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                                                                    EXHIBIT 10.5

1. BASIC PROVISIONS

        1.1 PARTIES: This Lease, executed in duplicate at Cupertino, California,
on February 5, 2001, by and between Mission West Properties, L.P. III, a
Delaware limited partnership, and Intevac Corporation, a California Corporation,
hereinafter called respectively Lessor and Lessee, without regard to number or
gender.

        1.2 LETTING: Lessor hereby leases to Lessee, and Lessee hires from
Lessor, the Premises, for the term, at the rental and upon all the terms and
conditions set forth herein.

        1.3 USE: Lessee may use the Premises for the purpose of conducting
therein office, research and development, light manufacturing, and warehouse
activities, and any other legal activity.

        1.4 PREMISES: The real property with appurtenances as shown on Exhibit A
(the "Premises") situated in the City of Santa Clara, County of Santa Clara,
State of California, and more particularly described as follows:

        The Premises includes 119,583 square feet out of 167,063 square feet of
        buildings, including all improvements thereto as shown on Exhibit A.l
        including the right to use up to 396 unreserved parking spaces and the
        link between 3550 and 3560 Bassett Street of approximately 1,600 sq. ft.
        The addresses for the Premises are 3560-3570-3580 Bassett Street, Santa
        Clara, California. Lessee's pro-rata share of the Premises is 71.6%.

        1.5 TERM: The term shall be for seventy-five (75) months unless extended
pursuant to Section 35 of this Lease (the "Lease Term"), commencing on the
Commencement Date as defined in Section 1.11 and ending on March 31, 2007.

        1.6 RENT: Base rent shall be payable in monthly installments as follows:

<TABLE>
<CAPTION>
                                           Base rent      Estimated CAC*         Total
                                           ---------      --------------         -----
<S>                                        <C>            <C>                   <C>
01/01/01 through 03/31/01                  $146,489           $2,200*           $148,689
04/01/01 through 03/31/02                  $152,349           $2,200*           $154,549
04/01/02 through 03/31/03                  $236,774           $2,200*           $238,974
04/01/03 through 03/31/04                  $246,245           $2,200*           $248,445
04/01/04 through 03/31/05                  $256,095           $2,200*           $258,295
04/01/05 through 03/31/06                  $266,339           $2,200*           $268,539
04/01/06 through 03/31/07                  $276,992           $2,200*           $279,192
</TABLE>

*       CAC charges to be adjusted per Common Area Charges Section below.

Base rent and CAC as scheduled above shall be payable in advance on or before
the first day of each calendar month during the Lease Term. The term "Rent," as
used herein, shall be deemed to be and to mean the base monthly rent and all
other sums required to be paid by Lessee pursuant to the terms of this Lease.
Rent shall be paid in lawful money of the United States of America, without
offset or deduction, and shall be paid to Lessor at such place or places as may
be designated from time to time by Lessor. Rent for any period less than a
calendar month shall be a pro rata portion of the monthly installment.

        1.7 SECURITY DEPOSIT: NONE

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        1.8 COMMON AREA CHARGES: Lessee shall pay to Lessor, as additional Rent,
an amount equal to Lessee's pro-rata share of the total common area charges of
the Premises as defined below (the common area charges for the Premises is
referred to herein as ("CAC")). Lessee shall pay to Lessor as Rent, on or before
the first day of each calendar month during the Lease Term, subject to
adjustment and reconciliation as provided herein below, the sum of Two Thousand
and Two Hundred Dollars ($2,200), said sum representing Lessee's estimated
monthly payment of Lessee's percentage share of CAC. It is understood and agreed
that Lessee's obligation under this paragraph shall be prorated to reflect the
Commencement Date and the end of the Lease Term.

Lessee's estimated monthly payment of CAC payable by Lessee during the calendar
year in which the Lease commences is set forth above. At or prior to the
commencement of each succeeding calendar year term (or as soon as practical
thereafter), Lessor shall provide Lessee with Lessee's estimated monthly payment
for CAC which Lessee shall pay to Lessor as Rent. Within 120 days of the end of
the calendar year and the end of the Lease Term, Lessor shall provide Lessee a
statement of actual CAC incurred for the preceding year or other applicable
period in the case of a termination year. If such statement shows that Lessee
has paid less than its actual percentage, then Lessee shall on demand pay to
Lessor the amount of such deficiency. If such statement shows that Lessee has
paid more than its actual percentage, then Lessor shall, at its option, promptly
refund such excess to Lessee or credit the amount thereof to the Rent next
becoming due from Lessee. Lessor reserves the right to revise any estimate of
CAC if the actual or projected CAC show an increase or decrease in excess of 10%
from an earlier estimate for the same period. In such event, Lessor shall
provide a revised estimate to Lessee, together with an explanation of the
reasons therefore, and Lessee shall revise its monthly payments accordingly.
Lessor's and Lessee's obligation with respect to adjustments at the end of the
Lease Term or earlier expiration of this Lease shall survive the Lease Term or
earlier expiration.

As used in this Lease, CAC shall include but is not limited to: (i) landscaping
repair, replacement, and maintenance; (ii) all costs and expenses including but
not limited to supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Premises; (iii) licenses,
permits and inspection fees; (iv) all other costs incurred by Lessor in
maintaining and operating the Premises; and (v) an amount equal to ten percent
(10%) of items (i) through (iv) above. Lessee shall have the right to review
the basis and computation analysis used to derive the CAC applicable to this
Lease annually.

        1.9 LATE CHARGES: Lessee hereby acknowledges that a late payment made by
Lessee to Lessor of Rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges, which may be imposed on
Lessor according to the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of base monthly rent or monthly
estimate of CAC is not received by Lessor or Lessor's designee within five (5)
days after such amount is due or if any other Rent or other sum payable to
Lessor is not received by Lessor or Lessor's designee within ten (10) days after
Lessor delivers a written notice to Lessee, Lessee shall pay to Lessor a late
charge equal to five percent (5%) of such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payments made by Lessee. Acceptance of
such late charges by Lessor shall in no event constitute a waiver of Lessee's
default with respect to such overdue amount, nor shall it prevent Lessor from
exercising any of the other rights and remedies granted hereunder.

        1.10 QUIET ENJOYMENT: Lessor covenants and agrees with Lessee that upon
Lessee paying Rent and performing its covenants and conditions under this Lease,
Lessee shall and may peaceably and quietly have, hold and enjoy the Premises for
the Lease Term, subject, however, to the rights reserved by Lessor hereunder.

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        1.11 POSSESSION: Lessee is in possession of Premises. Terms and
conditions of this lease shall commence on January 1, 2001. On January 1, 2001,
this Lease will supercede and replace all prior agreements between Lessee and
Lessor related to Lessee's use of the Premises.

2. LESSEE IMPROVEMENTS

        2.1 ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER: Lessee accepts
the Premises in an "AS IS" condition and "AS IS" state of repair. Lessee has
occupied the Premises for over five (5) years under an existing NNN lease.
Lessee agrees on the last day of the Lease Term, or on the sooner termination of
this Lease, to surrender the Premises to Lessor in Good Condition and Repair.
"Good Condition and Repair" shall generally mean that the Premises are in the
condition that one would expect the Premises to be in, if throughout the Lease
Term Lessee (i) uses and maintains the Premises in a commercially reasonable
manner and in an accordance with the requirements of this Lease and (ii) makes
all Required Replacements. "Required Replacements" are the replacements to
worn-out equipment, fixtures, and improvements that a commercially reasonable
owner-user would make. All of the following shall be in Good Condition and
Repair: (i) the interior walls and floors of all offices and other interior
areas, (ii) all suspended ceilings and any carpeting shall be clean and in good
condition, (iii) all glazing, windows, doors and door closures, plate glass, and
(iv) all electrical systems including light fixtures and ballasts, plumbing,
temperature control systems, and those additional items listed in Section 5 of
the Lease. Lessee, on or before the end of the Lease Term or sooner termination
of this Lease, shall remove all its personal property and trade fixtures from
the Premises, and all such property not so removed shall be deemed to be
abandoned by Lessee. Lessee shall reimburse Lessor for all disposition costs
incurred by Lessor relative to Lessee's abandoned property. If the Premises are
not surrendered at the end of the Lease Term or earlier termination of this
Lease, Lessee shall indemnify Lessor against loss or liability resulting from
any delay caused by Lessee in surrendering the Premises including, without
limitation, any claims made by any succeeding Lessee founded on such delay.
Notwithstanding the above, Lessor shall install, at Lessor's cost, new roof
membrane on all remaining space by December 31, 2001.

3. USES PROHIBITED: Lessee shall not commit, or suffer to be committed, any
waste upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the buildings in
which the subject Premises are located or allow any sale by auction upon the
Premises, or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, or place any loads upon the floor, walls, or ceiling
which may endanger the structure, or use any machinery or apparatus which will
in any manner vibrate or shake the Premises or the building of which it is a
part, or place any harmful liquids in the drainage system of the building. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises outside of the building proper. No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature shall be stored upon or permitted to remain on any
portion of the Premises outside of the building structure, unless approved by
the local, state, federal or other applicable governing authority. Lessor
consents to Lessee's use of materials which are necessary to the operation of
Lessee's business, or which are incidental to the normal, day-to-day operations
of any office user, such as copier fluids, cleaning materials, etc., but this
does not relieve Lessee of any of its obligations not to contaminate the
Premises and related real property or violate any Hazardous Materials Laws. For
the purposes of this paragraph "building structure" includes fenced-in storage
areas attached to the building. Lessee agrees to comply with the regulations of
all local, state, federal and other applicable governing authorities with
respect to storage of articles of any nature in the "building structure" and
Premises.

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4. ALTERATIONS AND ADDITIONS: Lessee shall not make, or suffer to be made, any
alteration or addition to said Premises, or any part thereof, without the
express, advance written consent of Lessor; any addition or alteration to said
Premises, except movable furniture and trade fixtures, shall become at once a
part of the realty and belong to Lessor at the end of the Lease Term or earlier
termination of this Lease. Alterations and additions which are not deemed as
trade fixtures shall include HVAC systems, lighting systems, electrical systems,
partitioning, carpeting, or any other installation which has become an integral
part of the Premises. Lessee agrees that it will not proceed to make such
alterations or additions until all required government permits have been
obtained and after having obtained consent from Lessor to do so, until five (5)
days from the receipt of such consent, so that Lessor may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Lessee's improvements. Lessee shall at all times permit such notices to be
posted and to remain posted until the completion of work. At the end of the
Lease Term or earlier termination of this Lease, Lessee shall remove and shall
be required to remove its special tenant improvements, all related equipment,
and any additions or alterations installed by Lessee at or during the Lease Term
and Lessee shall return the Premises to the condition that existed before the
installation of the tenant improvements. Notwithstanding the above, Lessor
agrees to allow any reasonable alterations and improvements and will use its
best efforts to notify Lessee at the time of approval if such improvements or
alterations are to be removed at the end of the Lease Term or earlier
termination of this Lease.

5. MAINTENANCE OF PREMISES:

        Lessee shall at its sole cost and expense keep, repair, and maintain the
        Premises in Good Condition and Repair, including, but not limited to:

                1. The interior walls and floors of all offices and other
                interior areas, doors and door closures, all lighting systems,
                temperature control systems, and plumbing systems.

                2. The interior and exterior window washing as needed.

                3. The HVAC by a service contract with a licensed air
                conditioning and heating contractor which contract shall provide
                for a minimum of quarterly maintenance of all air conditioning
                and heating equipment at the Premises including HVAC repairs or
                replacements which are either excluded from such service
                contract or any existing equipment warranties.

                4. The roof membrane by a service contract with a licensed
                reputable roofing contractor which contract shall provide for a
                minimum of semi-annual maintenance, cleaning of storm gutters,
                drains, removing of debris, and trimming overhanging trees,
                repair of the roof and application of a finish coat every five
                years to the building at the Premises.

                5. Exterior pest control.

                6. Fire monitoring services.

                7. Elevator repair, inspection, and replacements.

                Lessor will at Lessee's sole cost and expense keep, repair, and
                maintain the exterior of the building, any appurtenances and
                every part thereof, including but not limited to, glazing,
                sidewalks, parking areas, electrical systems, and painting of
                exterior walls. The parking lot to receive a finish coat every
                five to seven years.

        (c) Lessee hereby waives any and all rights to make repairs at the
        expense of Lessor as provided in Section 1942 of the Civil Code of the
        State of California, and all rights provided for by Section 1941 of said
        Civil Code.

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        (d) Lessor shall be responsible for the repair of any structural defects
        in the Premises including the roof structure (not membrane), exterior
        walls and foundation during the Lease Term.

        (e) Lessee shall be responsible for and pay for all Required
        Replacements of any items in this Section 5 on Lease Termination.

