Administrator.

     Section 2.03. Terms, Conditions and Method of Grant. The terms and
conditions of options granted under the Plan may differ from one another as the
Plan Administrator, in its absolute discretion, shall determine as long as all
options granted under the Plan satisfy the requirements of the Plan. Whenever
the Plan Administrator shall designate an employee or other individual to
receive an option (the "optionee"), any officer of the Company designated by
the Plan Administrator shall forthwith send notice thereof to the optionee,
stating the number of Shares covered by the option and the price per Share. The
date of notice shall be the date of granting the option to the optionee for all
purposes of the Plan. The notice shall be accompanied by an option agreement
(with a copy of the Plan attached) to be signed by the Company and by the
optionee, which option agreement shall be in the form and shall contain such
provisions consistent with the Plan as the Plan Administrator, acting with the
benefit of legal counsel, shall consider advisable.

     Section 3.01. Maximum Number of Shares Subject to the Plan. Subject to the
provisions of Section 13.01(a), the maximum aggregate number of authorized and
unissued Shares that may be optioned and sold under the Plan is Twenty-Four
Million (24,000,000) Shares. If any of the options granted under the Plan
expire or terminate for any reason before they have been exercised in full, the
unpurchased Shares subject to those expired or terminated options shall again
be available for the purposes of the Plan.

     Section 4.01. Eligibility and Participation. Only full-time, key employees
of the Company or of any subsidiary corporation or any parent corporation shall
be eligible for selection by the Plan Administrator to receive incentive stock
options and full-time, key employees and directors of the Company or of any
subsidiary corporation or any parent corporation shall be eligible to receive
non-statutory stock options. For purposes of this Plan, the phrase "key
employees" shall include officers, department heads, division managers, other
employees having supervisory responsibilities, and those other employees as the
Plan Administrator may specifically designate from time to time.

                                      -2-
<PAGE>

     Section 5.01. Effective Date and Term of Plan. The Plan shall become
effective upon its adoption by the Board of Directors of the Company subject to
the receipt of the approval of the Plan required by Section 15.01. The Plan
shall remain in effect for a term of 10 years unless sooner terminated under
Section 14.01.

     Section 5.02. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Plan shall expire on the date determined
by the Plan Administrator, but in no event shall any option granted under the
Plan expire later than (10) years from the date on which the option is granted.
In addition, each option shall be subject to early termination as provided in
the Plan. However, any non-statutory stock option granted to a non-employee
director of the Company or any subsidiary corporation or parent corporation
shall expire five (5) years after the date of grant of such option.

     Section 5.03. Purchase Price. The purchase price for Shares acquired
pursuant to the exercise (in whole or in part) of any incentive stock option
granted under this Plan shall be not less than 100% of the fair market value of
the Shares at the time of the grant. Fair market value shall be determined by
the Plan Administrator on the basis of those factors they deem in good faith to
be appropriate; provided, however, that if at the time the determination is
made the Shares are admitted to trading on a national securities exchange, the
fair market value of the Shares shall be not less than the higher of (a) the
mean between the high bid and asked prices reported for the Shares on that
exchange on the date or most recent trading day preceding the date on which the
option is granted, or (b) the last reported sale price reported for the Shares
on that exchange on the date or most recent trading day preceding the date on
which the option is granted. The phrase "national securities exchange" shall
include the National Association of Securities Dealers Automated Quotation
System and the over-the-counter market.

     Section 5.04. Term and Purchase Price of Incentive Stock Option Granted to
More Than 10% Shareholder. Notwithstanding anything to the contrary in Sections
5.02 and 5.03, if an incentive stock option is to be granted to an employee of
the Company or any subsidiary corporation or parent corporation who at the time
the option is granted owns (or under Section 424(d) of the Code is deemed to
own) more than 10% of the total combined voting power of all classes of stock
of the Company or of any parent corporation or subsidiary corporation, that
option by its terms shall not be exercisable after the expiration of five (5)
years after the date that option is granted, and the purchase price of the
Shares acquired pursuant to the exercise (in whole or in part) of that option
shall be at least 110% of the fair market value (as determined under Section
5.03 by the Plan Administrator) of the Shares subject to the option at the time
the option is granted.

