Document:

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                                                                 EXHIBIT 10.22

                                 CONFIDENTIAL

                     ASSEMBLY AND TEST SERVICES AGREEMENT

This Package and Test Agreement (the "Agreement"), is dated and effective as of
February 28th, 2000 (the "Effective Date"), by and between. ST Assembly and Test
Services Ltd a Singapore Corporation with offices at 5 Yishun Street, 768442,
Singapore (STATS), and Centillium Communications, Inc., a Delaware corporation
with offices at 47211 Lakeview Blvd., Fremont, California, 94538("Centillium").

                                    RECITALS
     WHEREAS, Centillium desires to purchase from STATS and STATS desires to
supply to Centillium Assembly and Test Services on the terms and conditions of
this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:

1.0  DEFINITIONS

     1.1  "Assembly Cycle Time" means the period of time required to manufacture
           -------------------
          the Products, commencing upon wafer start and ending on the day when
          STATS ships out (ex-factory) the ordered quantity of Products. The
          Assembly and Test Cycles Times for Prototype Production and Volume
          Production shall be as set forth in Exhibit A. Cycle Time does not
          include local national holidays and other factory holidays and
          shutdowns.

     1.2  "Lead Time" means the period of time, in calendar days, from the
           ---------
          placement of a particular order of a Product until the date of first
          shipment (ex-factory) of the ordered quantity of the Product.

     1.3  "Products" means the name of the package technology.

     1.4  "Affiliate" means any corporation or business entity, which is owned
           ---------
          or controlled by, owns or controls, or is under common ownership or
          control with, a party. For purposes of this definition, "control" of a
          corporation or business entity shall mean the right to exercise,
          directly or indirectly, more than fifty percent (50%) of the voting
          rights attributable to the shares of the corporation or business
          entity or the power to direct or cause the direction of the management
          or policies of the corporation or business entity.

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2.0  INTELLECTUAL PROPERTY RIGHTS

     2.1  Technical Information. All intellectual property and related rights in
          ---------------------
          and to technical information of either party including an affiliate or
          either party, which is provided to the other party in the course of
          the development of the Product(s) shall continue to belong to such
          providing party. This information shall be considered confidential and
          covered by a separate Non Disclosure Agreement.

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3.0  ASSEMBLY AND TEST SUPPLY

     3.1  Assembly Manufacturing
          3.1.1  On the terms and conditions of this Agreement, STATS will;
               manufacture packages, wafer sort silicon and test assembled
               packages

          3.1.2  Centillium will take ownership of the packages after all
               processing has been completed and electrical test continuity and
               Visual Mechanical results meet specification, see exhibit B.

          3.1.3  STATS will perform all Assembly and Test at its Singapore
               manufacturing facility. If STATS desires to change the location
               at which Assembly or Tests are being performed, STATS shall first
               define a qualification plan and obtain Centillium's written
               consent, more than 90 days prior to the location change.
               Centillium reserves the right to approve all changes to location.
               Centillium will notify STATS of approval or rejection within two
               weeks from receiving STATS notification and supporting
               documentation

          3.1.4  If STATS desires to change the form, fit, function or
               reliability STATS shall first define a qualification plan and
               obtain Centillium written consent, more than 90 days prior to
               such changes. Centillium reserves the right to approve all
               changes to form, fit, function or reliability. Centillium will
               notify STATS of approval or rejection within two weeks from STATS
               Centillium's notification and supporting documentation

          3.1.5  STATS will notify Centillium 90 days in advance, in writing, of
               any changes that are not form, fit, function or reliability
               related.
          3.1.6  STATS agrees to provide End-of-Life Notification to Centillium
               one year in advance of product discontinuance.
     3.2  STATS will treat Centillium as a Key Account and as such will continue
          to provide early access to newly developed processes during the period
          this agreement is in force.

     3.3  Qualification and Quality Control

          3.3.1  Qualification Centillium and STATS will cooperate fully to
               qualify jointly each product for which silicon is used in a
               package technology and will be manufactured hereunder
               ("Qualification"). Accordingly, the parties will cooperate to
               implement a Qualification procedure pursuant to which the parties
               will agree on parameters to monitor product quality and
               reliability. After qualification, Reliability Monitor data will
               be provided to Centillium on a quarterly basis detailing; Number
               of Lots, Number of devices, Number of passes/fails (cycles when
               failed), Test criteria. EXHIBIT C

          3.3.2  Changes After Qualification of any Product, STATS shall not
               make any major and/or critical Process change which will impact
               the performance, reliability or construction of the Products,
               without Centillium prior written consent, which consent shall not
               be unreasonably withheld. STATS shall notify Centillium in
               writing in advance of major Process changes, including but not
               limited to any changes which may:

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               3.3.2.1 Degrade Product quality or reliability;
               3.3.2.2 Result in failure of the Product to meet Centillium
                    specifications
               3.3.2.3 Substantially stow lead times
               3.3.2.4 Change Process control variables, ranges or method;
               3.3.2.5  Result in leadframe or substrate revisions or changes to
                    test methods/limits;
          3.3.3  Problem Notification

          STATS will classify and notify Centillium promptly (EXHIBIT D) upon
               discovering major process problems in its manufacturing lines
               that may affect the delivery capability of packages or package
               yields or that it has caused via the use of returned material.

          3.3.4  Yield Improvement Help STATS will notify Centillium of yield
               trends on a quarterly basis and what action is being performed to
               resolve the issues.

     3.4  Capacity and Forecasts.
          3.4.1  Capacity Agreement (EXHIBIT E)

          In order to ensure capacity. Centillium will provide a 12 month
               forecast with upside potential. STATS will agree to fulfill the
               capacity requirement of the 12 month forecast. This forecast is
               to be used for capacity planning only and the forecast on section
               (3.4.2) will be used to purchase wafers. If Centillium has
               unexpected demand above and beyond its upside forecast STATS
               agrees to meet this upside 100%, within the specified cycle times
               (EXHIBIT A) provided at least five (5) weeks notice is provided.

          3.4.2  Three (3) Month Rolling Forecasts

          Each month, Centillium will provide STATS a rolling forecast
               ("Forecast") of the number of packages and test time, which
               Centillium intends to purchase weekly during the next three- (3)
               months. The Forecast will be based on "packages out," i.e., on
               deliveries expected to be made by STATS each week

          3.4.3  Forecast Acknowledgment.
          All Forecasts shall be mutually agreed in writing (e-mail) with PO
               number and acknowledged package builds for each month of the
               three- (3) month forecast
          3.4.4  Required Orders

          Upon mutual agreement by the parties regarding the forecast,
               Centillium shall issue a "blanket" purchase order for those units
               identified in the initial Forecast and each subsequent weekly
               Forecast issued in accordance with this Agreement. Authorization
               for payment against the forecast will be given upon the
               determination of the quantity within 30 days of the shipment
               date.