6. INSURANCE:

        A) HAZARD INSURANCE: Lessee shall not use, or permit said Premises, or
        any part thereof, to be used, for any purpose other than that for which
        the Premises are hereby leased; and no use shall be made or permitted to
        be made of the Premises, nor acts done, which may cause a cancellation
        of any insurance policy covering the Premises, or any part thereof, nor
        shall Lessee sell or permit to be kept, used or sold, in or about said
        Premises, any article which may be prohibited by a fire and extended
        coverage insurance policy. Lessee shall comply with any and all
        requirements, pertaining to said Premises, of any insurance organization
        or company, necessary for the maintenance of reasonable fire and
        extended coverage insurance, covering the Premises. Lessor shall, at
        Lessee's sole cost and expense, purchase and keep in force fire and
        extended coverage insurance, covering loss or damage to the Premises in
        an amount equal to the full replacement cost of the Premises, as
        determined by Lessor, with proceeds payable to Lessor. In the event of a
        loss per the insurance provisions of this paragraph, Lessee shall be
        responsible for deductibles up to a maximum of $5,000 per occurrence.
        Lessee acknowledges that the insurance referenced in this paragraph does
        not include coverage for Lessee's personal property.

        B) LOSS OF RENTS INSURANCE: Lessor shall, at Lessee's sole cost and
        expense, purchase and maintain in full force and effect, a policy of
        rental loss insurance, in an amount equal to the amount of Rent payable
        by Lessee commencing within sixty (60) days of the date of the loss or
        on the date of loss if reasonably available for the next ensuing one (1)
        year, as reasonably determined by Lessor with proceeds payable to Lessor
        ("Loss of Rents Insurance").

        C) LIABILITY AND PROPERTY DAMAGE INSURANCE: Lessee, as a material part
        of the consideration to be rendered to Lessor, hereby waives all claims
        against Lessor and Lessor's Agents for damages to goods, wares and
        merchandise, and all other personal property in, upon, or about the
        Premises, and for injuries to persons in, upon, or about the Premises,
        from any cause arising at any time, and Lessee will hold Lessor and
        Lessor's Agents exempt and harmless from any damage or injury to any
        person, or to the goods, wares, and merchandise and all other personal
        property of any person, arising from the use or occupancy of the
        Premises by Lessee, or from the failure of Lessee to keep the Premises
        in Good Condition and Repair, as herein provided. Lessee shall, at
        Lessee's sole cost and expense, purchase and keep in force a standard
        policy of commercial general liability insurance and property damage
        policy covering the Premises and all related areas insuring the Lessee
        having a combined single limit for both bodily injury, death and
        property damage in an amount not less than five million dollars
        ($5,000,000.00) and Lessee's insurance shall be primary. The limits of
        said insurance shall not, however, limit the liability of Lessee
        hereunder. Lessee shall, at its sole cost and expense, comply with all
        of the insurance requirements of all local, municipal, state and federal
        authorities now in force, or which may hereafter be in force, pertaining
        to Lessee's use and occupancy of the said Premises.

        D) PERSONAL PROPERTY INSURANCE: Lessee shall obtain, at Lessee's sole
        cost and expense, a policy of fire and extended coverage insurance
        including coverage for direct physical loss special form, and a
        sprinkler leakage endorsement insuring the personal property of Lessee.
        The proceeds from any personal property damage policy shall be payable
        to Lessee.

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All insurance policies required in 6 C) and 6 D) above shall: (i) provide for a
certificate of insurance evidencing the insurance required herein, being
deposited with Lessor ten (10) days prior to the Commencement Date, and upon
each renewal, such certificates shall be provided prior to the expiration date
of such coverage, (ii) be in a form reasonably satisfactory to Lessor and shall
provide the coverage required by Lessee in this Lease, (iii) be carried with
companies with a Best Rating of A minimum, (iv) specifically provide that such
policies shall not be subject to cancellation or reduction of coverage except
after 30 days prior written notice to Lessor, (v) name Lessor, and any other
parties requested by Lessor that have an insurable interest in the Premises as
additional insureds by endorsement to policy, and (vi) shall be primary.

Lessee agrees to pay to Lessor, as additional Rent, on demand, the full cost of
the insurance polices referenced in 6 A) and 6 B) above as evidenced by
insurance billings from Lessor. If Lessee does not occupy the entire Premises,
the insurance premiums shall be allocated to the portion of the Premises
occupied by Lessee on a pro-rata square footage or other equitable basis, as
determined by Lessor. It is agreed that Lessee's obligation under this paragraph
shall be prorated to reflect the Commencement Date and the end of the Lease
Term.

Lessor and Lessee hereby waive any rights each may have against the other
related to any loss or damage caused to Lessor or Lessee as the case may be, or
to the Premises or its contents, and which may arise from any risk covered by
fire and extended coverage insurance and those risks required to be covered
under Lessee's personal property insurance. The parties shall provide that their
respective insurance policies insuring the property or the personal property
include a waiver of any right of subrogation which said insurance company may
have against Lessor or Lessee, as the case may be.

7. ABANDONMENT: Lessee shall not vacate or abandon the Premises at any time
during the Lease Term; and if Lessee shall abandon, vacate or surrender said
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee and left on the Premises shall be deemed to be
abandoned, at the option of Lessor. Notwithstanding the above, the Premises
shall not be considered vacated or abandoned if Lessee maintains the Premises in
Good Condition and Repair, provides security and is not in default.

8. FREE FROM LIENS: Lessee shall keep the subject Premises and the property in
which the subject Premises are situated, free from any and all liens including
but not limited to liens arising out of any work performed, materials furnished,
or obligations incurred by Lessee. However, the Lessor shall allow Lessee to
contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee
provides Lessor a bond if the lien exceeds $5,000.

9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Lessee shall, at its sole cost and
expense, comply with all of the requirements of all local, municipal, state and
federal authorities now in force, or which may hereafter be in force, pertaining
to the Premises, and shall faithfully observe in the use and occupancy of the
Premises all local and municipal ordinances and state and federal statutes now
in force or which may hereafter be in force.

10. INTENTIONALLY OMITTED.

11. ADVERTISEMENTS AND SIGNS: Lessee shall not place or permit to be placed, in,
upon or about the Premises any unusual or extraordinary signs, or any signs not
approved by the city, local, state, federal or other applicable governing
authority. Lessee shall not place, or permit to be placed upon the Premises, any
signs, advertisements or notices without the written consent of the Lessor, and
such consent shall not be unreasonably withheld. A sign so placed on the
Premises shall be so placed upon the understanding and agreement that Lessee
will remove same at the end of the

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Lease Term or earlier termination of this Lease and repair any damage or injury
to the Premises caused thereby, and if not so removed by Lessee, then Lessor may
have the same removed at Lessee's expense.

12. UTILITIES: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for sewer
usage, PG&E and telephone site service or related fees shall be the obligation
of Lessee and paid for by Lessee. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion of all charges which
are jointly metered, the determination to be made by Lessor acting reasonably
and on any equitable basis. Lessor and Lessee agree that Lessor shall not be
liable to Lessee for any disruption in any of the utility services to the
Premises.

13. ATTORNEY'S FEES: In case suit should be brought for the possession of the
Premises, for the recovery of any sum due hereunder, because of the breach of
any other covenant herein, or to enforce, protect, or establish any term,
conditions, or covenant of this Lease or the right of either party hereunder,
the losing party shall pay to the Prevailing Party reasonable attorney's fees
which shall be deemed to have accrued on the commencement of such action and
shall be enforceable whether or not such action is prosecuted to judgment. The
term "Prevailing Party" shall mean the party that received substantially the
relief requested, whether by settlement, dismissal, summary judgment, judgment,
or otherwise.

14. DEFAULT

        14.1 LESSEE DEFAULT: The occurrence of any of the following shall
constitute a default and breach of this Lease by Lessee: a) Any failure by
Lessee to pay Rent or to make any other payment required to be made by Lessee
hereunder when due if not cured within ten (10) days after written notice
thereof by Lessor to Lessee; b) The abandonment or vacation of the Premises by
Lessee except as provided in Section 7; c) A failure by Lessee to observe and
perform any other provision of this Lease to be observed or performed by Lessee,
where such failure continues for thirty days after written notice thereof by
Lessor to Lessee; provided, however, that if the nature of such default is such
that the same cannot be reasonably cured within such thirty (30) day period,
Lessee shall not be deemed to be in default if Lessee shall, within such period,
commence such cure and thereafter diligently prosecute the same to completion;
d) The making by Lessee of any general assignment for the benefit of creditors;
the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt
or of a petition for reorganization or arrangement under any law relating to
bankruptcy; e) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets or Lessee's interest in this Lease, or the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease.

        14.2 SURRENDER OF LEASE: In the event of any such default by Lessee,
then in addition to any other remedies available to Lessor at law or in equity,
Lessor shall have the immediate option to terminate this Lease before the end of
the Lease Term and all rights of Lessee hereunder, by giving written notice of
such intention to terminate. In the event that Lessor terminates this Lease due
to a default of Lessee, then Lessor may recover from Lessee: a) the worth at the
time of award of any unpaid Rent which had been earned at the time of such
termination; plus b) the worth at the time of award of unpaid Rent which would
have been earned after termination until the time of award exceeding the amount
of such rental loss that the Lessee proves could have been reasonably avoided;
plus c) the worth at the time of award of the amount by which the unpaid Rent
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; plus
d) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the "worth at the time of award"
is computed by allowing

<PAGE>   8

interest at the rate of Wells Fargo's prime rate plus two percent (2%) per
annum. As used in (c) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

        14.3 RIGHT OF ENTRY AND REMOVAL: In the event of any such default by
Lessee, Lessor shall also have the right, with or without terminating this
Lease, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Lessee.

        14.4 ABANDONMENT: In the event of the vacation or abandonment, except as
provided in Section 7, of the Premises by Lessee or in the event that Lessor
shall elect to re-enter as provided in paragraph 14.3 above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, and Lessor does not elect to terminate this Lease as
provided in Section 14.2 above, then Lessor may from time to time, without
terminating this Lease, either recover all Rent as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental rates and
upon such other terms and conditions as Lessor, in its sole discretion, may deem
advisable with the right to make alterations and repairs to the Premises. In the
event that Lessor elects to reset the Premises, then Rent received by Lessor
from such reletting shall be applied; first, to the payment of any indebtedness
other than Rent due hereunder from Lessee to Lessor; second, to the payment of
any cost of such reletting; third, to the payment of the cost of any alterations
and repairs to the Premises; fourth, to the payment of Rent due and unpaid
hereunder; and the residue, if any, shall be held by Lessor and applied to the
payment of future Rent as the same may become due and payable hereunder. Should
that portion of such Rent received from such reletting during any month, which
is applied by the payment of Rent hereunder according to the application
procedure outlined above, be less than the Rent payable during that month by
Lessee hereunder, then Lessee shall pay such deficiency to Lessor immediately
upon demand therefore by Lessor. Such deficiency shall be calculated and paid
monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and
expenses incurred by Lessor in such reletting or in making such alterations and
repairs not covered by the rentals received from such reletting.

        14.5 NO IMPLIED TERMINATION: No re-entry or taking possession of the
Premises by Lessor pursuant to Section 14.3 OR Section 14.4 of this Lease shall
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Lessee or unless the termination thereof is decreed
by a court of competent jurisdiction. Notwithstanding any reletting without
termination by Lessor because of any default by Lessee, Lessor may at any time
after such reletting elect to terminate this Lease for any such default.

15. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Lessor, terminate all or any existing subleases or sub tenancies,
or may, at the option of Lessor, operate as an assignment to him of any or all
such subleases or sub tenancies.

16. TAXES: Lessee shall pay and discharge punctually and when the same shall
become due and payable without penalty to Lessor, all real estate taxes,
personal property taxes, taxes based on vehicles utilizing parking areas in the
Premises, taxes computed or based on rental income (other than federal, state
and municipal net income taxes), Environmental Surcharges, privilege taxes,
excise taxes, business and occupation taxes, school fees or surcharges, gross
receipts taxes, sales and/or use taxes, employee taxes, occupational license
taxes, water and sewer taxes, assessments (including, but not limited to,
assessments for public improvements or benefit), assessments for local
improvement and maintenance districts, and all other governmental impositions
and charges of every kind and nature whatsoever, regardless of whether now
customary or within the contemplation of the parties hereto and regardless of
whether resulting from increased rate and/or valuation, or whether extraordinary
or ordinary, general or special, unforeseen or foreseen, or similar or
dissimilar to any of the foregoing (all of the foregoing being hereinafter

<PAGE>   9

collectively called "Tax" or "Taxes") which, at any time during the Lease Term,
shall be applicable or against the Premises, or shall become due and payable and
a lien or charge upon the Premises under or by virtue of any present or future
laws, statutes, ordinances, regulations, or other requirements of any
governmental authority whatsoever. The term "Environmental Surcharge" shall
include any and all expenses, taxes, charges or penalties imposed by the Federal
Department of Energy, Federal Environmental Protection Agency, the Federal Clean
Air Act, or any regulations promulgated thereunder, or any other local, state or
federal governmental agency or entity now or hereafter vested with the power to
impose taxes, assessments or other types of surcharges as a means of controlling
or abating environmental pollution or the use of energy in regard to the use,
operation or occupancy of the Premises. The term "Tax" shall include, without
limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed, assessed, measured, or based in any manner whatsoever (i) in whole or
in part on the Rent payable by Lessee under this Lease, (ii) upon or with
respect to the use, possession, occupancy, leasing, operation or management of
the Premises, (iii) upon this transaction or any document to which Lessee is a
party creating or transferring an interest or an estate in the Premises, (iv)
upon Lessee's business operations conducted at the Premises, (v) upon, measured
by or reasonably attributable to the cost or value of Lessee's equipment,
furniture, fixtures and other personal property located on the Premises or the
cost or value of any leasehold improvements made in or to the Premises by or for
Lessee, regardless of whether title to such improvements shall be in Lessor or
Lessee, or (vi) in lieu of or equivalent to any Tax set forth in this Section
16. In the event any such Taxes are payable by Lessor and it shall not be lawful
for Lessee to reimburse Lessor for such Taxes, then the Rent payable thereunder
shall be increased to net Lessor the same net rent after imposition of any such
Tax upon Lessor as would have been payable to Lessor prior to the imposition of
any such Tax. It is the intention of the parties that Lessor shall be free from
all such Taxes and all other governmental impositions and charges of every kind
and nature whatsoever. However, nothing contained in this Section 16 shall
require Lessee to pay any Federal or State income, franchise, estate,
inheritance, succession, transfer or excess profits tax imposed upon Lessor. If
any general or special assessment is levied and assessed against the Premises,
Lessor agrees to use its best reasonable efforts to cause the assessment to
become a lien on the Premises securing repayment of a bond sold to finance the
improvements to which the assessment relates which is payable in installments of
principal and interest over the maximum term allowed by law. It is understood
and agreed that Lessee's obligation under this paragraph will be prorated to
reflect the Commencement Date and the end of the Lease Term. It is further
understood that if Taxes cover the Premises and Lessee does not occupy the
entire Premises, the Taxes will be allocated to the portion of the Premises
occupied by Lessee based on a pro-rata square footage or other equitable basis,
as determined by Lessor.