     Section 5.05. Maximum Amount of Options. The maximum aggregate fair market
value (determined as of the time the option is granted) of the Shares with
respect to which incentive stock options are exercisable for the first time by
any optionee in any calendar year under all stock option plans of the Company,
or of any parent corporation or subsidiary corporation of the Company, shall
not exceed $100,000. To the extent that the aggregate fair market value
(determined as of the time the option is granted) of the Shares with respect to
which incentive stock options are exercisable for the first time by any
optionee in any calendar year under all stock option plans of the Company or
any parent corporation or subsidiary

                                      -3-
<PAGE>

corporation of the Company exceeds $100,000, such options shall be treated as
non-statutory options.

     Section 6.01. Exercise of Options. Subject to Section 6.03, each option
shall be exercisable in one or more installments prior to its expiration or
termination at such times as determined by the Plan Administrator at the time
of grant; provided, however, that no option may be exercisable by a
non-employee director until six (6) months after the date of the grant. The
right to exercise may be cumulative as determined by the Plan Administrator. No
option may be exercised for a fraction of a Share or other than on a business
day of the Company. The full purchase price of any Shares purchased shall be
paid (i) in cash or by certified or cashier's check payable to the order of the
Company, or by a combination of cash or certified or cashier's check, at the
time of exercise of the option, or (ii) at the discretion of the Plan
Administrator and as permitted by law, by delivering the Company's Shares
already owned by the optionee or a combination of Shares and cash or certified
or cashiers checks.

     Section 6.02. Written Notice Required. Any option granted pursuant to the
terms of the Plan shall be considered exercised when written notice of that
exercise, together with the investment representation described in Section
7.01, has been given to the Company at its principal executive office by the
person entitled to exercise the option and full payment for the Shares with
respect to which the option is exercised has been received by the Company.

     Section 6.03. Vesting of Non-Statutory Stock Options. Non-statutory stock
options granted to non-employee directors of the Company or any subsidiary
corporation or parent corporation will become exercisable as follows: 100%
three (3) months after the date of the grant.

     Section 7.01. Compliance With State and Federal Laws; Delivery of Shares.
No Shares shall be issued with respect to any option granted under the Plan
unless the exercise of that option and the issuance and delivery of the Shares
pursuant to that exercise shall comply with all relevant provisions of state
and federal laws, rules, and regulations, 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 that compliance. If
any law, or any regulation of the Securities and Exchange Commission, or of any
other body having jurisdiction, shall require the Company or the optionee to
take any action in connection with the Shares specified in the optionee's
notice, then the date for the delivery of the Shares shall be postponed until
the completion of the necessary action. The Plan Administrator shall require
(to the extent required by or advisable under applicable laws, rules, and
regulations) an optionee to furnish evidence satisfactory to the Company
(including a written and signed representation letter and a consent to be bound
by any transfer restrictions imposed by laws, legend condition, or otherwise)
upon exercise of the option that the Shares to be acquired are being purchased
only for investment and without any present intention to sell or distribute the
Shares in violation of any law, rule, or regulation. Further, each optionee
shall consent to the imposition of a legend on the stock certificate evidencing
the Shares subject to his or her option restricting their transferability as
required by or advisable under applicable laws, rules and regulations.

     Section 8.01. Employment of Optionee. Nothing in the Plan or in any option
granted hereunder shall confer upon any optionee (i) any right to continued
employment by the Company

                                      -4-
<PAGE>

or any parent corporation or subsidiary corporation, or limit in any way the
right of the employer at any time to terminate or alter the terms of that
employment or (ii) any right to sue the Company, or any parent corporation or
subsidiary corporation for any adverse tax consequences in connection with the
grant or exercise of any option or the disposition of any Shares acquired
pursuant to this Plan.

     Section 9.01. Option Rights Upon Termination of Employment. If an optionee
ceases to be an employee or a director of the Company or any subsidiary
corporation or parent corporation for any reason other than death or permanent
and total disability (within the meaning of Section 22(e)(3) of the Code), the
optionee's option shall immediately terminate; provided, however, that the Plan
Administrator, in its absolute discretion, may provide at the time of the grant
of an option that the option may be exercised (to the extent it remains
unexercised on the date of termination) at any time within a period of up to
three months following the date of termination, unless either the option or the
Plan otherwise provides for earlier termination but only to the extent that the
optionee is entitled to exercise the option at the date of such termination.
The transfer of an employee from the employ of the Company to any subsidiary
corporation or parent corporation, or vice versa, or from any subsidiary
corporation or parent corporation, to any other subsidiary corporation or
parent corporation shall not be deemed to constitute a cessation of employment
for purposes of this Plan.