          3.4.5  Purchase Order Process

          A blanket purchase order and the forecast process as stated in section
               3.4.4, 3.4.2 will initiate all purchases under this Agreement.
               Forecast shall state unit quantities, unit descriptions,
               requested delivery dates and shipping instructions. This
               Agreement, any prices agreed upon by the parties pursuant to this
               Agreement, unit quantities, unit descriptions, requested delivery
               dates and shipping instructions, shall constitute the complete
               agreement between the parties with respect to the purchase and
               sale of the Products and shall

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               supersede all prior oral or written agreements, representations
               and other communications between the parties relating to the
               subject matter of this Agreement. This Agreement shall also
               supersede any standard terms and conditions or pre-printed terms
               and conditions found on any Purchase Order issued under this
               Agreement.

          3.4.6  Cancellation
                 ------------

          Centillium may cancel product purchase order(s) or any portions
               thereof for any reason by notifying STATS in writing 48 hours
               prior to the scheduled start date on the forecast, provided that
               Centillium shall be liable for the costs of any direct or
               indirect raw materials incurred by STATS in reliance of the
               forecasts notwithstanding the cancellation or if Centillium's
               confirmed orders are less than Centillium's forecasts orders.

          3.4.7  Delivery Commitments.
                 --------------------

          STATS will deliver products to the carrier for shipment, within one
               (1) day. Upon Centillium request, STATS will halt production
               during manufacture, the foregoing delivery commitments will be
               extended by the number of days that the products are held.

          3.4.8  Shipping
                 --------

          All assembled units shall be delivered to Centillium, its designated
               airport or Customers freight forwarder in the case of drop ship.
               Pre-alerts are required to be sent from STATS to Centillium's
               freight forwarder at least 24 hr. in advance. Products shall be
               suitably packed for shipment in STATS JEDEC compliant standard
               containers, marked for shipment as specified in Centillium's
               purchase order, and delivered to a carrier or forwarding agent
               chosen by Centillium. However, should Centillium fail to
               designate a carrier, forwarding agent or type of conveyance,
               STATS shall contact Centillium's shipping department.

     3.5  Test and Inspection
          3.5.1  Inspection Results
                 ------------------

          STATS will supply to Centillium, with each shipment, quality control
               results, visual quality inspection results as agreed by the
               parties and a certificate of compliance to show the assembly and
               quality control steps were all completed

          3.5.2  Regular Reports
                 ---------------

          STATS will supply Centillium with reliability and statistical quality
               data on the STATS standard processes, which is made for the same
               product line, at regular intervals to be agreed upon but no less
               than once a quarter. The format and the contents of these
               report(s) are to be mutually agreed upon. Upon reasonable notice,
               STATS will allow Centillium on-site inspection at reasonable
               intervals to ensure that STATS follows the reliability and
               testing procedures set forth in this Agreement.

          3.5.3  Incoming Inspection Packages and tested devices may be subject
                 -------------------
               to incoming inspection, electrical testing and reliability
               testing by Centillium in accordance with the acceptance criteria
               set forth in Exhibit B and C hereto. Packages meeting applicable
               initial acceptance criteria or updated acceptance criteria will
               be deemed

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               accepted by Centillium. If packages do not meet this criteria
               Centillium Communications will notify STATS within 72 hr.

          3.5.4  Test or Visual/Mechanical Failure
                 ---------------------------------

          If any packages or lot of packages fails incoming inspection or test,
               and if test failure is caused by any defect in the Process used
               by STATS, Centillium may reject such lot or package in writing as
               soon as possible but at least within forty-five (45) days after
               delivery. In such event, STATS may, at its option, either re-
               test, rework or refund Centillium the purchase price of STATS
               services. Centillium will explain the reasons for wishing to
               reject a lot, and STATS will be entitled to examine any lot that
               Centillium wishes to reject. The parties will seek in good faith
               to resolve any disagreement as to whether a lot is conforming.
               After mutual agreement for return shipment, Centillium shall use
               reasonable commercial efforts to use STATS original packing, but
               in any event shall use commercially reasonable packaging, and
               supply all identifying shipping documents in order to avoid any
               deterioration of the goods.

          3.5.5  Low Line Yield on Volume Production.
                 -----------------------------------

          If the output per lot (i.e., electrical or visual mechanical yield,
               which meets the inspection and test criteria, is less than yield
               defined in Exhibit F and if Centillium so requests, STATS will
               explain the reasons for the low line yield. Lots or packages with
               yields below a yield defined in Exhibit F may not be shipped
               unless Centillium prior approval is obtained. The Established
               Standard Yield will be reviewed in every quarterly strategic
               business review and mutually agreed upon to apply for the
               following quarter and placed in Exhibit F.

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4.0  COMPENSATION
     4.1  Purchase Price
          --------------

     The price of the services shall be determined from time to time by
          agreement and quotation. The fixed price for any quarter will be
          reviewed during the last month of the previous quarter and mutually
          agreed to by the parties in good faith. For example, the Q2 (May -
          July) price will be finalized by March. If an agreement cannot be
          made, the current price will continue to be valid for the products
          already ordered.

     4.2  Payment.
          -------

     STATS will invoice Centillium the (the "payer"), as specified in the
          relevant Purchase Order. Past due invoices of Centillium to the payer
          shall bear interest at the rate of US prime rate + 1.5%, however, this
          payment can be delayed without charge if a quality or other process
          issue causes a delay but not in excess of the maximum lawful rate,
          until paid in full. If the due date of the invoice of STATS is not a
          business day, the payer shall pay STATS on the next business day
          following such due date. STATS may submit invoices for services not
          earlier than the date of shipment to Centillium Payment shall be in
          United States dollars unless otherwise agreed.

     4.3  Taxes
          -----

     Purchase prices shall be exclusive of all taxes and customs duties
          including any applicable goods and services tax, and Centillium shall
          pay and be liable for all taxes and duties imposed by any taxing
          jurisdiction in "Country of Origin" or at the location of
          manufacturing.

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5.0  WARRANTY AND DISCLAIMER; LIABILITY

     5.1  LIMITED WARRANTY. Products sold by STATS are warranted to conform to
          ----------------
          specifications therefor at the time of delivery to Centillium and to
          remain free from defects in workmanship and material for a period of
          three (3) months from the date of shipment by STATS. Any products
          which fail to meet either such warranty shall, at upon mutual
          agreement, either be repaired or replaced by STATS at no charge to
          Centillium or STATS shall issue a credit therefor in the amount paid
          by Centillium on the said invoice. STATS warranty obligation shall be
          limited solely to such repair, replacement or credit. Such obligation
          shall be conditioned upon receipt by STATS of notice of any alleged
          non-conformance to specifications within thirty (30) days after
          delivery to Centillium and of any alleged defect in material or
          workmanship within thirty (30) days after discovery. Products, which
          STATS consents or directs in writing to be returned, shall be returned
          to STATS, freight prepaid, F.O.B. Centillium's facility in California
          or other destination directed by. STATS warranty shall only apply if
          the products have not been altered or repaired other than with
          authorization from STATS and according to its approved procedures, the
          products have not been subjects to misuse, abuse, improper
          installation, misapplication, maintenance, neglect or accident, the
          products have not been damaged by excessive physical or electrical
          stress and the products have not had their serial numbers, or other
          markings, if any, altered, defaced or removed. All Products or parts
          determined to be defective shall become the property of STATS upon
          replacement, and STATS reserves the right to utilize refurbished parts
          to repair or replace the warranted products. Warranty repairs or
          warranty replacements shall be subject to this warranty for the longer
          of (a) ninety (90) days following shipment of the repaired/replaced
          products, or (b) the remainder of the original warranty for the
          defective product, which has been repaired or replaced.

     THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
          EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY
          OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, COURSE OF
          DEALING OR USAGE OF TRADE. STATS SHALL HAVE NO RESPONSIBILITY FOR ANY
          PARTICULAR APPLICATION MADE OF ANY PRODUCT.

     5.2  LIMITATION OF LIABILITY
          -----------------------

     UNDER NO CIRCUMSTANCE SHALL STATS OR ANY OF ITS AFFILIATES BE LIABLE TO
          CENTILLIUM OR ANY OTHER PERSON OR ENTITY FOR ANY SPECIAL, PUNITIVE,
          INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON LOST
          GOODWILL, LOST PROFITS, WORK STOPAGE, PRODUCT FAILURE, IMPAIRMENT OF
          OTHER GOODS OR OTHERWISE AND WHETHER ARISING OUT OF BREACH OF
          WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, TORT OR OTHERWISE.

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6.0  INTELLECTUAL PROPERTY INDEMNITY

     6.1  Indemnification by Centillium
          -----------------------------

     Centillium agrees to defend STATS and its Affiliates against any third-
          party actions or claims arising out of the manufacture, use, sale,
          offer for sale, or importation of Products and brought against STATS
          to the extent based upon a claim that Centillium's specifications,
          technology, or information made available to STATS, or the product
          thereof infringes any worldwide patent, trademark or copyright, trade
          secret or similar intellectual property right of any third party, and
          Centillium agrees to purchase any work-in-process for Products and to
          pay any settlement amounts or damages awarded against STATS and its
          Affiliates (including reasonable attorneys fees and court costs) to
          the extent based upon such a claim; provided that STATS and its
          Affiliates provides Centillium (i) prompt notice thereof, (ii)
          reasonable assistance in connection with the defense thereof (at
          Centillium's expense excluding STATS and its Affiliates employee
          expense), and (iii) full control of the defense and settlement
          thereof. Centillium shall not settle any such claim in a manner that
          has a material adverse effect on STATS and its Affiliates without
          STATS and its Affiliates prior written consent. Centillium agrees to
          keep STATS and its Affiliates apprised of the progress of any action
          or claims covered by this Section 6.1. Notwithstanding the foregoing,
          Centillium's obligation to indemnify STATS and its Affiliates under
          this Section 6.1 shall not apply to any actions or claims described in
          Section 6.2 below.

     6.2  Indemnification by STATS.
          -------------------------

          6.2.1  STATS agrees to defend Centillium and/or its Associated
               Companies against any third-party actions or claims arising out
               of the manufacture, use, sale, offer for sale, or importation of
               Products and brought against Centillium to the extent based upon
               a claim that the use of any Process used by STATS or any
               technology or information provided by STATS under this Agreement
               infringes or misappropriates (directly or indirectly, such as,
               without limitation, through the sale or importation of a wafer
               manufactured by any such Process) any worldwide patent,
               copyright, trade secret or other intellectual property right of
               any third party, and agrees to pay any settlement amounts or
               damages awarded against Centillium and/or its Associated
               Companies (including reasonable attorneys fees and court costs)
               to the extent based upon such a claim; provided that Centillium
               and/or its Associated Companies provides STATS (i) reasonably
               prompt notice thereof, (ii) reasonable assistance in connection
               with the defense thereof (at Centillium's expense excluding
               Centillium and/or Associated Company employee expense), and (iii)
               allows STATS full control of the defense and settlement thereof.
               STATS shall not settle any such claim in a manner that has a
               material adverse effect on Centillium without Centillium's prior
               written consent. STATS agrees to keep Centillium apprised of the
               progress of any action covered by this Section 6.2.

          6.2.2  STATS shall at all times have the right to: (i) obtain
               appropriate licenses to, or (ii) modify the Process provided that
               the resulting Product complies with the specifications set forth
               in Exhibit B and subject to Centillium's right to

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               approve such changes in advance, such pre-approval not to be
               unreasonably withheld.

          6.2.3  Exclusions. STATS shall not be obligated to indemnify and hold
                 ----------
               harmless Centillium where the infringement is caused by: (i) the
               use of Products by Centillium in combination with other circuits
               components, components, devices or products if both the
               infringement would not have occurred but for such combination and
               could have been avoided by a different commercially viable
               combination and such combination is not reasonably necessary to
               use the Product for its intended purpose; (ii) use of the
               Products by Centillium and/or its Associated Companies in
               applications or environments for which Products were not
               designed; or (iii) modifications to the Products by Centillium
               and/or its Associated Companies if such infringement would have
               been avoided absent such modifications, unless such modifications
               were authorized by STATS.

     6.3  Entire Liability. THE FOREGOING STATES EACH PARTY'S ENTIRE LIABILITY
          -----------------
          AND OBLIGATION (EXPRESS, STATUTORY, IMPLIED OR OTHERWISE) UNDER THIS
          AGREEMENT WITH RESPECT TO INFRINGEMENT OF THIRD PARTY INTELLECTUAL
          PROPERTY. IN NO EVENT SHALL STATS'S LIABILITY PURSUANT TO SECTION 6.2
          ARISING OUT OF ANY INFRINGEMENT CLAIM EXCEED THE AMOUNT PAD OR PAYABLE
          BY CENTILLIUM HEREUNDER FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH
          CLAIM.

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7.0  GENERAL PROVISIONS

     7.1  Confidentiality. (5 years)

          7.1.1  Confidential Information. "Confidential Information" means any
                 ------------------------
               technical data, trade secret, know-how, or other information
               disclosed by any party (including the Associated Companies)
               hereunder, either directly or indirectly, in writing, orally, by
               drawing or by inspections, and which shall be marked by the
               disclosing party as "Confidential" or "Proprietary". If such
               information is disclosed orally, through demonstration or by
               inspection, in order to be deemed Confidential Information, it
               must be specifically designated as being of a confidential nature
               at the time of disclosure and confirmed in writing to be received
               by the receiving party within ten (10) days of such disclosure.

          7.1.2  Exclusions. Notwithstanding the foregoing, Confidential
               Information shall not include information which:
               7.1.2.1  is known to the receiving party at the time of
                    disclosure or becomes known to the receiving party without
                    breach of this Agreement;
               7.1.2.2  is or becomes publicly known through no wrongful act of
                    the receiving party or any affiliate of the receiving party;
               7.1.2.3  is rightfully received from a third party without
                    restriction on disclosure;
               7.1.2.4  is independently developed by the receiving party or any
                    of its affiliates by persons who had no access to the
                    information;
               7.1.2.5  is furnished to any third party by the disclosing party
                    without restriction on its disclosure; or
               7.1.2.6  is approved for release upon a prior written consent of
                    the disclosing party.