Subject to any limitations or restrictions imposed by any deeds of trust or
mortgages now or hereafter covering or affecting the Premises, Lessee shall have
the right to contest or review the amount or validity of any Tax by appropriate
legal proceedings but which is not to be deemed or construed in any way as
relieving, modifying or extending Lessee's covenant to pay such Tax at the time
and in the manner as provided in this Section 16. However, as a condition of
Lessee's right to contest, if such contested Tax is not paid before such contest
and if the legal proceedings shall not operate to prevent or stay the collection
of the Tax so contested, Lessee shall, before instituting any such proceeding,
protect the Premises and the interest of Lessor and of the beneficiary of a deed
of trust or the mortgagee of a mortgage affecting the Premises against any lien
upon the Premises by a surety bond, issued by an insurance company acceptable to
Lessor and in an amount equal to one and one-half (1 1/2) times the amount
contested or, at Lessor's option, the amount of the contested Tax and the
interest and penalties in connection therewith. Any contest as to the validity
or amount of any Tax, whether before or after payment, shall be made by Lessee
in Lessee's own name, or if required by law, in the name of Lessor or both
Lessor and Lessee. Lessee shall defend, indemnify and hold harmless Lessor from
and against any and all costs or expenses, including attorneys' fees, in
connection with any such proceedings brought by Lessee, whether in its own name
or not. Lessee shall be entitled to retain any refund of any such contested Tax
and penalties or interest thereon which have been paid by Lessee. Nothing
contained herein shall be construed as affecting or limiting Lessor's right to
contest any Tax at Lessor's expense.

<PAGE>   10

17. NOTICES: Unless otherwise provided for in this Lease, any and all written
notices or other communication (the "Communication") to be given in connection
with this Lease shall be given in writing and shall be given by personal
delivery, facsimile transmission or by mailing by registered or certified mail
with postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:

(a)  to the Lessor at:   10050 Bandley Drive
                         Cupertino, California 95014
                         Attention: Carl E. Berg
                         Fax No: (408) 725-1626

(b)  to the Lessee at:   3560 Bassett Street
                         Santa Clara, California
                         Attention: Charley Eddy
                         Fax No: 408.727.5739

or such other addresses, facsimile number or individual as may be designated by
a Communication given by a party to the other parties as aforesaid. Any
Communication given by personal delivery shall be conclusively deemed to have
been given and received on a date it is so delivered at such address provided
that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which
delivery is made or refused or if given by recognized overnight courier, on the
first business day following deposit with such overnight courier and if given by
facsimile transmission, on the day on which it was transmitted provided such day
is a business day, failing which, on the next business day thereafter.

18. ENTRY BY LESSOR: Lessee shall permit Lessor and its agents to enter into and
upon said Premises at all reasonable times using the minimum amount of
interference and inconvenience to Lessee and Lessee's business, subject to any
security regulations of Lessee, for the purpose of inspecting the same or for
the purpose of maintaining the building in which said Premises are situated, or
for the purpose of making repairs, alterations or additions to any other portion
of said building, including the erection and maintenance of such scaffolding,
canopies, fences and props as may be required, without any rebate of Rent and
without any liability to Lessee for any loss of occupation or quiet enjoyment of
the Premises; and shall permit Lessor and his agents, at any time within ninety
(90) days prior to the end of the Lease Term, to place upon said Premises any
usual or ordinary "For Sale" or "For Lease" signs and exhibit the Premises to
prospective tenants at reasonable hours.

19. DESTRUCTION OF PREMISES: In the event of a partial destruction of a building
in said Premises during the Lease Term from any cause which is covered by
Lessor's property insurance, Lessor shall forthwith repair the same, provided
such repairs can be made within one hundred eighty (180) days after receipt of
building permit under the laws and regulations of State, Federal, County, or
Municipal authorities, but such partial destruction shall in no way annul or
void this Lease, except that Lessee shall be entitled to a proportionate
reduction of Rent while such repairs are being made to the extent of payments
received by Lessor under its Loss of Rents Insurance coverage. With respect to
any partial destruction which Lessor is obligated to repair or may elect to
repair under the terms of this paragraph, the provision of Section 1932,
Subdivision 2, and of Section 1933, Subdivision 4, of the Civil Code of the
State of California are waived by Lessee. In the event that a building in the
subject Premises is destroyed to an extent greater than thirty-three and
one-third percent (33 1/3%) of the replacement cost thereof, Lessor may, at its
sole option, elect to terminate this Lease as to that building, whether the
subject Premises is insured or not. A total destruction of more than 50% of the
subject Premises shall terminate this Lease. Notwithstanding the above, Lessor
is only obligated to repair

<PAGE>   11

or rebuild to the extent of available insurance proceeds including any
deductible amount paid by Lessee. Should Lessor determine that insufficient or
no insurance proceeds are available for repair or reconstruction of Premises,
Lessor, at its sole option, may terminate the Lease. Notwithstanding the above,
Lessee shall have the option of continuing this Lease by agreeing to pay all
repair costs to the subject Premises which are not otherwise reimbursable by
insurance.

20. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this Lease, or any
interest therein, and shall not sublet the said Premises or any part thereof, or
any right or privilege appurtenant thereto, or cause any other person or entity,
to occupy or use the Premises, or any portion thereof, without the advance
written consent of Lessor. Notwithstanding the above, Lessee may, without the
consent of Lessor, assign this Lease or sublet all or any part of the Premises
to a bona fide subsidiary or affiliate of Lessee, an entity in which or with
which Lessee merges or an entity which acquires all or substantially all of the
assets of Lessee ("Excepted Party"). Any such assignment or subletting requiring
Lessor's consent made without Lessor's consent shall be void, and shall, at the
option of the Lessor, terminate this Lease. This Lease shall not, or shall any
interest therein, be assignable, as to the interest of Lessee, by operation of
law, without the written consent of Lessor. Notwithstanding Lessor's obligation
to provide reasonable approval, Lessor reserves the right to withhold its
consent for any proposed sublessee or assignee of Lessee if the proposed
sublessee or assignee is a user or generator of Hazardous Materials. If Lessee
desires to assign its rights under this Lease or to sublet all or any part of
the Premises to a party other than an Excepted Party, Lessee shall first notify
Lessor of the proposed terms and conditions of such assignment or subletting.
Lessor, at its sole option, shall have the right (i) to enter into a direct
Lessor-lessee relationship with such party under such proposed terms and
conditions, in which event Lessee shall be relieved of its obligations hereunder
to the extent of the Lessor-lessee relationship entered into between Lessor and
such third party, or (ii) to terminate the Lease and relieve Lessee of all Lease
obligations occurring after the termination of the Lease. Notwithstanding the
foregoing, Lessee may assign this Lease to an Excepted Party, provided there is
no substantial reduction in the net worth of the resulting guarantor. Whether or
not Lessor's consent to a sublease or assignment is required, in the event of
any sublease or assignment, Lessee shall be and shall remain primarily liable
for the performance of all conditions, covenants, and obligations of Lessee
hereunder and, in the event of a default by an assignee or sublessee, Lessor may
proceed directly against the original Lessee hereunder and/or any other
predecessor of such assignee or sublessee without the necessity of exhausting
remedies against said assignee or sublessee. If Lessee merges or sells
substantially all of its assets and the net worth of the resulting entity is
substantially less than that of Lessee, such sale shall be a default under this
Lease unless approved by Lessor.

21. CONDEMNATION: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the
remainder of the Lease Term only that portion of Rent as the value of the part
remaining. The rental adjustment resulting will be computed at the same Rental
rate for the remaining part not taken; however, Lessor shall have the option to
terminate this Lease as of the date when title to the part so taken vests in the
condemnor or purchaser. If all of the Premises, or such part thereof be taken so
that there does not remain a portion susceptible for occupation hereunder, this
Lease shall thereupon terminate. If a part or all of the Premises be taken, all
compensation awarded upon such taking shall be payable to the Lessor. Lessee may
file a separate claim and be entitled to any award granted to Lessee.

22. EFFECTS OF CONVEYANCE: The term "Lessor" as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
so that, in the event of any sale of said land or building, or in the event of a
Lease of said building, Lessor shall be and hereby is entirely freed and
relieved of all covenants and obligations of Lessor hereunder, and it shall be
deemed and construed, without further agreement between the parties and the

<PAGE>   12

purchaser of any such sale, or the Lessor of the building, that the purchaser or
lessor of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor may transfer and deliver the security, as such, to
the purchaser at any such sale of the building, and thereupon the Lessor shall
be discharged from any further liability.

23. SUBORDINATION: This Lease, in the event Lessor notifies Lessee in writing,
shall be subordinate to any ground lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property at which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such
subordination. Notwithstanding such subordination, if Lessee is not in default
and so long as Lessee shall pay the Rent and observe and perform all of the
provisions and covenants required under this Lease, Lessee's right to quiet
possession of the Premises shall not be disturbed or effected by any
subordination.

24. WAIVER: The waiver by Lessor or Lessee of any breach of any term, covenant
or condition, herein contained shall not be construed to be a waiver of such
term, covenant or condition or any subsequent breach of the same or any other
term, covenant or condition therein contained. The subsequent acceptance of Rent
hereunder by Lessor shall not be deemed to be a waiver of Lessee's breach of any
term, covenant, or condition of the Lease.

25. HOLDING OVER: Any holding over after the end of the Lease Term requires
Lessor's written approval prior to the end of the Lease Term, which,
notwithstanding any other provisions of this Lease, Lessor may withhold. Such
holding over shall be construed to be a tenancy at sufferance from month to
month. Lessee shall pay to Lessor monthly base rent equal to one and one-half
(1.5) times the monthly base rent installment due in the last month of the Lease
Term and all other additional rent and all other terms and conditions of the
Lease shall apply, so far as applicable. Holding over by Lessee without written
approval of Lessor shall subject Lessee to the liabilities and obligations
provided for in this Lease and by law, including, but not limited to those in
Section 2.1 of this Lease. Lessee shall indemnify and hold Lessor harmless
against any loss or liability resulting from any delay caused by Lessee in
surrendering the Premises, including without limitation, any claims made or
penalties incurred by any succeeding lessee or by Lessor. No holding over shall
be deemed or construed to exercise any option to extend or renew this Lease in
lieu of full and timely exercise of any such option as required hereunder.

26. LESSOR'S LIABILITY: If Lessee should recover a money judgment against Lessor
arising in connection with this Lease, the judgment shall be satisfied only out
of the Lessor's interest in the Premises and neither Lessor nor any of its
partners shall be liable personally for any deficiency.

27. ESTOPPEL CERTIFICATES: Lessee shall at any time during the Lease Term, upon
not less than ten (10) days prior written notice from Lessor, execute and
deliver to Lessor a statement in writing certifying that, this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification) and the dates to which the Rent and other charges have been
paid in advance, if any, and acknowledging that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder or specifying
such defaults if they are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises. Lessee's
failure to deliver such a statement within such time shall be conclusive upon
the Lessee that (a) this Lease is in full force and effect, without modification
except as may be represented by Lessor; (b) there are no uncured defaults in
Lessor's performance.

28. TIME: Time is of the essence of the Lease.

<PAGE>   13

29. CAPTIONS: The headings on titles to the paragraphs of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof. This instrument contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest.

30. PARTY NAMES: Landlord and Tenant may be used in various places in this Lease
as a substitute for Lessor and Lessee respectively.