     Section 10.01. Option Rights Upon Death or Disability. Except as otherwise
limited by the Plan Administrator at the time of the grant of an option, if an
optionee dies or becomes permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code while an employee or a director of the Company or
any subsidiary corporation or parent corporation, or dies within three months
after ceasing to be an employee or director thereof (provided that the optionee
was entitled to exercise the option at the time of ceasing to be an employee or
director), the optionee's option shall expire one year after the date of death
or the date of permanent and total disability, unless either the option or the
Plan otherwise provides for earlier termination. During this one year (or
shorter) period, the option may be exercised, to the extent that it remains
unexercised on the date of death or on the date of permanent and total
disability, by the optionee, if living, or by the person or persons to whom the
optionee's rights under the option shall pass by will or by the laws of descent
and distribution, but only to the extent that the optionee is entitled to
exercise the option at the date of death or date of permanent and total
disability, as the case may be.

     Section 11.01. No Privileges of Ownership. Notwithstanding the exercise of
any option granted pursuant to the Plan, no optionee shall have any of the
rights or privileges of a shareholder of the Company in respect of any Shares
issuable upon the exercise of the option until the optionee becomes a
shareholder of record.

     Section 12.01. Limited Transferability of Options. During the lifetime of
an optionee, incentive stock options shall be exercisable only by the optionee
and shall not be assignable or transferable other than by will or by the laws
of descent and distribution following the optionee's death. Non-statutory stock
options shall be subject to the same restrictions, except that a non-statutory
stock option may, to the extent permitted by the Plan Administrator, be
assigned in whole or in part during an optionee's lifetime to one or more
members of the optionee's immediate family or to a trust established
exclusively for one or more such family members. The

                                      -5-
<PAGE>

terms applicable to the assigned portion shall be the same as those in effect
for the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.

     Section 13.01. Adjustment to Number and Purchase Price; Acceleration of
Right to Exercise Option; Cancellation of Option. All options granted pursuant
to the Plan shall be adjusted, modified, or canceled in the manner prescribed
by this section.

     (a) If the outstanding Shares of the Company are increased, decreased,
changed into, or exchanged for a different number or kind or Shares or
securities through merger, consolidation, combination, exchange of Shares, or
other reorganization, recapitalization, reclassification, stock dividend, stock
split, or reverse stock split, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of Shares as to which options may
be granted under the Plan. A corresponding adjustment changing the number or
kind of Shares allocated to unexercised options or portions thereof that were
granted prior to any such change shall likewise be made. Any adjustments made
pursuant to this Section 13.01 in outstanding options shall be made without
change in the aggregate purchase price applicable to the unexercised portion of
the option, but with a corresponding adjustment in the price for each Share or
other unit of any security covered by the option. With respect to incentive
stock options, the adjustments described in this section 13.01(a) shall be made
in accordance with Section 424 of the Code.

     (b) Upon the effective date of the dissolution or liquidation of the
Company, or of a reorganization, merger, or consolidation of the Company with
one or more other corporations in which the Company is not the surviving
corporation, or of the transfer of substantially all of the assets or Shares of
the Company to another corporation, the Plan and any option theretofore granted
hereunder shall terminate. In the event of such dissolution, liquidation,
reorganization, merger, consolidation, transfer of assets, or transfer of
stock, each optionee (or that person's estate or a person who acquired the
right to exercise the option from the optionee by bequest or inheritance) shall
be entitled, prior to the effective date of the consummation of any such
transaction, to purchase, in whole or in part, the full number of Shares under
the option or options granted to the optionee that the optionee would otherwise
have been entitled to purchase during the remaining term of the option and
without regard to any otherwise applicable restrictions set forth in the option
delaying the immediate exercise of the option. To the extent that any such
exercise relates to stock that is not otherwise available for purchase through
the exercise of the option by the optionee at that time, the exercise pursuant
to this Section 13.01(b) shall be contingent upon the consummation of that
dissolution, liquidation, reorganization, merger, consolidation, sale, or
transfer of assets or stock.