          7.1.3  Compelled Disclosure. Notwithstanding the foregoing, a
                 --------------------
               receiving party may disclose Confidential Information if such
               Confidential Information is disclosed pursuant to judicial order,
               requirement of a governmental agency or by operation of law;
               provided, however, that the receiving party shall provide prior
               notice to the disclosing party and thereafter use reasonable
               commercial efforts to assist the disclosing party in preventing
               or controlling such compelled disclosure.

          7.1.4  Nondisclosure. The receiving party agrees that it will not
                 -------------
               disclose any Confidential Information to any third party unless
               that third party agrees to be bound to the confidentiality
               obligations stated in this part VII and will not use Confidential
               Information of the disclosing party for any purpose other than
               for the performance of obligations hereunder during the term of
               this Agreement. The receiving party further agrees that
               Confidential Information shall remain the sole property of the
               disclosing party and that it will take all reasonable precautions
               to prevent any unauthorized disclosure of Confidential
               Information by its employees and independent contractors. No
               license shall be granted by the disclosing party to the receiving
               party with respect to Confidential Information disclosed
               hereunder unless otherwise expressly provided herein. Each party
               will disclose the other's Confidential Information

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               only to those of its employees and personnel of Affiliates that
               have a need to know and who are informed that such information is
               confidential.

          7.1.5  Return of Confidential Information. After expiration or
                 ----------------------------------
               termination of this Agreement upon the request of the disclosing
               party, the receiving party will promptly return all Confidential
               Information furnished hereunder and all copies thereof, and the
               receiving party will certify that al such confidential
               information has been returned or destroyed.

          7.1.6  Publicity. The parties agree that all publicity and public
                 ---------
               announcements concerning the formation and existence of this
               Agreement shall be jointly planned and coordinated by and among
               the parties. Neither party shall disclose any of the provisions
               of this Agreement, the existence of this Agreement, nor that the
               parties are doing business with one another to any third party
               without the prior written consent of the other party. Centillium
               will be responsible for all communications with Centillium's
               customers concerning the subject matter hereof, and STATS agrees
               to forward to Centillium any communications it receives from
               Centillium's customers. Notwithstanding the foregoing, any party
               may disclose information concerning this Agreement as required by
               the rules, orders, regulations, subpoenas or directives of a
               court, government or governmental agency, after giving prior
               notice to the other parties and either party may disclose this
               Agreement to its attorneys, accountants or like consultants that
               have a need to know or to potential investors or potential
               acquiring companies.

          7.1.7  Remedy for Breach of Confidentiality. If a party breaches any
                 ------------------------------------
               of its obligations with respect to confidentiality and
               unauthorized use of Confidential Information hereunder, the non-
               breaching party shall be entitled to equitable relief to protect
               its interest therein, including but not limited to injunctive
               relief, as well as money damages.

     7.2  Term and Termination
          --------------------

     This Agreement shall remain in force for five (5) years from the time the
          first product is released to production by Centillium unless it is
          terminated earlier as provided in this Agreement. At the end of five
          (5) years, this Agreement will be extended for another one (1) year
          under the same terms and conditions provided herein unless either
          party gives notice of termination twelve (12) months prior to the
          expiration date. Notwithstanding the foregoing, all existing orders
          and the provisions of Part 5.0, 6.0, and Section 7.6 (Export Controls)
          shall survive any termination or expiration of this Agreement. The
          obligations of confidentiality under Article 7.1 shall last during the
          specific period set forth in Article 7.1.

          7.2.1  Subject to Section 7.2(b), either party may terminate this
               Agreement with immediate effect, at its sole discretion, upon
               giving written notice to the other party, in case:

               7.2.1.1  the other party defaults in the performance of any
                    material obligation hereunder, and if any such default is
                    not corrected within ninety (90) days after the defaulting
                    party receives written notice of such default from the non-
                    defaulting party,

               7.2.1.2  the business of the other party as a commercial
                    enterprise ceases, or

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          7.2.1.3  The other party files a petition in bankruptcy, or is
               adjudicated bankrupt, or makes a general assignment for the
               benefit of creditors, or becomes insolvent, or is otherwise
               unable to meet its business obligations for a period of three (3)
               consecutive months.

          7.2.2  In the event that STATS terminates this Agreement pursuant to
               Section 7.2 above, STATS agrees to upon request to provide
               Centillium customers with a continued supply of Packages and test
               services. Centillium agrees to provide STATS with a list of such
               customers reasonably prior to the occurrence of the events
               specified in Sections 7.2.

     7.3  Force Majeure. The parties shall not be liable to one another for
          -------------
          failure to perform any part of this Agreement except for any payment
          obligation when such failure is due to fire, flood, strikes, labor
          troubles or other industrial disturbances, inevitable accidents, war
          (declared or undeclared), embargoes, blockades, legal restrictions,
          governmental regulations or orders, riots, insurrections, year 2000
          computer problems or any cause beyond the control of such party.
          However, the party so prevented from performance shall use
          commercially reasonable efforts to resume performance, and the parties
          shall proceed under this Agreement when the causes of such
          nonperformance have ceased or have been eliminated.

     7.4  Assignment. The parties shall not assign or transfer this Agreement,
          ----------
          in whole or in part, or any right or obligation hereunder to any third
          party without the prior written consent of the other party, provided
          that either party shall have the right to assign this Agreement to an
          entity that acquires all or substantially all of its assets, without
          the consent of the other party.

     7.5  Governing Law: Disputes.
          -----------------------

          7.5.1  Except as hereinafter provided, all disputes or controversies
               arising out of or in any manner relating to this Agreement which
               the parties do not resolve in good faith within ten days after
               either party notifies the other of its desire to arbitrate such
               disputes or controversies shall be settled by arbitration by a
               single arbitrator in accordance with the then standard prevailing
               commercial rules, as modified or supplemented by this article, of
               the American Arbitration Association ("AAA"). The arbitration
               shall be held in Santa Clara County, California. The arbitration
               award shall be in writing and shall specify the factual and legal
               bases of such award. The arbitration award shall be final and
               binding, and a judgment consistent therewith may be entered by
               any court of competent jurisdiction. The parties agree that the
               arbitration award shall be treated confidentially, and the
               parties shall not, except as otherwise required by law or court
               or, disclose the arbitration award to any third party, excluding
               personnel I their affiliated companies and their attorneys and
               accountants with a need to know, provided that such recipients
               agree to be bound by the same restrictions as are contained in
               this Agreement. The arbitrator shall not have the power to render
               an award of punitive damages. To the extent of any conflict, this
               article shall supersede and control AAA rules.

                                 Page 13 of 25
<PAGE>

          7.5.2  Nothing in this article shall be construed to preclude or in
               any way prohibit either party from: (1) seeking any provisional
               remedy, such as an injunction or a temporary restraining order;
               or (2) instituting or prosecuting to judgment any lawsuit in any
               court of competent jurisdiction to collect any money due.