31. EARTHQUAKE INSURANCE: If Lessor desires to obtain some form of earthquake
insurance in the future, if and when available, on terms acceptable to Lessor as
determined in the sole and absolute discretion of Lessor, then as a condition of
Lessor agreeing to waive the requirement for earthquake insurance, Lessee agrees
that it will pay, as additional Rent, which shall be included in the monthly
CAC, an amount not to exceed Forty Seven Thousand Eight Hundred and Thirty Three
Dollars ($47,833) per year.

32. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if Lessee shall have defaulted
in the payment of Rent for two or more times during any twelve month period
during the Lease Term, then such conduct shall, at the option of the Lessor,
represent a separate event of default which cannot be cured by Lessee. Lessee
acknowledges that the purpose of this provision is to prevent repetitive
defaults by the Lessee under the Lease, which constitute a hardship to the
Lessor and deprive the Lessor of the timely performance by the Lessee hereunder.

33.     HAZARDOUS MATERIALS

        33.1 DEFINITIONS: As used in this Lease, the following terms shall have
        the following meaning:

        a. The term "Hazardous Materials" shall mean (i) polychlorinated
        biphenyls; (ii) radioactive materials and (iii) any chemical, material
        or substance now or hereafter defined as or included in the definitions
        of "hazardous substance" "hazardous water", "hazardous material",
        "extremely hazardous waste", "restricted hazardous waste" under Section
        25115, 25117 or 15122.7, or listed pursuant to Section 25140 of the
        California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous
        Waste Control Law), (ii) defined as "hazardous substance" under Section
        25316 of the California Health and Safety Code, Division 20, Chapter 6.8
        (Carpenter-Presley-Tanner Hazardous Substances Account Act), (iii)
        defined as "hazardous material", "hazardous substance", or "hazardous
        waste" under Section 25501 of the California Health and Safety Code,
        Division 20, Chapter 6.95 (Hazardous Materials Release, Response, Plans
        and Inventory), (iv) defined as a "hazardous substance" under Section
        25181 of the California Health and Safety Code, Division 201, Chapter
        6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi)
        asbestos, (vii) listed under Article 9 or defined as "hazardous" or
        "extremely hazardous" pursuant to Article II of Title 22 of the
        California Administrative Code, Division 4, Chapter 20, (viii) defined
        as "hazardous substance" pursuant to Section 311 of the Federal Water
        Pollution Control Act, 33 U.S.C. 1251 et seq. or listed pursuant to
        Section 1004 of the Federal Water Pollution Control Act (33 U.S.C.
        1317), (ix) defined as a "hazardous waste", pursuant to Section 1004 of
        the Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
        seq., (x) defined as "hazardous substance" pursuant to Section 101 of
        the Comprehensive Environmental Responsibility Compensations, and
        Liability Act, 42 U.S.C. 9601 et seq., or (xi) regulated under the Toxic
        Substances Control Act, 156 U.S.C. 2601 et seq.

<PAGE>   14

        b. The term "Hazardous Materials Laws" shall mean any local, state and
        federal laws, rules, regulations, or ordinances relating to the use,
        generation, transportation, analysis, manufacture, installation,
        release, discharge, storage or disposal of Hazardous Material.

        c. The term "Lessor's Agents" shall mean Lessor's agents,
        representatives, employees, contractors, subcontractors, directors,
        officers and partners.

        d. The term "Lessee's Agents" shall mean Lessee's agents,
        representatives, employees, contractors, subcontractors, directors,
        officers, partners, invitees or any other person in or about the
        Premises.

        33.2 LESSEE'S RIGHT TO INVESTIGATE: Lessee shall be entitled to cause
such inspection, soils and ground water tests, and other evaluations to be made
of the Premises as Lessee deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure to Lessee's employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. Lessee shall provide
Lessor with copies of all inspections, tests and evaluations. Lessee shall
indemnify, defend and hold Lessor harmless from any cost, claim or expense
arising from such entry by Lessee or from the performance of any such
investigation by such Lessee.

        33.3 INTENTIONALLY OMITTED.

        33.4 LESSEE'S OBLIGATION TO INDEMNIFY: Lessee, at its sole cost and
expense, shall indemnify, defend, protect and hold Lessor and Lessor's Agents
harmless from and against any and all cost or expenses, including those
described under subparagraphs i, ii and iii herein below set forth, arising from
or caused in whole or in part, directly or indirectly by:

        a. Lessee's or Lessee's Agents' use, analysis, storage, transportation,
        disposal, release, threatened release, discharge or generation of
        Hazardous Material to, in, on, under, about or from the Premises; or

        b. Lessee's or Lessee's Agents failure to comply with Hazardous Material
        laws; or

        c. Any release of Hazardous Material to, in, on, under, about, from or
        onto the Premises caused by or occurring as a result of acts or
        omissions of Lessee or Lessee's Agents, except ground water
        contamination from other parcels where the source is from off the
        Premises not arising from or caused by Lessee or Lessee's Agents.

The cost and expenses indemnified against include, but are not limited to the
following:

        i. Any and all claims, actions, suits, proceedings, losses, damages,
        liabilities, deficiencies, forfeitures, penalties, fines, punitive
        damages, cost or expenses;

        ii. Any claim, action, suit or proceeding for personal injury (including
        sickness, disease, or death), tangible or intangible property damage,
        compensation for lost wages, business income, profits or other economic
        loss, damage to the natural resources of the environment, nuisance,
        pollution, contamination, leaks, spills, release or other adverse
        effects on the environment;

        iii. The cost of any repair, clean-up, treatment or detoxification of
        the Premises necessary to bring the Premises into compliance with all
        Hazardous Material Laws, including the preparation and implementation of
        any closure, disposal, remedial action, or other actions with regard to
        the Premises, and expenses (including, without limitation, reasonable
        attorney's fees and consultants fees, investigation and laboratory fees,
        court cost and litigation expenses).

<PAGE>   15

        33.5 LESSEE'S OBLIGATION TO REMEDIATE CONTAMINATION: Lessee shall, at
its sole cost and expense, promptly take any and all action necessary to
remediate contamination of the Premises by Hazardous Materials occurring as a
result of acts or omissions of Lessee or Lessee's Agents.

        33.6 OBLIGATION TO NOTIFY: Lessor and Lessee shall each give written
notice to the other as soon as reasonably practical of (i) any communication
received from any governmental authority concerning Hazardous Material which
related to the Premises and (ii) any contamination of the Premises by Hazardous
Materials which constitutes a violation of any Hazardous Material Laws.

        33.7 SURVIVAL: The obligations of Lessee under this Section 33 shall
survive the Lease Term or earlier termination of this Lease.

        33.8 CERTIFICATION AND CLOSURE: On or before the end of the Lease Term
or earlier termination of this Lease, Lessee shall deliver to Lessor a
certification executed by Lessee stating that, to the best of Lessee's
knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee's obligation in Paragraph 33. If pursuant to local ordinance, state or
federal law, Lessee is required, at the expiration of the Lease Term, to submit
a closure plan for the Premises to a local, state or federal agency, then Lessee
shall comply at its sole cost and expense with the requirements of the closure
plan and furnish to Lessor a copy of such plan.

        33.9 PRIOR HAZARDOUS MATERIALS: Lessee shall have no obligation to clean
up or to hold Lessor harmless with respect to any Hazardous Material or wastes
discovered on the Premises which were not introduced into, in, on, about, from
or under the Premises during Lessee's prior occupancy or during the Lease Term
or ground water contamination from other parcels where the source is from off
the Premises not arising from or caused by Lessee or Lessee's Agents. Lessee
will reimburse Lessor for its pro-rata share of Environmental Surcharges related
to the Premises. As of the time of signing of this Lease, Lessor was not aware
of any Environmental Surcharges due or expected to be due related to the
Premises.

34. BROKERS: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease. Lessee
agrees to indemnify and hold Lessor harmless against any claim, cost, liability
or cause of action asserted by any broker or finder claiming through Lessee.
Lessor represents and warrants that it has not utilized or contacted a real
estate broker or finder with respect to this Lease and Lessor agrees to
indemnify and hold Lessee harmless against any claim, cost, liability or cause
of action asserted by any broker or finder claiming through Lessor.

35. OPTION TO EXTEND

A. OPTION: Lessor hereby grants to Lessee one (1) option to extend the Lease
Term, with the extended term to be for a period of five (5) years, on the
following terms and conditions:

        (i) Lessee shall give Lessor written notice of its exercise of its
        option to extend no earlier than twelve (12), nor later than six (6)
        calendar months before the Lease Term would end but for said exercise.
        If Lessee and Lessor have not agreed to rental terms in writing, Lessee
        may withdraw its notice of exercise of an extension option prior to six
        (6) months before the Lease Term would end but for said exercise. Lessor
        shall provide Lessee with Lessor's proposed base monthly rent for the
        option period within twenty (20) days of Lessee's written request.
        Lessee's acceptance, in writing, of Lessor's proposed base monthly rent
        shall operate to

<PAGE>   16

        extend the Lease Term. Upon any extension of the Lease Term pursuant to
        this Section 35, the term "Lease Term" as used in this Lease shall
        thereafter include the then extended term. Time is of the essence.

        (ii) Lessee may not extend the Lease Term pursuant to any option granted
        by this Section 35 if Lessee is in default as of the date of the
        exercise of its option. If Lessee has committed a default by Lessee as
        defined in Section 14 or 32 that has not been cured or waived by Lessor
        in writing by the date that any extended term is to commence, then
        Lessor may elect not to allow the Lease Term to be extended,
        notwithstanding any notice given by Lessee of an exercise of this option
        to extend.

        (iii) All terms and conditions of this Lease shall apply during the
        extended term, except that the base rent and rental increases for each
        extended term shall be determined as provided in Section 35 (B) below

        (iv) The option rights of Intevac granted under this Section 35 are
        granted for Intevac's personal benefit and may not be assigned or
        transferred by Intevac or exercised if Intevac is not occupying the
        Premises at the time of exercise.

B. EXTENDED TERM RENT - OPTION PERIOD: The monthly Rent for the Premises during
the extended term shall equal the fair market monthly Rent for the Premises as
of the commencement date of the extended term, but in no case, less than the
Rent during the last month of the prior Lease term. Promptly upon Lessee's
exercise of the option to extend, Lessee and Lessor shall meet and attempt to
agree on the fair market monthly Rent for the Premises as of the commencement
date of the extended term. In the event the parties fail to agree upon the
amount of the monthly Rent for the extended term prior to commencement thereof,
the monthly Rent for the extended term shall be determined by appraisal in the
manner hereafter set forth; provided, however, that in no event shall the
monthly Rent for the extended term be less than in the immediate preceding
period. Annual base rent increases during the extended term shall be four
percent (4%) per year. In the event it becomes necessary under this paragraph to
determine the fair market monthly Rent of the Premises by appraisal, Lessor and
Lessee each shall appoint a real estate appraiser who shall be a member of the
American Institute of Real Estate Appraiser ("AIREA") and such appraisers shall
each determine the fair market monthly Rent for the Premises taking into account
the value of the Premises and the amenities provided by the outside areas, the
common areas, and the Building, and prevailing comparable Rentals in the area.
Such appraisers shall, within twenty (20) business days after their appointment,
complete their appraisals and submit their appraisal reports to Lessor and
Lessee. If the fair market monthly Rent of the Premises established in the two
(2) appraisals varies by five percent (5%) or less of the higher Rent, the
average of the two shall be controlling. If said fair market monthly Rent varies
by more than five percent (5%) of the higher Rental, said appraisers, within ten
(10) days after submission of the last appraisal, shall appoint a third
appraiser who shall be a member of the AIREA and who shall also be experienced
in the appraisal of Rent values and adjustment practices for commercial
properties in the vicinity of the Premises. Such third appraiser shall, within
twenty (20) business days after his appointment, determine by appraisal the fair
market monthly Rent of the Premises taking into account the same factors
referred to above, and submit his appraisal report to Lessor and Lessee. The
fair market monthly Rent determined by the third appraiser for the Premises
shall be controlling, unless it is less than that set forth in the lower
appraisal previously obtained, in which case the value set forth in said lower
appraisal shall be controlling, or unless it is greater than that set forth in
the higher appraisal previously obtained in which case the Rent set for in said
higher appraisal shall be controlling. If either Lessor or Lessee fails to
appoint an appraiser, or if an appraiser appointed by either of them fails,
after his appointment to submit his appraisal within the required period in
accordance with the foregoing, the appraisal submitted by the appraiser properly
appointed and timely submitting his appraisal shall be controlling. If the two
appraisers appointed by Lessor and Lessee are unable to agree upon a third
appraiser within the required period in accordance with the foregoing,
application shall be made within twenty (20) days thereafter by either Lessor or
Lessee to AIREA, which shall appoint

<PAGE>   17

a member of said institute willing to serve as appraiser. The cost of all
appraisals under this subparagraph shall be borne equally be Lessor and Lessee.

36. APPROVALS: Whenever in this Lease the Lessor's or Lessee's consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that the Lessor or Lessee does not respond to a request
for any consents which may be required of it in this Lease within ten business
days of the request of such consent in writing by the Lessee or Lessor, such
consent shall be deemed to have been given by the Lessor or Lessee.