     (c) Notwithstanding the foregoing, in the event of a complete liquidation
of a subsidiary corporation or parent corporation, or in the event that such
corporation ceases to be a subsidiary corporation or parent corporation, any
unexercised options theretofore granted to an employee of such subsidiary
corporation or parent corporation, respectively, shall be deemed canceled
unless the employee shall become employed by the Company or by any other
subsidiary corporation or parent corporation, respectively, on the occurrence
of any such event

                                      -6-
<PAGE>

     Section 14.01. Termination and Amendment of Plan. The Plan shall terminate
ten (10) years from the effective date of the Plan (as determined under Section
5.01), and no options shall be granted under the Plan after that date;
provided, however, that termination of the Plan shall not terminate any option
granted prior thereto, and options granted prior to termination of the Plan and
existing at the time of termination of the Plan shall continue to be subject to
all the terms and conditions of the Plan as if the Plan had not terminated.
Subject to the limitation contained in Section 14.02, the Plan Administrator
may at any time amend or revise the terms of the Plan (including the form and
substance of the option agreements to be used hereunder), provided that no
amendment or revision shall (a) increase the maximum aggregate number of Shares
provided for in Section 3.01 that may be sold pursuant to options granted under
the Plan except as required under the provisions of Section 13.01(a), (b)
permit the granting of an option to anyone other than as provided in Section
4.01, (c) increase the maximum term provided for in Sections 5.02 and 5.04 of
any option, or (d) change the minimum purchase price for the Shares under
Sections 5.03 and 5.04, unless approved by the written consent of the
shareholders, or by the affirmative vote, in person or by proxy, of a majority
of the outstanding voting stock of the Company at a duly held shareholders'
meeting.

     Section 14.02. Prior Rights and Obligations. No amendment, suspension, or
termination of the Plan shall, without the consent of the optionee, alter or
impair any of that optionee's rights or obligations under any option granted
under the Plan prior to that amendment, suspension, or termination.

     Section 15.01. Approval of Shareholders. Within 12 months after its
adoption by the Board of Directors of the Company, the Plan must be approved by
the unanimous written consent of the shareholders, or by the affirmative vote,
in person or by proxy, of a majority of the outstanding voting stock of the
Company at a duly held shareholders' meeting. Options may be granted under the
Plan prior to obtaining shareholder approval, but those options shall be
contingent upon shareholder approval being obtained and may not be exercised
prior to the receipt of shareholder approval.

     Section 16.01. Reservation of Shares. During the term of the Plan, the
Company will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. In addition, the
Company will from time to time, as is necessary to accomplish the purposes of
the Plan, seek to obtain from any regulatory agency having jurisdiction any
requisite authority in order to grant options under the Plan and to issue and
sell Shares hereunder.

     Section 17.01. Tax Withholding. The Company may make such provisions as it
may deem appropriate for the withholding of any state or federal taxes which
the Company determines is advisable to withhold in connection with any option
or any other right, payment or settlement made under this Plan. The exercise of
the option shall not be effective unless such withholding shall have been
effected or obtained in a manner acceptable to the Company, including, but not
limited to, requiring the optionee to remit to the Company an amount sufficient
to satisfy any federal, state and/or local tax withholding requirements.

     Section 18.01. Sections-Headings. The headings of the sections of the Plan
are for convenience only and shall not be considered or referred to in
resolving questions of

                                      -7-
<PAGE>

interpretation. References to "Section" that are not followed by a section
number and the phrase "of the Code" are references to sections of the Plan.

     Section 19.01. Governing Law. The Plan shall be governed by and construed
and interpreted in accordance with the internal laws of the State of
California, except to the extent preempted by federal law, which shall govern
to such extent.

     Section 20.01. Invalid Provision. In the event that any provision of this
Plan is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering
any other provisions contained herein invalid or unenforceable, and all such
other provisions shall be given full force and effect to the same extent as
though the invalid or unenforceable provision was not contained herein.

     Section 21.01. Adoption. The Plan was adopted by a resolution duly adopted
by the Board of Directors of the Company on June 5, 1998. The first amendment
to the Plan was adopted by a resolution duly adopted by the Board of Directors
of the Company on January 27, 1999. The second amendment to the Plan was
adopted by a resolution duly adopted by the Board of Directors of the Company
on July 10, 2000.

                                      -8-

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