          7.5.3  Except as provided in this subsection, neither party shall have
               the right to take depositions or obtain discovery of documents or
               other information. After the appointment of the arbitrator, the
               parties shall agree on (1) a reasonable number of and schedule
               for depositions which the parties may take and (2) a reasonable
               scope and schedule for the production of documents or other
               information which is relevant to the subject matter of the
               arbitration. If the parties cannot reach agreement on the number
               of depositions, the scope, of production of documents or other
               information and the schedule therefor, the arbitrator shall make
               such determination(s). All discoveries shall be completed no
               later than thirty (30) days prior to the arbitration hearing. The
               arbitrator shall have the power to enforce any discovery agreed
               upon by the parties or other wise required to be taken sanctions
               and penalties as can be or may be imposed in like circumstance in
               a civil actions by a California Superior Court, except the power
               to order the arrest or imprisonment of a person.

          7.5.4  No later than thirty (30) days prior to the arbitration
               hearing, each party shall produce to the other party and the
               arbitrator lists of the witnesses, documents and other
               information which such party intends to use at the arbitration
               hearing.

     7.6  Export Controls. STATS and Centillium acknowledge that they are each
          ---------------
          subject to regulation by agencies of the U.S. and "Country of Origin"
          Governments, including the U.S. Department of Commerce, which prohibit
          export or diversion of certain products and technology to certain
          countries. Any and all obligations of the parties to provide technical
          information, technical assistance, any media in which any of the
          foregoing is contained, training and related technical data
          (collectively, "Data") shall be subject in all respect to such United
          States and "California" laws and regulation as shall from time to time
          govern the license and delivery of technology and products abroad by
          persons subject to the jurisdiction of the United States, including
          the Export Administration Act of 1979, as amended, any successor
          legislation, and the Export Administration Regulations issued by the
          Department of Commerce, International Trade Administration, Bureau of
          Export Administration.

     Without in any way limiting the provisions of this Agreement, the parties
          agree that unless prior written authorization is obtained from the
          Bureau of Export Administration or unless the Export Administration
          Regulations explicitly permit the re-export without such written
          authorization, neither party will export, re-export, or transship,
          directly or indirectly, the Products or any technical data disclosed
          or provided to STATS, or the direct product of such technical data, to
          country groups Q, S, W, Y, or Z (as defined in the Export
          Administration Regulations and which currently consist of Albania,
          Bulgaria, Cambodia, Cuba, the Czech Republic, Estonia, Laos, Latvia,
          Libya, Lithuania, Mongolian People's Republic, North Korea, Poland,
          Romania, the geographic area of the former Union of Soviet Socialist
          Republics, the

                                 Page 14 of 25
<PAGE>

          Slovak Republic and Vietnam, or to the People's Republic of China
          (excluding Taiwan), Haiti, Iran, Iraq, Syria, Yugoslavia (Serbia and
          Montenegro), or to any other country, as to which the U.S. Governments
          have placed an embargo against the shipment of products, which is in
          effect during the term of this Agreement.

     7.7  Notice Any notice required or permitted to be given under this
          ------
          Agreement shall be delivered (i) by hand, (ii) by registered or
          certified mail, postage prepaid, return receipt requested, to the
          address of the other party first set forth above, or to such other
          address as a party may designated by written notice in accordance with
          this Section 7.7 by overnight courier, or (iii) by electronic
          transmission with conforming letter mailed under the conditions
          described in (ii). Notice so given shall be deemed effective when
          received, or if not received by reason of fault of addressee, when
          delivered.

          If to ST Assembly and Test Services Ltd, to:

          Exec. Vice President Sales
          Singapore Account Manager
          5 Yishun Street 23
          768442

          If to Centillium, to:

          Vice President of Operations and Manufacturing
          Centillium
          47211 Lakeview Blvd
          California, 94538

     7.8  Relationship of Parties The relationship between Centillium and STATS
          -----------------------
          under this Agreement is that of independent contractors and neither
          shall be, nor represent itself to be, the joint venture, franchiser,
          franchisee, partner, broker, employee, servant, agent, or
          representative of the other for any purpose whatsoever. No party is
          granted any right or authority to assume or create any obligation or
          responsibility, express or implied, on behalf of, or in the name of,
          another party or to bind another in any matter or thing whatsoever.

     7.9  Waiver
          ------

     Should any of the parties fail to exercise or enforce any provision of this
          Agreement or to waive any rights in respect thereto, such waiver or
          failure shall not be construed as constituting a continuing waiver or
          a waiver of any other right.

     7.10  Severability
           ------------

     In the event that any provision or provisions of this Agreement shall be
          held to be unenforceable, the parties shall re-negotiate those
          provisions in good faith to be valid, enforceable substitute
          provisions which provisions shall reflect as closely as possible the
          intent of the original provisions of this Agreement. If the parties
          fail to negotiate

                                 Page 15 of 25
<PAGE>

          a substitute provision, this Agreement will continue in full force and
          effect without said.

     7.11  Entire Agreement This Agreement, including the Exhibits referred to
           ----------------
          herein, contains the entire understanding of the parties, and
          supersedes any prior agreement between or among the parties with
          respect to its subject matter. In case of any conflicts between this
          Agreement and any purchase orders, acceptances, correspondence,
          memorandum, listing sheets and other documents forming part of any
          order for Products, this Agreement shall govern. This Agreement shall
          not be amended or modified except by written instrument signed by the
          duly authorized representatives of the parties hereto. IN WITNESS
          WHEREOF, the parties hereto have caused this Agreement to be signed by
          their duly authorized representatives or officers, effective as of the
          Effective Date.

STATS  Centillium

By: /s/                         By: /s/ WF Mackenzie
    ---                             ----------------

Name: JUNE CHIA                 Name: William F Mackenzie
      ----------                      -------------------

Title: EVP Sales & Marketing          Title: VP Operations and Manufacturing
       ---------------------
Services

                                 Page 16 of 25
<PAGE>

                                    EXHIBITS
                                    --------

A - Assembly and Test Cycle Times - Prototype and Production
B - Acceptance Criteria - Electrical and Visual Mechanical
C - Regular Data - SPC, Test and Reliability
D - Problem Resolution Procedures
E - Capacity Guarantee
F - Low yield limits
G - Specifications
H - WIP Reporting Format (minimum data set)

                                 Page 17 of 25
<PAGE>

      EXHIBIT A - Assembly and Test Cycle Times - Prototype and Production
      --------------------------------------------------------------------

<TABLE>
<S>                                    <C>                     <C>                     <C>
TECHNOLOGY                             PROTOTYPE               PRODUCTION               HOT-LOT
-------------------------------------------------------------------------------------------------------
LEADED ASSEMBLY                          3 Days                  5 Days                  3 Days
-------------------------------------------------------------------------------------------------------
NON-LEADED ASSEMBLY                      2 Days                  4 Days                  2 Days
-------------------------------------------------------------------------------------------------------
TEST                                     1 Day                   3 Days                  1 Day
-------------------------------------------------------------------------------------------------------
</TABLE>

                                 Page 18 of 25
<PAGE>

                        EXHIBIT B - ACCEPTANCE CRITERIA
                        -------------------------------

<TABLE>
<CAPTION>
TECHNOLOGY               PROTOTYPE             PRODUCTION               AOQ
                                                                    (PRODUCTION)
-----------------------------------------------------------------------------------
<S>                 <C>                   <C>                   <C>
-----------------------------------------------------------------------------------