37. AUTHORITY: Each party executing this Lease represents and warrants that he
or she is duly authorized to execute and deliver the Lease. If executed on
behalf of a corporation, that the Lease is executed in accordance with the
by-laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party's approval or consent to such execution and delivery is required, and that
the Lease is binding upon said individual, corporation (or partnership) as the
case may be in accordance with its terms.

38. INDEMNIFICATION OF LESSOR: Except to the extent caused by the sole
negligence or willful misconduct of Lessor or Lessor's Agents, Lessee shall
defend, indemnify and hold Lessor harmless from and against any and all
obligations, losses, costs, expenses, claims, demands, attorney's fees,
investigation costs or liabilities on account of, or arising out of the use,
condition or occupancy of the Premises or any act or omission to act of Lessee
or Lessee's Agents or any occurrence in, upon, about or at the Premises,
including, without limitation, any of the foregoing provisions arising out of
the use, generation, manufacture, installation, release, discharge, storage, or
disposal of Hazardous Materials by Lessee or Lessee's Agents. It is understood
that Lessee is and shall be in control and possession of the Premises and that
Lessor shall in no event be responsible or liable for any injury or damage or
injury to any person whatsoever, happening on, in, about, or in connection with
the Premises, or for any injury or damage to the Premises or any part thereof.
This Lease is entered into on the express condition that Lessor shall not be
liable for, or suffer loss by reason of injury to person or property, from
whatever cause, which in any way may be connected with the use, condition or
occupancy of the Premises or personal property located herein. The provisions of
this Lease permitting Lessor to enter and inspect the Premises are for the
purpose of enabling Lessor to become informed as to whether Lessee is complying
with the terms of this Lease and Lessor shall be under no duty to enter, inspect
or to perform any of Lessee's covenants set forth in this Lease. Lessee shall
further indemnify, defend and hold harmless Lessor from and against any and all
claims arising from any breach or default in the performance of any obligation
to Lessee's part to be performed under the terms of this Lease. The provisions
of Section 38 shall survive the Lease Term or earlier termination of this Lease
with respect to any third party claims, damage, injury or death occurring during
the Lease Term.

39. SUCCESSORS AND ASSIGNS: The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.

40. MISCELLANEOUS PROVISIONS: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights or remedies in law and in equity.

41. CHOICE OF LAW: This lease shall be construed and enforced in accordance with
the substantive laws of the State of California. The language of all parts of
this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.

<PAGE>   18

42. ENTIRE AGREEMENT: This Lease is the entire agreement between the parties,
and there are no agreements or representations between the parties except as
expressed herein. Except as otherwise provided for herein, no subsequent change
or addition to this Lease shall be binding unless in writing and signed by the
parties hereto.

In Witness Whereof, Lessor and Lessee have executed this Lease, the day and year
first above written.

LESSOR                                    LESSEE
MISSION WEST PROPERTIES, L.P. III         INTEVAC CORPORATION
BY: MISSION WEST PROPERTIES, INC.,
    ITS GENERAL PARTNER

By:    /s/ Carl E. Berg                   By:   /s/ Charles B. Eddy
    ----------------------------------        ----------------------------------
Signature of authorized representative    Signature of authorized representative

Carl E. Berg                              Charles B. Eddy
--------------------------------------    --------------------------------------
Printed name                              Printed name

President                                 Chief Financial Officer
--------------------------------------    --------------------------------------
Title                                     Title

    2/7/01                                    2-5-01
--------------------------------------    --------------------------------------
Date                                      Date

<PAGE>   19

                               [MAP OF SITE PLAN]<PAGE>   1

                                                                    EXHIBIT 10.1

                            ILLUMINET HOLDINGS, INC.
                           1997 EQUITY INCENTIVE PLAN

                                    SECTION 1

                              PURPOSE AND DURATION

        1.1 Effective Date. This Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock, Performance Units and
Performance Shares. This Plan shall be effective on the date of its adoption by
the Company's Board of Directors.

        1.2 Purpose of this Plan. This Plan is intended to attract, motivate,
and retain (a) employees of the Company and its Affiliates, (b) consultants who
provide significant services to the Company and its Affiliates, and (c) members
of the Board of Directors of the Company who are employees of neither the
Company nor any Affiliate. This Plan also is designed to further the growth and
financial success of the Company and its Affiliates by aligning the interests of
the Participants, through the ownership of Shares and through other incentives,
with the interests of the Company's stockholders.

                                    SECTION 2

                                   DEFINITIONS

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

        "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

        "Affiliate" means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by or
under common control with the Company.

        "Affiliated SAR" means an SAR that is granted in connection with a
related Option, and that automatically will be deemed to be exercised at the
same time that the related Option is exercised.

        "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units or Performance Shares.

        "Award Agreement" means the written agreement setting forth the terms
and provisions applicable to each Award granted under this Plan.

        "Board" or "Board of Directors" means the Board of Directors of the
Company.

        "Board Member" means any individual who is a member of the Board of
Directors of the Company.

        "Change in Control" shall have the meaning assigned to such term in
Section 12.2.

        "Code" means the Internal Revenue Code of 1986, as amended. Reference to
a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

        "Committee" means the committee appointed by the Board (pursuant to
Section 3.1) to administer this Plan.

<PAGE>   2

        "Company" means Illuminet Holdings, Inc., a Delaware corporation, and
any successor thereto. With respect to the definitions of the Performance Goals,
the Committee in its sole discretion may determine that "Company" means
Illuminet Holdings, Inc., and its consolidated subsidiaries.

        "Consultant" means any consultant, independent contractor or other
person who provides significant services to the Company or its Affiliates, but
who is neither an Employee nor a Board Member.

        "Disability" means a permanent and total disability within the meaning
of Code section 22(e)(3), provided that in the case of Awards other than
Incentive Stock Options, the Committee in its sole discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Committee from time to time.

        "Employee" means any employee of the Company or of an Affiliate, whether
such employee is so employed at the time this Plan is adopted or becomes so
employed subsequent to the adoption of this Plan.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific section of ERISA or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

        "Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.

        "Fair Market Value" means, as of any given date, the mean between the
highest and lowest reported sales prices of the Shares on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Shares are listed or on the Nasdaq
Stock Market. If there is no regular public trading market for such Shares, the
Fair Market Value of the Shares shall be determined by the Committee in good
faith. Notwithstanding the preceding, for federal, state and local income tax
reporting purposes, fair market value shall be determined by the Committee (or
its delegate) in accordance with uniform and nondiscriminatory standards adopted
by it from time to time.

        "Fiscal Year" means the fiscal year of the Company.

        "Freestanding SAR" means a SAR that is granted independently of any
Option.

        "Grant Date" means, with respect to an Award, the date that the Award
was granted.

        "Incentive Stock Option" means an Option to purchase Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of section 422 of the Code.

        "Nonemployee Board Member" means a Board Member who is not an employee
of the Company or any Affiliate.

        "Nonqualified Stock Option" means an Option to purchase Shares which is
not an Incentive Stock Option.

        "Option" means an Incentive Stock Option or a Nonqualified Stock Option.

        "Participant" means an Employee, Consultant or Nonemployee Board Member
who has an outstanding Award.

        "Performance Goals" means the goal(s) (or combined goal(s)) determined
by the Committee (in its sole discretion) to be applicable to a Participant with
respect to an Award. For Awards that are intended to qualify as
"performance-based compensation" under section 162(m) of the Code, as determined
by the Committee, the Performance Goals applicable to an Award shall provide for
a targeted level or levels of achievement using one or more of the following
predetermined measurements: (a) earnings (either in the aggregate or on a per
share basis); (b) net income (before or after taxes); (c) operating income; (d)
cash flow; (e) return measures (including return on assets, equity or sales);
(f) earnings before or after taxes, and before or after depreciation and
amortization; (g) gross revenues; (h) share price (including growth measures and
total stockholder return or attainment by the Shares of a specified value for a
specified period of time); (i) reductions in expense levels in each case where
applicable determined either on a Company-wide basis or in respect of any one or
more business units; (j) net economic value; or (k) market share. The
Performance Goals may differ from Participant to Participant and from Award to
Award.

<PAGE>   3

        "Performance Period" shall have the meaning assigned to such term in
Section 8.3.

        "Performance Share" means an Award granted to a Participant pursuant to
Section 8.

        "Performance Unit" means an Award granted to a Participant pursuant to
Section 8.

        "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions and, therefore, the
Shares are subject to a substantial risk of forfeiture. As provided in Section
7, such restrictions may be based on the passage of time, the achievement of
target levels of performance or the occurrence of other events as determined by
the Committee in its sole discretion.

        "Plan" means the Illuminet Holdings, Inc., 1997 Equity Incentive Plan,
as set forth in this instrument and as hereafter amended from time to time.

        "Restricted Stock" means an Award granted to a Participant pursuant to
Section 7.

        "Retirement" means, in the case of an Employee, a Termination of Service
by reason of the Employee's retirement pursuant to any retirement program
instituted by the Company or any Affiliate employer or as otherwise agreed to by
the Employer or the applicable Affiliate employer. With respect to a Consultant,
no Termination of Service shall be deemed to be on account of "Retirement". With
respect to a Nonemployee Board Member, "Retirement" means termination of service
on the Board at or after age sixty-five (65).

        "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.

        "Section 16 Person" means a person who, with respect to the Shares, is
subject to section 16 of the 1934 Act.

        "Shares" means the shares of common stock of the Company.

        "Stock Appreciation Right" or "SAR" means an Award, granted alone or in
connection with a related Option, that is designated as a SAR pursuant to
Section 6.

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

        "Tandem SAR" means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).

        "Termination of Service" means (a) in the case of an Employee, a
cessation of the employee-employer relationship between an employee and the
Company or an Affiliate for any reason, including, but not limited to, a
cessation by resignation, discharge, death, Disability, Retirement or the
disaffiliation of an Affiliate, but excluding any such cessation where there is
a simultaneous reemployment by the Company or an Affiliate, and (b) in the case
of a Board Member or Consultant, a cessation of the service relationship between
a Board Member or Consultant and the Company or an Affiliate for any reason,
including, but not limited to, a cessation by resignation, discharge, death,
Disability, (Retirement, with respect to a Board Member) or the disaffiliation
of an Affiliate, but excluding any such cessation where there is a simultaneous
reengagement of the Board Member or Consultant by the Company or an Affiliate.

                                    SECTION 3

                                 ADMINISTRATION

        3.1 The Committee. Subject to Section 3.2, the Plan shall be
administered by the Board, or a committee appointed by the Board to administer
the Plan. Any references herein to "Committee" are references to the Board, or a
committee established by

<PAGE>   4

the Board, as applicable. To the extent the Board considers it desirable to
comply with or qualify under Rule 16b-3 or meet the performance-based exception
under section 162(m) of the Code, the Committee shall consist of two or more
directors of the Company, all of whom qualify as "outside directors" as defined
for purposes of the regulations under Code section 162(m) and "non-employee
directors" within the meaning of Rule 16b-3. The number of members of the
Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, in each case as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 and Code section 162(m) as then in effect.

        3.2 Authority of the Committee. It shall be the duty of the Committee to
administer this Plan in accordance with its provisions. The Committee shall have
all powers and discretion necessary or appropriate to administer this Plan and
to control its operation, including, but not limited to, the power to (a)
determine which Participants shall be granted Awards, (b) prescribe the terms
and conditions of the Awards, (c) interpret this Plan and the Awards, (d) adopt
rules for the administration, interpretation and application of this Plan as are
consistent therewith, and (e) interpret, amend or revoke any such rules.

        3.3 Delegation by the Committee. The Committee, in its sole discretion
and on such terms and conditions as it may provide, may delegate all or any part
of its authority and powers under this Plan to one or more Board Members or
officers of the Company; provided, however, that the Committee may not delegate
its authority and powers in any way which would jeopardize this Plan's
qualification under Rule 16b-3.

        3.4 Decisions Binding. All determinations and decisions made by the
Committee, the Board and any delegate of the Committee pursuant to Section 3.3
shall be final, conclusive, and binding on all persons, and shall be given the
maximum deference permitted by law.

                                    SECTION 4

                           SHARES SUBJECT TO THIS PLAN

        4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant under this Plan shall equal
thirteen percent (13%) of the total shares of the Company that may be issued
from time to time, so that as additional Shares are issued by the Company, or as
Shares are redeemed and cancelled by the Company, the number of Shares available
for grant under this Plan shall increase or decrease, respectively, by thirteen
percent (13%) of the number of Shares so issued or redeemed and cancelled.
Shares granted under this Plan may be either authorized but unissued Shares or
treasury Shares, or any combination thereof.

        4.2 Lapsed Awards. If an Award is settled in cash, or is canceled,
terminates, expires or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award thereafter shall be available to be the subject
of an Award.

        4.3 Adjustments in Awards and Authorized Shares. In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, stock split, Share combination, or other change in
the corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and class of Shares which may be delivered under this Plan,
the number, class and price of Shares subject to outstanding Awards, and the
numerical limits of Sections 4.1, 5.1, 6.1, 7.1 and 8.1, in such manner as the
Committee (in its sole discretion) shall determine to be advisable or
appropriate to prevent the dilution or diminution of such Awards.
Notwithstanding the preceding, the number of Shares subject to any Award always
shall be a whole number.