LEADED ASSEMBLY      4 mil Coplanarity     3 mil Coplanarity          15 DPM
-----------------------------------------------------------------------------------
NON-LEADED           8 mil Coplanarity     6 mil Coplanarity          15 DPM
 ASSEMBLY
-----------------------------------------------------------------------------------
TEST                 Prototype Program       Latest Program           35 DPM
-----------------------------------------------------------------------------------
</TABLE>

                                 Page 19 of 25
<PAGE>

                            EXHIBIT C - REGULAR DATA
                            ------------------------

<TABLE>
<CAPTION>
Test                       Number of lots        Devices tested         Passes/Fails       Test Criteria
<S>                      <C>                  <C>                   <C>                   <C>
Autoclave                Number of lots       Devices tested        Passes/Fails          Test Criteria
HAST                     Number of lots       Devices tested        Passes/Fails          Test Criteria
Temp Cycle               Number of lots       Devices tested        Passes/Fails          Test Criteria
Thermal Shock            Number of lots       Devices tested        Passes/Fails          Test Criteria
Ball Shear               Number of lots       Devices tested        Passes/Fails          Test Criteria
Bond Pull                Number of lots       Devices tested        Passes/Fails          Test Criteria
Solderability            Number of lots       Devices tested        Passes/Fails          Test Criteria
Lead Strength            Number of lots       Devices tested        Passes/Fails          Test Criteria
Die Shear                Number of lots       Devices tested        Passes/Fails          Test Criteria
Mark Permanency          Number of lots       Devices tested        Passes/Fails          Test Criteria
SPC                      Number of lots       Devices tested        Cp                    Cpk
</TABLE>

Data is to be provided to the Centillium Reliability Engineer on a Monthly Basis
including FA Reports for all failures

                                 Page 20 of 25
<PAGE>

                    EXHIBIT D Problem Resolution Procedures

When STATS identifies current or potential problems or Centillium Notifies STATS
of a potential problem
a)                       Accept such notice and classify it in accordance with
  the following classifications:

     i.   Critical - Functional or Reliability failure resulting in missed
          deliveries or customer lines down
     ii.                 Major - Functional or Reliability failure which does
          not resulting in missed deliveries or customer lines down
     iii.                Minor - Cosmetic problem or feature enhancement

b)                       Resolve such Engineering Complaint according to the
  following classifications of the date of STATS's notice, unless the parties
  mutually agree upon a later date. If unable to resolve an Engineering
  Complaint within the specified period, STATS will issue an "interim report".

     i.   Critical - 1 day
     ii.                 Major  - 3 days
     iii.                Minor  - 2 weeks

b)                       For Critical and Major complaints, STATS agrees to
  acknowledge receipt of such Engineering Complaint and advise Centillium of
  their proposed organization responsible for containing it within one (1)
  working day of Centillium's receipt thereof.

c)                       For Minor complaints, STATS agrees to acknowledge
  receipt of such Engineering Complaint and advise furnish Centillium a weekly
  report of the status of open Engineering Complaints, in a mutually agreed upon
  medium, together with a proposed schedule for their resolution.

                                 Page 21 of 25
<PAGE>

                          EXHIBIT E Capacity Agreement

<TABLE>
<CAPTION>
MONTHS                LEADED PACKAGES    NON LEADED PACKAGES     TEST TIME/HR         TEST TIME/HR
                                                                   (DIGITAL)            (ANALOG)
------------------------------------------------------------------------------------------------------
<S>                 <C>                  <C>                  <C>                  <C>
March                             35000                75000                  611                  125
------------------------------------------------------------------------------------------------------
Apr                               35000                75000                  611                  125
------------------------------------------------------------------------------------------------------
May                               27500                67500                  528                  113
------------------------------------------------------------------------------------------------------
Jun                               30000                70000                  556                  117
------------------------------------------------------------------------------------------------------
Jul                               32500                62500                  528                  104
------------------------------------------------------------------------------------------------------
Aug                               35000                75000                  611                  125
------------------------------------------------------------------------------------------------------
Sept                              35000                75000                  611                  125
------------------------------------------------------------------------------------------------------
Oct                               40000                80000                  667                  133
------------------------------------------------------------------------------------------------------
Nov                               40000               100000                  778                  167
------------------------------------------------------------------------------------------------------
Dec                               40000               155000                 1083                  258
------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 .                              This forecast is to be used for capacity planning only and the forecast on section (3.4.2) will be
used to purchase wafers.
<S>                          <C>
 .                            If Centillium has unexpected demand above and beyond its upside forecast STATS agrees to meet this
                             upside 100%, within the specified cycle times (EXHIBIT A) provided at least five (5) weeks notice is
                             provided for leaded and 8 weeks for non leaded
 .                            Test time for Digital includes Sort
</TABLE>

                                 Page 22 of 25
<PAGE>

                          EXHIBIT F LOW YIELD CRITERIA

<TABLE>
<CAPTION>
TECHNOLOGY                         DIGITAL TEST            ANALOG                 AOQ                  AOQ
                                                            TEST                 (V/M)            (ELECTRICAL)
-----------------------------------------------------------------------------------------------------------------
<S>                             <C>                  <C>                  <C>                  <C>
LEADED ASSEMBLY                                 90%                62.5%        35 DPM               15 DPM
-----------------------------------------------------------------------------------------------------------------
NON-LEADED ASSEMBLY                             80%         N/A                 35 DPM               15 DPM
-----------------------------------------------------------------------------------------------------------------
</TABLE>

 .    If the lot does not meet the limit page the relevant Centillium engineer

                                 Page 23 of 25
<PAGE>

                           EXHIBIT G - SPECIFICATIONS
<TABLE>
<CAPTION>

SPC monitoring of manufacturing sites     CSP-OPQR- 16
<S>                                       <C>
Reliability process monitoring program    CSP-OPQR- 17
Packing and Transportation of wafers      CSP-OPSH-1
Visual wafer inspection criteria          CSP-OPQR-18
</TABLE>

                                 Page 24 of 25
<PAGE>

              EXHIBIT H - WIP Reporting Format (minimum data set)

1. Location
2. Requested Ship Date
3. Date and time file sent
4. Forecast Ship date
5. Customer or MELCO Devices Number
6. Ship confirmation date
7. Process Stage
8. Lot number
9. Package quantity into process stage

 .  Reports to be generated daily

                                 Page 25 of 25<PAGE>

                                                                    EXHIBIT 10.1

                                  TVIA, INC.

                             AMENDED AND RESTATED
                           1999 STOCK INCENTIVE PLAN

     1    Purposes of the Plan.  The purposes of this Stock Incentive Plan are
          --------------------
to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.

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

          (a) "Administrator" means the Board or any of the Committees appointed
               -------------
to administer the Plan.

          (b) "Applicable Laws" means the legal requirements relating to the
              ----------------
administration of stock incentive plans, if any, under applicable provisions of
federal and state securities laws, the corporate laws of California and, to the
extent other than California, the corporate law of the state of the Company's
incorporation, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards
granted to residents therein.

          (c) "Award" means the grant of an Option, Restricted Stock, or other
               -----
right or benefit under the Plan.

          (d) "Award Agreement" means the written agreement evidencing the grant
              ----------------
of an Award executed by the Company and the Grantee, including any amendments
thereto.

          (e) "Board" means the Board of Directors of the Company.
               -----

          (f) "Cause" means, with respect to the termination by the Company or a
               -----
Related Entity of the Grantee's Continuous Service, that such termination is for
"Cause" as such term is expressly defined in a then-effective written agreement
between the Grantee and the Company or such Related Entity, or in the absence of
such then-effective written agreement and definition, is based on, in the
determination of the Administrator, the Grantee's: (i) refusal or failure to act
in accordance with any specific, lawful direction or order of the Company or a
Related Entity; (ii) unfitness or unavailability for service or unsatisfactory
performance (other than as a result of Disability); (iii) performance of any act
or failure to perform any act in bad faith and to the detriment of the Company
or a Related Entity; (iv) dishonesty, intentional misconduct or material breach
of any agreement with the Company or a Related Entity; or (v) commission of a
crime involving dishonesty, breach of trust, or physical or emotional harm to
any person.  At least 30 days prior to the termination of the Grantee's
Continuous Service pursuant to (i) or (ii) above, the Company shall provide the
Grantee with notice of the Company's or such Related Entity's intent to
terminate, the reason therefor, and an opportunity for the Grantee to cure such
defects in his or her service to the Company's or such Related Entity's
satisfaction.  During this 30 day (or longer) period, no Award issued to the
Grantee under the Plan may be exercised or purchased.

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

          (h) "Committee" means any committee appointed by the Board to
               ---------
administer the Plan.

          (i) "Common Stock" means the common stock of the Company.
               ------------

                                       1
<PAGE>

          (j) "Company" means Tvia, Inc., a California corporation.
               -------

          (k) "Consultant" means any person (other than an Employee or a
               ----------
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

          (l) "Continuous Service" means that the provision of services to the
               ------------------
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated.  Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related Entity, or
any successor, in any capacity of Employee, Director or Consultant, or (iii) any
change in status as long as the individual remains in the service of the Company
or a Related Entity in any capacity of Employee, Director or Consultant (except
as otherwise provided in the Award Agreement).  An approved leave of absence
shall include sick leave, military leave, or any other authorized personal
leave.  For purposes of Incentive Stock Options, no such leave may exceed ninety
(90) days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract.

          (m) "Corporate Transaction" means any of the following transactions to
               ---------------------
which the Company is a party:

              (i)     a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

              (ii)    the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;

              (iii)   any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger; or

              (iv)    acquisition by any person or related group of persons
(other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities, but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.

          (n) "Director" means a member of the Board or the board of directors
               --------
of any Related Entity.

          (o) "Disability" means that a Grantee is permanently unable to carry
               ----------
out the responsibilities and functions of the position held by the Grantee by
reason of any medically determinable physical or mental impairment.  A Grantee
will not be considered to have incurred a Disability unless he or she furnishes
proof of such impairment sufficient to satisfy the Administrator in its
discretion.

                                       2
<PAGE>

          (p) "Employee" means any person, including an Officer or Director, who
               --------
is an employee of the Company or any Related Entity.  The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

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

          (r) "Fair Market Value" means, as of any date, the value of Common
               -----------------
Stock determined as follows:

              (i)     Where there exists a public market for the Common Stock,
the Fair Market Value shall be (A) the closing price for a Share for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the Administrator to be
the primary market for the Common Stock or the Nasdaq National Market, whichever
is applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

              (ii)    In the absence of an established market for the Common
Stock of the type described in (i), above, the Fair Market Value thereof shall
be determined by the Administrator in good faith and in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations.

          (s) "Grantee" means an Employee, Director or Consultant who receives
               -------
an Award under the Plan.

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

          (u) "Non-Qualified Stock Option" means an Option not intended to
               --------------------------
qualify as an Incentive Stock Option.

          (v)  "Officer" means a person who is an officer of the Company or a
                -------
Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

          (w) "Option" means an option to purchase Shares pursuant to an Award
               ------
Agreement granted under the Plan.

          (x) "Parent" means a "parent corporation," whether now or hereafter
               ------
existing, as defined in Section 424(e) of the Code.

          (y) "Plan" means this Amended and Restated 1999 Stock Incentive Plan.
               ----

          (z) "Post-Termination Exercise Period" means the period specified in
               --------------------------------
the Award Agreement of not less than thirty (30) days commencing on the date of
termination (other than termination by the Company or any Related Entity for
Cause) of the Grantee's Continuous Service, or such longer period as may be
applicable upon death or Disability.

                                       3
<PAGE>

          (aa) "Registration Date" means the first to occur of (i) the closing
                -----------------
of the first sale to the general public of (A) the Common Stock or (B) the same
class of securities of a successor corporation (or its Parent) issued pursuant
to a Corporate Transaction in exchange for or in substitution of the Common
Stock, pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction, .

          (bb) "Related Entity" means any Parent, Subsidiary and any business,
                --------------
corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly.

          (cc) "Restricted Stock" means Shares issued under the Plan to the
               -----------------
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

          (dd) "Share" means a share of the Common Stock.
                -----

          (ee) "Subsidiary" means a "subsidiary corporation," whether now or
                ----------
hereafter existing, as defined in Section 424(f) of the Code.

     3.   Stock Subject to the Plan.
          --------------------------

          (a) Subject to the provisions of Section 11(a) below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 13.8 million Shares.  The shares may be authorized,
but unissued, or reacquired Common Stock.

          (b) Any Shares covered by an Award (or portion of an Award) which is
forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan.  If any unissued Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated).  Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

     4.   Administration of the Plan.
          ---------------------------

          (a) Plan Administrator.  With respect to grants of Awards to
              ------------------
Employees, Directors, or Consultants, the Plan shall be administered by (A) the
Board or (B) a Committee (or a subcommittee of the Committee) designated by the
Board, which Committee shall be constituted in such a manner as to satisfy
Applicable Laws.  Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.

                                       4
<PAGE>

          (b) Powers of the Administrator.  Subject to Applicable Laws and the
              ---------------------------
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:

              (i)     to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;

              (ii)    to determine whether and to what extent Awards are granted
hereunder;

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

              (iv)    to approve forms of Award Agreements for use under the
Plan;

              (v)     to determine the terms and conditions of any Award granted
hereunder;

              (vi)    to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such rules or laws; provided,
however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent
with the provisions of the Plan;

              (vii)   to amend the terms of any outstanding Award granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent;

              (viii)  to construe and interpret the terms of the Plan and
Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan; and

              (ix)    to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.

          (c) Effect of Administrator's Decision.  All decisions, determinations
              ----------------------------------
and interpretations of the Administrator shall be conclusive and binding on all
persons.