        4.4 Repurchase Option. The Committee may, in its sole discretion,
include in the terms of any Award Agreement, that the Company shall have the
option to repurchase Shares of any Participant acquired pursuant to any Award
granted under the Plan upon the Termination of Service of such Participant upon
such terms as the Committee shall state in the Award.

        4.5 Buy-Out Provision. The Committee may at any time offer on behalf of
the Company to buy out, for a payment in cash or Shares, an Award previously
granted, based on such terms and conditions as the Committee, in its sole
discretion, shall establish and communicate to the Participants at the time such
offer is made.

<PAGE>   5

        4.6 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Award as it
may deem advisable or appropriate in its sole discretion, including, but not
limited to, restrictions related to applicable Federal securities laws, the
requirements of any national securities exchange or system upon which Shares are
then listed or traded, and any blue sky or state securities laws.

        4.7 Adjustments upon Merger or Asset Sale. In the event of a merger of
the Company with or into another corporation, or the sale of substantially all
of the assets of the Company, the Board of Directors, in its discretion, may
require the successor corporation to either (i) assume each outstanding Award or
(ii) substitute an equivalent award by the successor corporation or a Parent or
Subsidiary of the successor corporation. If an Award is not assumed or
substituted in the event of a merger or sale of assets, the Award shall fully
vest and become immediately exercisable and the Committee shall notify the
Participant that the Award shall be exercisable for a period of twenty-five (25)
days from the date of such notice, and the Award shall terminate upon the
expiration of such period unless exercised. For the purposes of this paragraph,
the Award shall be considered assumed if, following the merger or sale of
assets, the Award confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the merger or sale of assets, equal
consideration (whether stock, cash, or other securities or property) as received
in the merger or sale of assets by holders of each Share of common stock held on
the effective date of the transaction (and if holders of Shares were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Committee may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Award, for each Share subject to the award, to
be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of common stock
in the merger or sale of assets.

                                    SECTION 5

                                  STOCK OPTIONS

        5.1 Grant of Options. Subject to the terms and provisions of this Plan,
Options may be granted to Participants at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of Shares subject to each Option;
provided, however, that during any Fiscal Year, no Participant shall be granted
Options covering more than 100,000 Shares. The Committee may grant Incentive
Stock Options, Nonqualified Stock Options, or any combination thereof.

        5.2 Award Agreement. Each Option shall be evidenced by an Award
Agreement that shall specify the Exercise Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option and such other terms and conditions as the Committee, in
its sole discretion, shall determine. The Award Agreement also shall specify
whether the Option is intended to be an Incentive Stock Option or a Nonqualified
Stock Option.

        5.3 Exercise Price. Subject to the provisions of this Section 5.3, the
Exercise Price for each Option shall be determined by the Committee in its sole
discretion.

                5.3.1 Nonqualified Stock Options. In the case of a Nonqualified
        Stock Option, the Exercise Price may be less than the Fair Market Value
        of a Share on the Grant Date.

                5.3.2 Incentive Stock Options. In the case of an Incentive Stock
        Option, the Exercise Price shall be not less than one hundred percent
        (100%) of the Fair Market Value of a Share on the Grant Date; provided,
        however, that if on the Grant Date, the Employee (together with persons
        whose stock ownership is attributed to the Employee pursuant to section
        424(d) of the Code) owns stock possessing more than 10% of the total
        combined voting power of all classes of stock of the Company or any of
        its Subsidiaries, the Exercise Price shall be not less than one hundred
        ten percent (110%) of the Fair Market Value of a Share on the Grant
        Date.

                5.3.3 Substitute Options. Notwithstanding the provisions of
        Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate
        consummates a transaction described in section 424(a) of the Code (e.g.,
        the acquisition of property or stock from an unrelated corporation),
        persons who become Participants on account of such transaction may be
        granted Options in substitution for options granted by such former
        employer or recipient of services. If such substitute Options are
        granted, the Committee, in its sole discretion and consistent with
        section 424(a) of the Code, may determine that such

<PAGE>   6

        substitute Options shall have an exercise price less than one hundred
        (100%) of the Fair Market Value of the Shares on the Grant Date.

        5.4 Expiration of Options.

                5.4.1 Expiration Dates. Except as provided in Section 5.7
        regarding Incentive Stock Options, each Option shall terminate upon the
        earlier of the first to occur of the following events:

                        (a) The date(s) for termination of the Option set forth
                in the Award Agreement; or

                        (b) The expiration of ten (10) years from the Grant
                Date.

                5.4.2 Committee Discretion. Subject to the limits of Section
        5.4.1, the Committee, in its sole discretion, (a) shall provide in each
        Award Agreement when each Option expires and becomes unexercisable, and
        (b) may, after an Option is granted, extend the maximum term of the
        Option (subject to Section 5.7 regarding Incentive Stock Options).

        5.5 Exercisability of Options. Options granted under this Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine.

        5.6 Payment. Options shall be exercised by the Participant's delivery of
a written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.

        Upon the exercise of any Option, the Exercise Price shall be payable to
the Company in full in cash or its equivalent. The Committee, in its sole
discretion, also may permit exercise (a) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the total
Exercise Price, or (b) by any other means which the Committee, in its sole
discretion, determines (i) to provide legal consideration for the Shares, and
(ii) to be consistent with the purposes of this Plan.

        As soon as practicable after receipt of a written notification of
exercise and full payment for the Shares purchased, the Company shall deliver to
the Participant (or the Participant's designated broker), Share certificates
(which may be in book entry form) representing such Shares.

        5.7 Certain Additional Provisions for Incentive Stock Options.

                5.7.1 Exercisability. The aggregate Fair Market Value
        (determined on the Grant Date(s)) of the Shares with respect to which
        Incentive Stock Options are exercisable for the first time by any
        Employee during any calendar year (under all plans of the Company and
        its Subsidiaries) shall not exceed $100,000.

                5.7.2 Termination of Service. No Incentive Stock Option may be
        exercised more than three (3) months after the Participant's Termination
        of Service for any reason other than Disability or death, unless (a) the
        Participant dies during such three-month period, and (b) the Award
        Agreement or the Committee permits later exercise. No Incentive Stock
        Option may be exercised more than one (1) year after the Participant's
        termination of employment on account of Disability, unless (a) the
        Participant dies during such one-year period, and (b) the Award
        Agreement or the Committee permits later exercise.

                5.7.3 Company and Subsidiaries Only. Incentive Stock Options may
        be granted only to persons who are employees of the Company or a
        Subsidiary on the Grant Date.

                5.7.4 Expiration. No Incentive Stock Option may be exercised
        after the expiration of ten (10) years from the Grant Date; provided,
        however, that if the Option is granted to an Employee who, together with
        persons whose stock ownership is attributed to the Employee pursuant to
        section 424(d) of the Code, owns stock possessing more than 10% of the
        total combined voting power of all classes of stock of the Company or
        any of its Subsidiaries, the Option may not be exercised after the
        expiration of five (5) years from the Grant Date.

<PAGE>   7

                                    SECTION 6

                            STOCK APPRECIATION RIGHTS

        6.1 Grant of SARs. Subject to the terms and conditions of this Plan, an
SAR may be granted to Participants at any time and from time to time as shall be
determined by the Committee, in its sole discretion. The Committee may grant
Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof.

                6.1.1 Number of Shares. The Committee shall have complete
        discretion to determine the number of SARs granted to any Participant,
        provided that during any Fiscal Year, no Participant shall be granted
        SARs covering more than 100,000 Shares.

                6.1.2 Exercise Price and Other Terms. The Committee, subject to
        the provisions of this Plan, shall have complete discretion to determine
        the terms and conditions of SARs granted under this Plan; provided,
        however, that the exercise price of a Freestanding SAR shall be not less
        than one hundred percent (100%) of the Fair Market Value of a Share on
        the Grant Date. The exercise price of Tandem or Affiliated SARs shall
        equal the Exercise Price of the related Option.

        6.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. With respect to a Tandem SAR granted in connection with an
Incentive Stock Option: (a) the Tandem SAR shall expire no later than the
expiration of the underlying Incentive Stock Option; (b) the value of the payout
with respect to the Tandem SAR shall be for no more than one hundred percent
(100%) of the difference between the Exercise Price of the underlying Incentive
Stock Option and the Fair Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the
Tandem SAR shall be exercisable only when the Fair Market Value of the Shares
subject to the Incentive Stock Option exceeds the Exercise Price of the
Incentive Stock Option.

        6.3 Exercise of Affiliated SARs. An Affiliated SAR shall be deemed to be
exercised upon the exercise of the related Option. The deemed exercise of an
Affiliated SAR shall not necessitate a reduction in the number of Shares subject
to the related Option.

        6.4 Exercise of Freestanding SARs. Freestanding SARs shall be
exercisable on such terms and conditions as the Committee, in its sole
discretion, shall determine.

        6.5 SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the Committee, in
its sole discretion, shall determine.

        6.6 Expiration of SARs. An SAR granted under this Plan shall expire upon
the date determined by the Committee, in its sole discretion, as set forth in
the Award Agreement. Notwithstanding the foregoing, the terms and provisions of
Section 5.4 also shall apply to SARs.

        6.7 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

                (a) The positive difference between the Fair Market Value of a
        Share on the date of exercise over the exercise price; by

                (b) The number of Shares with respect to which the SAR is
        exercised.

        At the sole discretion of the Committee, the payment upon SAR exercise
may be in cash, in Shares of equivalent value, or in any combination thereof.

<PAGE>   8

                                    SECTION 7

                                RESTRICTED STOCK

        7.1 Grant of Restricted Stock. Subject to the terms and provisions of
this Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee, in its sole
discretion, shall determine. The Committee, in its sole discretion, shall
determine the number of Shares to be granted to each Participant; provided,
however, that during any Fiscal Year, no Participant shall receive more than
100,000 Shares of Restricted Stock.

        7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee, in its
sole discretion, determines otherwise, Shares of Restricted Stock shall be held
by the Company as escrow agent until the end of the applicable Period of
Restriction.

        7.3 Transferability. Except as otherwise determined by the Committee, in
its sole discretion, Shares of Restricted Stock may not be sold, transferred,
gifted, bequeathed, pledged, assigned, or otherwise alienated or hypothecated,
voluntarily or involuntarily, until the end of the applicable Period of
Restriction.

        7.4 Other Restrictions. The Committee, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate in accordance with this Section 7.4.

                7.4.1 General Restrictions. The Committee may set restrictions
        based upon (a) the achievement of specific performance objectives
        (Company-wide, divisional or individual), (b) applicable Federal or
        state securities laws, or (c) any other basis determined by the
        Committee in its sole discretion.

                7.4.2 Section 162(m) Performance Restrictions. For purposes of
        qualifying grants of Restricted Stock as "performance-based
        compensation" under section 162(m) of the Code, the Committee, in its
        sole discretion, shall set restrictions based upon the achievement of
        Performance Goals. The Performance Goals shall be set by the Committee
        on or before the latest date permissible to enable the Restricted Stock
        to qualify as "performance-based compensation" under section 162(m) of
        the Code. In granting Restricted Stock that is intended to qualify under
        Code section 162(m), the Committee shall follow any procedures
        determined by it in its sole discretion from time to time to be
        necessary, advisable or appropriate to ensure qualification of the
        Restricted Stock under Code section 162(m) (e.g., in determining the
        Performance Goals).

                7.4.3 Legend on Certificates. The Committee, in its sole
        discretion, may legend the certificates representing Restricted Stock to
        give appropriate notice of such restrictions. For example, the Committee
        may determine that some or all certificates representing Shares of
        Restricted Stock shall bear the following legend:

                "THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED
                BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY
                OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
                AS SET FORTH IN THE ILLUMINET HOLDINGS, INC., 1997 EQUITY
                INCENTIVE PLAN, AND IN A RESTRICTED STOCK AGREEMENT. A COPY OF
                THIS PLAN AND SUCH RESTRICTED STOCK AGREEMENT MAY BE OBTAINED
                FROM THE SECRETARY OF ILLUMINET HOLDINGS, INC."

        7.5 Removal of Restrictions. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under this Plan shall be released from escrow as soon as practicable after
the end of the applicable Period of Restriction. The Committee, in its sole
discretion, may accelerate the time at which any restrictions shall lapse and
remove any restrictions. After the end of the applicable Period of Restriction,
the Participant shall be entitled to have any legend or legends under Section
7.4.3 removed from his or her Share certificate, and the Shares shall be freely
transferable by the Participant.

        7.6 Voting Rights. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the applicable Award Agreement
provides otherwise.

<PAGE>   9

        7.7 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the applicable Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

        7.8 Return of Restricted Stock to Company. On the date set forth in the
applicable Award Agreement, the Restricted Stock for which restrictions have not
lapsed shall revert to the Company and thereafter shall be available for grant
under this Plan.

                                    SECTION 8

                    PERFORMANCE UNITS AND PERFORMANCE SHARES

        8.1 Grant of Performance Units/Shares. Performance Units and Performance
Shares may be granted to Participants at any time and from time to time, as
shall be determined by the Committee, in its sole discretion. The Committee
shall have complete discretion in determining the number of Performance Units
and Performance Shares granted to each Participant; provided, however, that
during any Fiscal Year, (a) no Participant shall receive Performance Units
having an initial value greater than $250,000, and (b) no Participant shall
receive more than 100,000 Performance Shares.

        8.2 Value of Performance Units/Shares. Each Performance Unit shall have
an initial value that is established by the Committee on or before the Grant
Date. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the Grant Date.

        8.3 Performance Objectives and Other Terms. The Committee shall set
performance objectives in its sole discretion which, depending on the extent to
which they are met, will determine the number or value of Performance Units or
Performance Shares, or both, that will be paid out to the Participants. The time
period during which the performance objectives must be met shall be called the
"Performance Period". Each Award of Performance Units or Performance Shares
shall be evidenced by an Award Agreement that shall specify the Performance
Period, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.

                8.3.1 General Performance Objectives. The Committee may set
        performance objectives based upon (a) the achievement of Company-wide,
        divisional or individual goals, (b) applicable Federal or state
        securities laws, or (c) any other basis determined by the Committee in
        its discretion.

                8.3.2 Section 162(m) Performance Objectives. For purposes of
        qualifying grants of Performance Units or Performance Shares as
        "performance-based compensation" under section 162(m) of the Code, the
        Committee, in its sole discretion, shall determine that the performance
        objectives applicable to Performance Units or Performance Shares, as the
        case may be, shall be based on the achievement of Performance Goals. The
        Performance Goals shall be set by the Committee on or before the latest
        date permissible to enable the Performance Units or Performance Shares,
        as the case may be, to qualify as "performance-based compensation" under
        section 162(m) of the Code. In granting Performance Units or Performance
        Shares which are intended to qualify under Code section 162(m), the
        Committee shall follow any procedures determined by it from time to time
        to be necessary or appropriate in its sole discretion to ensure
        qualification of the Performance Units or Performance Shares, as the
        case may be, under Code section 162(m) (e.g., in determining the
        Performance Goals).

        8.4 Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units or Performance
Shares shall be entitled to receive a payout of the number of Performance Units
or Performance Shares, as the case may be, earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance objectives have been achieved. After the grant of a
Performance Unit or Performance Share, the Committee, in its sole discretion,
may reduce or waive any performance objectives for such Performance Unit or
Performance Share, except with respect to Awards that are intended to qualify as
"performance-based compensation" under section 162(m) of the Code.

        8.5 Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units or Performance Shares shall be made as soon as
practicable after the end of the applicable Performance Period. The Committee,
in its sole discretion, may pay earned Performance Units or Performance Shares
in the form of cash, in Shares (which have an aggregate Fair Market Value

<PAGE>   10

equal to the value of the earned Performance Units or Performance Shares, as the
case may be, at the end of the applicable Performance Period), or in any
combination thereof.

        8.6 Cancellation of Performance Units/Shares. On the earlier of the date
set forth in the Award Agreement or the Participant's Termination of Service
(other than by death, Disability or, with respect to an Employee, Retirement),
all unearned or unvested Performance Units or Performance Shares shall be
forfeited to the Company, and thereafter shall be available for grant under this
Plan. In the event of a Participant's death, Disability or, with respect to an
Employee, Retirement, prior to the end of a Performance Period, the Committee
shall reduce his or her Performance Units or Performance Shares proportionately
based on the date of such Termination of Service.

                                    SECTION 9

                                  MISCELLANEOUS

        9.1 Deferrals. The Committee, in its sole discretion, may permit a
Participant to defer receipt of the payment of cash or the delivery of Shares
that would otherwise be due to such Participant under an Award. Any such
deferral election shall be subject to such rules and procedures as shall be
determined by the Committee in its sole discretion.

        9.2 No Effect on Employment or Service. Nothing in this Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause. For
purposes of this Plan, transfer of employment of a Participant between the
Company and any of its Affiliates (or between Affiliates) shall not be deemed a
Termination of Service. Employment or secure relationship with the Company and
its Affiliates is on an at-will basis only, unless otherwise provided by an
applicable employment or service agreement between the Participant and the
Company or its Affiliate, as the case may be.

        9.3 Participation. No Participant shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.

        9.4 Indemnification. Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability or expense (including
attorneys' fees) 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 failure to act under this Plan or any Award Agreement,
and (b) from any and all amounts paid by him or her in settlement thereof, with
the Company's prior written 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, however, that 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 of 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 or hold them harmless.

        9.5 Successors. All obligations of the Company under this Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business or assets of the Company.

        9.6 Beneficiary Designations. If permitted by the Committee, a
Participant under this Plan may name a beneficiary or beneficiaries to whom any
vested but unpaid Award 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
Committee. In the absence of any such designation, any vested benefits remaining
unpaid at the Participant's death shall be paid to the Participant's estate and,
subject to the terms of this Plan and of the applicable Award Agreement, any
unexercised vested Award may be exercised by the administrator or executor of
the Participant's estate.

        9.7 Transferability of Awards. Except as provided otherwise in the Award
Agreement, Awards granted under this Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated.

<PAGE>   11

        9.8 No Rights as Stockholder. Except to the limited extent provided in
Sections 7.6 and 7.7, no Participant (nor any beneficiary thereof) shall have
any of the rights or privileges of a stockholder of the Company with respect to
any Shares issuable pursuant to an Award (or the exercise thereof), unless and
until certificates representing such Shares shall have been issued, recorded on
the records of the Company or its transfer agents or registrars, and delivered
to the Participant (or his or her beneficiary).

                                   SECTION 10

                      AMENDMENT, TERMINATION, AND DURATION

        10.1 Amendment, Suspension, or Termination. The Board, in its sole
discretion, may amend or terminate this Plan, or any part thereof, at any time
and for any reason; provided, however, that if and to the extent required by law
or to maintain this Plan's qualification under Rule 16b-3, the Code, or the
rules of any national securities exchange (if applicable), any such amendment
shall be subject to stockholder approval. The amendment, suspension or
termination of this Plan shall not, without the consent of the Participant,
alter or impair any rights or obligations under any Award theretofore granted to
such Participant. No Award may be granted during any period of suspension or
after termination of this Plan.

        10.2 Duration of this Plan. This Plan shall become effective on the date
specified herein, and subject to Section 10.1 (regarding the Board's right to
amend or terminate this Plan), shall remain in effect thereafter; provided,
however, that without further stockholder approval, no Incentive Stock Option
may be granted under this Plan after the tenth anniversary of the effective date
of this Plan.

                                   SECTION 11

                                 TAX WITHHOLDING

        11.1 Withholding Requirements. Prior to the delivery of any Shares or
cash pursuant to an Award (or the exercise thereof), the Company shall have the
power and the right to deduct or withhold from any amounts due to the
Participant from the Company, or require a Participant to remit to the Company,
an amount sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to such
Award (or the exercise thereof).

        11.2 Withholding Arrangements. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part, by
(a) electing to have the Company withhold otherwise deliverable Shares, or (b)
delivering to the Company Shares then owned by the Participant having a Fair
Market Value equal to the amount required to be withheld. The amount of the
withholding requirement shall be deemed to include any amount that the Committee
agrees may be withheld at the time any such election is made, not to exceed the
amount determined by using the maximum federal, state or local marginal income
tax rates applicable to the Participant with respect to the Award on the date
that the amount of tax to be withheld is to be determined. The Fair Market Value
of the Shares to be withheld or delivered shall be determined as of the date
that the taxes are required to be withheld.

                                   SECTION 12

                                CHANGE IN CONTROL

        12.1 Change in Control. In the event of a Change in Control of the
Company, all Awards granted under this Plan that then are outstanding and not
then exercisable or are subject to restrictions, shall, unless otherwise
provided for in the Award Agreements applicable thereto, become immediately
exercisable, and all restrictions shall be removed, as of the first date that
the Change in Control has been deemed to have occurred, and shall remain as such
for the remaining life of the Award as provided herein and within the provisions
of the related Award Agreements.

Notwithstanding the preceding sentence, in the event that the Committee is
advised by the Company's independent auditors that the effect of the preceding
sentence would be to preclude the ability of the Company to account for an
acquisition or merger transaction as a pooling of interests, the Committee may
declare the preceding sentence to be inoperable to such extent as the Committee,
in its sole discretion, deems advisable.
<PAGE>   12

        12.2 Definition. For purposes of Section 12.1 above, a Change in Control
of the Company shall be deemed to have occurred if the conditions set forth in
any one or more of the following shall have been satisfied, unless such
condition shall have received prior approval of a majority vote of the
Continuing Directors, as defined below, indicating that Section 12.1 shall not
apply thereto:

                (a) any "person", as such term is used in Sections 13(d) and
        14(d) of the 1934 Act (other than the Company, any trustee or other
        fiduciary holding securities under an employee benefit plan of the
        Company or any corporation owned, directly or indirectly, by the
        stockholders of the Company in substantially the same proportions as
        their ownership of stock of the Company), is or becomes the "beneficial
        owner" (as defined in Rule 13(d)(3) under the Exchange Act), directly or
        indirectly, of securities of the Company representing thirty percent
        (30%) or more of the combined voting power of the Company's then
        outstanding securities;

                (b) during any period of two consecutive years (not including
        any period prior to the Effective Date of this Plan), individuals
        ("Existing Directors") who at the beginning of such period constitute
        the Board of Directors, and any new board member (an "Approved
        Director") (other than a board member designated by a person who has
        entered into an agreement with the Company to effect a transaction
        described in paragraph (a), (b) or (c) of this Section 12.2) whose
        election by the Board of Directors or nomination for election by the
        Company's shareholders was approved by a vote of a least two-thirds
        (2/3) of the board members then still in office who either were board
        members at the beginning of the period or whose election or nomination
        for election previously was so approved (Existing Directors together
        with Approved Directors constituting "Continuing Directors"), cease for
        any reason to constitute at least a majority of the Board of Directors;
        or

                (c) the stockholders of the Company approve a merger or
        consolidation of the Company with any other person, other than (i) a
        merger or consolidation which would result in the voting securities of
        the Company outstanding immediately prior thereto continuing to
        represent (either by remaining outstanding or by being converted into
        voting securities for the surviving entity) more than fifty percent
        (50%) of the combined voting power of the voting securities of the
        Company or such surviving entity outstanding immediately after such
        merger or consolidation, or (ii) a merger in which no "person" (as
        defined in Section 12.2(a)) acquires more than thirty percent (30%) of
        the combined voting power of the Company's then outstanding securities;
        or

                (d) the stockholders of the Company approve a plan of complete
        liquidation of the Company or an agreement for the sale or disposition
        by the Company of all or substantially all of the Company's assets (or
        any transaction having a similar effect).

                                   SECTION 13

                               LEGAL CONSTRUCTION

        13.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

        13.2 Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.

        13.3 Requirements of Law. The grant of Awards and the issuance of Shares
under this Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required from time to time.

        13.4 Securities Law Compliance. With respect to Section 16 Persons,
Awards under this Plan are intended to comply with all applicable conditions of
Rule 16b-3. To the extent any provision of this Plan, Award Agreement or action
by the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable or appropriate by the Committee in
its sole discretion.

<PAGE>   13

        13.5 Governing Law. This Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Delaware
(excluding its conflict of laws provisions).

        13.6 Captions. Captions are provided herein for convenience of reference
only, and shall not serve as a basis for interpretation or construction of this
Plan.

                                       Adopted October 29, 1997

                                       Amended April 29, 1998

                                       Amended September 9, 1999

                                       Amended and Restated
                                           March 6, 2001

                            ILLUMINET HOLDINGS, INC.
                           1997 EQUITY INCENTIVE PLAN
                   NON-OUALIFIED STOCK OPTION AWARD AGREEMENT

        This Stock Option Award Agreement (the "Award Agreement"), made this
_______ day of _______, [Year] evidences the grant, by Illuminet Holdings, Inc.,
(the "Company"), of a stock option to _______________ (the "Grantee") on the
date hereof (the "Date of Grant"). By accepting the Award and executing this
Award Agreement, the Grantee agrees to be bound by the provisions hereof and of
the Illuminet Holdings, Inc. 1997 Equity Incentive Plan (the "Plan").
Capitalized terms not defined herein shall have the same meaning as used in the
Plan.

        I. Shares Optioned and Option Price. The Grantee shall have an option to
purchase _______ shares of the Company's Common Stock, $0.01 par value (the
"Shares"), at an exercise price of $_______ for each share (the "Option"),
subject to the terms and conditions of this Award Agreement and of the Plan, the
provisions of which are incorporated herein by this reference. The Option is
not, nor is it intended to be, an Incentive Stock Option as described in section
422 of the Internal Revenue Code of 1986.

        2. Exercise Period. The Option may be exercised, from time to time, with
respect to the following number of Shares subject to this Option: (i) prior to
the first anniversary of the Date of Grant, none of such Shares; (ii) from and
after the first anniversary of the Date of Grant, 25% of such Shares; (iii) from
and after the second anniversary of the Date of Grant, 50% of such Shares (less
any Shares as to which this Option shall have been exercised prior to such
second anniversary); (iv) from and after the third anniversary of the date of
Grant, 75% of such Shares (less any Shares as to which this Option shall have
been exercised prior to such third anniversary); and (v) from and after the
fourth anniversary of the Date of Grant, 100% of such Shares (less any Shares as
to which this Option shall have been exercised prior to such fourth
anniversary). Provided, however, that the Grantee's right to exercise the Option
shall terminate on the earliest to occur of the following dates:

                (a)     the tenth anniversary of the Date of Grant;

                (b)     the first anniversary of the date of the Grantee's
                        Termination of Service on account of Disability or
                        death;

                (c)     the date sixty days following the date of the Grantee's
                        Termination of Service for any reason other than
                        Disability or death (the "Termination Date").

Provided further that, during the sixty day period following the date of the
Grantee's Termination of Service for any reason other than Disability or death,
that portion of the Shares that was not exercisable on the date of the Grantee's
Termination of Service shall not become exercisable.

        3. Restriction on Exercise. Notwithstanding the foregoing provisions of
paragraph 2 or any other provision of this Award Agreement, the Committee, in
its sole discretion, may, only with respect to any unvested portion of this
Option, reduce the number of Shares subject to the Option or may cancel the
Option in its entirety if the Grantee (a) takes other employment or renders
services to others without the written consent of the Company; or (b) conducts
himself or herself in a manner that the Committee, in

<PAGE>   14

its sole discretion, deems has adversely affected or may adversely affect the
Company. Except as provided in the last sentence of this paragraph, the Grantee
will not be entitled to any remuneration or compensation whatsoever for the loss
of all or a portion of the Grantee's Option if the number of Shares subject to
the Grantee's Option are reduced, or if the Grantee's Option is canceled in its
entirety, pursuant to this paragraph. If at the time this Option was granted the
Grantee and the Company acknowledged in writing that this Option was being
granted in lieu of other specifically described compensation to the Grantee,
then, to the extent that pursuant to this paragraph the number of Shares subject
to this Option is reduced or this Option is canceled, then, the Company shall
pay to the Grantee the proportionate amount of such forgone compensation
represented by the reduced number of Shares or cancellation of this Option.

        4. Exercise. To the extent that the Option is exercisable hereunder, it
may be exercised in full or in part by the Grantee or, in the event of the
Grantee's death, by the person or persons to whom the Option was transferred by
will or the laws of descent and distribution, by delivering or mailing written
notice of the exercise and full payment of the purchase price to the Secretary
of the Company. The written notice shall be signed by each person entitled to
exercise the Option and shall specify the address and social security number of
each person. If any person other than the Grantee purports to be entitled to
exercise all or any portion of the Option, the written notice shall be
accompanied by proof, satisfactory to the Secretary of the Company, of that
entitlement. The written notice shall be accompanied by full payment in cash
(including personal check), in Shares represented by certificates transferring
ownership to the Company and with an aggregate Fair Market Value equal to the
purchase price on the date the written notice is received by the Secretary, or
in any combination of cash and Shares, provided that payment in full or part by
the transfer of Shares shall be subject to approval by the Committee. Payment
may also be made in such other manner as may be permitted by the Plan at the
time of exercise, subject to approval by the Committee. The written notice will
be effective and the Option shall be deemed exercised to the extent specified in
the notice on the date that the written notice (together with required
accompaniments) is received by the Secretary of the Company at its then
executive offices during regular business hours.

        5. Issue of Shares Upon Exercise. As soon as practicable after receipt
of an effective written notice of exercise and full payment of the purchase
price as provided in paragraph 4, the Secretary of the Company shall cause
ownership of the appropriate number of

<PAGE>   15

Shares to be transferred to the person or persons exercising the Option by
having a certificate or certificates for those Shares registered in the name of
such person or persons and shall have each certificate delivered to the
appropriate person. Notwithstanding the foregoing, if the Company or a
Subsidiary requires reimbursement of any tax required by law to be withheld with
respect to Shares received upon exercise of an Option, the Secretary shall not
transfer ownership of those Shares until the required payment is made.

        6. Transferability of Options. The Grantee may transfer the Option to
(i) the spouse, children, or grandchildren of the Grantee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefits of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members
are the only partners, provided that (a) there may be no consideration for any
such transfer and (b) subsequent transfers of the Option shall be prohibited,
except by will or the laws of descent and distribution. Following transfer, the
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for the purposes of the
Award Agreement, the term "Grantee" shall be deemed to refer to the transferee.
The event of a Termination of Service shall continue to be applied with respect
to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods, specified in Paragraph 2.
Neither the Committee nor the Company shall have any obligation to provide
notice to a transferee of termination of the Option under the terms of this
Award Agreement.

                6.1 Transferees of Stockholders. The Company shall not be
required to transfer any Shares on its books which shall have been sold,
assigned or otherwise transferred in violation of this Award Agreement, or to
treat as owner of such shares of stock, or to accord the right to vote as such
owner or to pay dividends to, any person or organization to which any such
Shares shall have been sold, assigned or otherwise transferred, from and after
any sale, assignment or transfer of any Share made in violation of this Award
Agreement. Any transfer in violation of the terms of this Award Agreement shall
be deemed null and void.

        7. Authorized Leave. For purposes hereof, an authorized leave of absence
(authorized by the Company or a Subsidiary to the Grantee in writing) shall not
be deemed a Termination of Service hereunder.

        8. Taxes. The Grantee will be solely responsible for any Federal, state
or local income taxes imposed in connection with the exercise of the Option or
the delivery of Shares incident thereto, and the Grantee authorizes the Company
or any Subsidiary to make any withholding for taxes which the Company deems
necessary or proper in connection therewith, from any amounts due to the Grantee
by the Company. Subject to approval by the Committee, the Grantee may satisfy
such withholding obligations, in whole or in part, by (a) electing to have the
Company withhold otherwise deliverable Shares or (b) delivering to the Company
Shares then owned by Grantee having a Fair Market Value equal to the amount
required to be withheld.

<PAGE>   16

        9. No Conflict. In the event of a conflict between this Award Agreement
and the Plan, the provisions of the Plan shall govern.

        10. Governing Law. This Award shall be governed under the laws of the
State of Delaware.

                                           ILLUMINET HOLDINGS, INC.

        BY:
            --------------------------
                                                  Roger H. Moore
                                                  President & CEO

ACKNOWLEDGMENT

The undersigned Grantee acknowledges that he or she understands and agrees to be
bound by each of the terms and conditions of this Award Agreement.

----------------------------                      ------------------------------
      PRINTED NAME                                           SIGNATURE

                            ILLUMINET HOLDINGS, INC.
                           1997 EQUITY INCENTIVE PLAN
                      DIRECTOR STOCK OPTION AWARD AGREEMENT

        This Stock Option Award Agreement (the "Award Agreement"), made this
_____ day of _______, [Year] evidences the grant, by Illuminet Holdings, Inc.,
(the "Company"), of a stock option to _________________ (the "Grantee") on the
date hereof (the "Date of Grant"). By accepting the Award and executing this
Award Agreement, the Grantee agrees to be bound by the provisions hereof and of
the Illuminet Holdings, Inc. 1997 Equity Incentive Plan (the "Plan").
Capitalized terms not defined herein shall have the same meaning as used in the
Plan.

        1. Shares Optioned and Option Price. The Grantee shall have an option to
purchase ________ shares of the Company's Common Stock, $0.01 par value (the
"Shares"), at an exercise price of $________ for each share (the "Option"),
subject to the terms and conditions of this Award Agreement and of the Plan, the
provisions of which are incorporated herein by this reference. The Option is
not, nor is it intended to be, an Incentive Stock Option as described in section
422 of the Internal Revenue Code of 1986.

        2. Exercise Period. The Option may be exercised, from time to time in
accordance with the following vesting schedule: 1/12 on the last day of each
month beginning with the month in which the Grant Date occurred and ending with
the eleventh consecutive month thereafter. Provided, however, that the Grantee's
right to exercise the Option shall terminate on the earliest to occur of the
following dates:

                (a)     the tenth anniversary of the Date of Grant; or

                (b)     the first anniversary of the date of the Grantee's
                        death.

        3. Restriction on Exercise. Notwithstanding the foregoing provisions of
paragraph 2 or any other provision of this Award Agreement, the Committee, in
its sole discretion, may, only with respect to any unvested portion of this
Option, reduce the number of Shares subject to the Option or may cancel the
Option in its entirety if the Grantee conducts himself or herself in a manner
that the Committee, in its sole discretion, deems has adversely affected or may
adversely affect the Company. Except as provided in

<PAGE>   17

the last sentence of this paragraph, the Grantee will not be entitled to any
remuneration or compensation whatsoever for the loss of all or a portion of the
Grantee's Option if the number of Shares subject to the Grantee's Option are
reduced, or if the Grantee's Option is canceled in its entirety, pursuant to
this paragraph. If at the time this Option was granted the Grantee and the
Company acknowledged in writing that this Option was being granted in lieu of
other specifically described compensation to the Grantee, then, to the extent
that pursuant to this paragraph the number of Shares subject to this Option is
reduced or this Option is canceled, then, the Company shall pay to the Grantee
the proportionate amount of such forgone compensation represented by the reduced
number of Shares or cancellation of this Option.

        4. Exercise. To the extent that the Option is exercisable hereunder, it
may be exercised in full or in part by the Grantee or, in the event of the
Grantee's death, by the person or persons to whom the Option was transferred by
will or the laws of descent and distribution, by delivering or mailing written
notice of the exercise and full payment of the purchase price to the Secretary
of the Company. The written notice shall be signed by each person entitled to
exercise the Option and shall specify the address and social security number of
each person. If any person other than the Grantee purports to be entitled to
exercise all or any portion of the Option, the written notice shall be
accompanied by proof, satisfactory to the Secretary of the Company, of that
entitlement. The written notice shall be accompanied by full payment in cash
(including personal check), in Shares represented by certificates transferring
ownership to the Company and with an aggregate Fair Market Value equal to the
purchase price on the date the written notice is received by the Secretary, or
in any combination of cash and Shares, provided that payment in full or part by
the transfer of Shares shall be subject to approval by the Committee. Payment
may also be made in such other manner as may be permitted by the Plan at the
time of exercise, subject to approval by the Committee. The written notice will
be effective and the Option shall be deemed exercised to the extent specified in
the notice on the date that the written notice (together with required
accompaniments) is received by the Secretary of the Company at its then
executive offices during regular business hours.

        5. Issue of Shares Upon Exercise. As soon as practicable after receipt
of an effective written notice of exercise and full payment of the purchase
price as provided in paragraph 3, the Secretary of the Company shall cause
ownership of the appropriate number of Shares to be transferred to the person or
persons exercising the Option by having a certificate or certificates for those
Shares registered in the name of such person or persons and shall have each
certificate delivered to the appropriate person. Notwithstanding the foregoing,
if the Company or a Subsidiary requires reimbursement of any tax required by law
to be withheld with respect to Shares received upon exercise of an Option, the
Secretary shall not transfer ownership of those Shares until the required
payment is made.

        6. Transferability of Options. The Grantee may transfer the Option to
(i) the spouse, children, or grandchildren of the Grantee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefits of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members
are the only partners, provided that (a) there may be no consideration for any
such transfer and (b) subsequent transfers of the Option shall be prohibited,
except by will or the laws of descent and distribution. Following transfer, the
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for the purposes of the
Award Agreement, the term "Grantee" shall be deemed to refer to the transferee.
Neither the Committee nor the Company shall have any obligation to provide
notice to a transferee of termination of the Option under the terms of this
Award Agreement.

                6.1 Transferees of Stockholders. The Company shall not be
required to transfer any Shares on its books which shall have been sold,
assigned or otherwise transferred in violation of this Award Agreement, or to
treat as owner of such shares of stock, or to accord the right to vote as such
owner or to pay dividends to, any person or organization to which any such
Shares shall have been sold, assigned or otherwise transferred, from and after
any sale, assignment or transfer of any Share made in violation of this Award
Agreement. Any transfer in violation of the terms of this Award Agreement shall
be deemed null and void.

        7. Taxes. The Grantee will be solely responsible for any Federal, state
or local income taxes imposed in connection with the exercise of the Option or
the delivery of Shares incident thereto, and the Grantee authorizes the Company
or any Subsidiary to make any withholding for taxes which the Company deems
necessary or proper in connection therewith, from any amounts due to the Grantee
by the Company. Subject to approval by the Committee, the Grantee may satisfy
such withholding obligations, in whole or in part, by (a) electing to have the
Company withhold otherwise deliverable Shares or (b) delivering to the Company
Shares then owned by Grantee having a Fair Market Value equal to the amount
required to be withheld.

        8. No Conflict. In the event of a conflict between this Award Agreement
and the Plan, the provisions of the Plan shall govern.

        9. Governing Law. This Award shall be governed under the laws of the
State of Delaware.

<PAGE>   18

                                       ILLUMINET HOLDINGS, INC.

                                       By:
                                           -------------------------------------
                                       Title: President and CEO

ACKNOWLEDGMENT

        The undersigned Grantee acknowledges that he or she understands and
agrees to be bound by each of the terms and conditions of this Award Agreement.

----------------------------                      ------------------------------
       Printed Name                                           Signature

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