     5.   Eligibility.  Awards other than Incentive Stock Options may be granted
          -----------
to Employees, Directors and Consultants.  Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary.  An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards.  Awards may be granted to such Employees,
Directors or Consultants who are residing in foreign jurisdictions as the
Administrator may determine from time to time.

     6.   Terms and Conditions of Awards.
          -------------------------------

          (a) Type of Awards.  The Administrator is authorized under the Plan to
              --------------
award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, or similar right with
a fixed or variable price related to the Fair Market Value of the Shares and
with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any other security with the value

                                       5
<PAGE>

derived from the value of the Shares. Such awards include, without limitation,
Options, or sales or bonuses of Restricted Stock, and an Award may consist of
one such security or benefit, or two (2) or more of them in any combination or
alternative.

          (b) Designation of Award.  Each Award shall be designated in the Award
              --------------------
Agreement.  In the case of an Option, the Option shall be designated as either
an Incentive Stock Option or a Non-Qualified Stock Option.  However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options.  For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option.

          (c) Conditions of Award.  Subject to the terms of the Plan, the
              -------------------
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria.  The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total shareholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

          (d) Acquisitions and Other Transactions.  The Administrator may issue
              -----------------------------------
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.

          (e) Award Exchange Programs.  The Administrator may establish one or
              -----------------------
more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.

          (f) Separate Programs.  The Administrator may establish one or more
              -----------------
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.

          (g) Early Exercise.  The Award Agreement may, but need not, include a
              --------------
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award.  Any unvested Shares received pursuant to such exercise may be
subject to a repurchase right in favor of the Company or a Related Entity or to
any other restriction the Administrator determines to be appropriate.

          (h) Term of Award.  The term of each Award shall be the term stated in
              -------------
the Award Agreement, provided, however, that the term shall be no more than ten
(10) years from the date of grant

                                       6
<PAGE>

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

          (i) Transferability of Awards.  Non-Qualified Stock Options shall be
              -------------------------
transferable (i) to the extent provided in the Award Agreement and in a manner
consistent with Section 260.140.41 of Title 10 of the California Code of
Regulations and (ii) by will, and by the laws of descent and distribution.
Incentive Stock Options and other Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Grantee, only by the Grantee.

          (j) Time of Granting Awards.  The date of grant of an Award shall for
              -----------------------
all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

     7.   Award Exercise or Purchase Price, Consideration, Taxes and Reload
          -----------------------------------------------------------------
Options.
-------

          (a) Exercise or Purchase Price.  The exercise or purchase price, if
              --------------------------
any, for an Award shall be as follows:

              (i)     In the case of an Incentive Stock Option:

                      (A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be not less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of grant; or

                      (B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.

              (ii)    In the case of a Non-Qualified Stock Option:

                      (A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be not less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant; or

                      (B)  granted to any person other than a person described
in the preceding paragraph, the per Share exercise price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

              (iii)   In the case of the sale of Shares:

                      (A) granted to a person who, at the time of the grant of
such Award, or at the time the purchase is consummated, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share purchase

                                       7
<PAGE>

price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant; or

                      (B) granted to any person other than a person described in
the preceding paragraph, the per Share purchase price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

              (iv)    In the case of other Awards, such price as is determined
by the Administrator.

              (v)     Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(d), above, the
exercise or purchase price for the Award shall be determined in accordance with
the principles of Section 424(a) of the Code.

          (b) Consideration.  Subject to Applicable Laws, the consideration to
              -------------
be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant).  In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following:

              (i)     cash;

              (ii)    check;

              (iii)   delivery of Grantee's promissory note with such recourse,
interest, security, and redemption provisions as the Administrator determines as
appropriate ;

              (iv)    if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);

              (v)     with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or

              (vi)    any combination of the foregoing methods of payment.

          (c) Taxes.  No Shares shall be delivered under the Plan to any Grantee
              -----
or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition

                                       8
<PAGE>

of Shares received on exercise of an Incentive Stock Option. Upon exercise of an
Award the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.

          (d) Reload Options.  In the event the exercise price or tax
              --------------
withholding of an Option is satisfied by the Company or the Grantee's employer
withholding Shares otherwise deliverable to the Grantee, the Administrator may
issue the Grantee an additional Option, with terms identical to the Award
Agreement under which the Option was exercised, but at an exercise price as
determined by the Administrator in accordance with the Plan.

     8.   Exercise of Award.
          ------------------

          (a) Procedure for Exercise; Rights as a Shareholder.
              ------------------------------------------------

              (i)     Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement but in the case of an
Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable
conditions such as continued employment. Notwithstanding the foregoing, in the
case of an Option granted to an Officer, Director or Consultant, the Award
Agreement may provide that the Option may become exercisable, subject to
reasonable conditions such as such Officer's, Director's or Consultant's
Continuous Service, at any time or during any period established in the Award
Agreement.

              (ii)    An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised, including, to the
extent selected, use of the broker-dealer sale and remittance procedure to pay
the purchase price as provided in Section 7(b)(v). Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Award Agreement
or Section 11(a), below.

          (b) Exercise of Award Following Termination of Continuous Service.  In
              -------------------------------------------------------------
the event of termination of a Grantee's Continuous Service for any reason other
than Disability or death (but not in the event of a Grantee's change of status
from Employee to Consultant or from Consultant to Employee), such Grantee may,
but only during the Post-Termination Exercise Period (but in no event later than
the expiration date of the term of such Award as set forth in the Award
Agreement), exercise the Award to the extent that the Grantee was entitled to
exercise it at the date of such termination or to such other extent as may be
determined by the Administrator.  The Grantee's Award Agreement may provide that
upon the termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Award shall terminate concurrently with the
termination of Grantee's Continuous Service.  In the event of a Grantee's change
of status from Employee to Consultant, an Employee's Incentive Stock Option
shall convert automatically to a Non-Qualified Stock Option on the day three (3)
months and one day following such change of status.  To the extent that the
Grantee is not entitled to exercise the Award at the date of termination, or if
the Grantee does not exercise such Award to the extent so entitled within the
Post-Termination Exercise Period, the Award shall terminate.

                                       9
<PAGE>

          (c) Disability of Grantee.  In the event of termination of a Grantee's
              ---------------------
Continuous Service as a result of his or her Disability, Grantee may, but only
within twelve (12) months from the date of such termination (and in no event
later than the expiration date of the term of such Award as set forth in the
Award Agreement), exercise the Award to the extent that the Grantee was
otherwise entitled to exercise it at the date of such termination; provided,
however, that if such Disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically convert to a Non-Qualified Stock
Option on the day three (3) months and one day following such termination.  To
the extent that the Grantee is not entitled to exercise the Award at the date of
termination, or if Grantee does not exercise such Award to the extent so
entitled within the time specified herein, the Award shall terminate.

          (d) Death of Grantee.  In the event of a termination of the Grantee's
              ----------------
Continuous Service as a result of his or her death, or in the event of the death
of the Grantee during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's Termination of Continuous Service as a
result of his or her Disability, the Grantee's estate or a person who acquired
the right to exercise the Award by bequest or inheritance may exercise the
Award, but only to the extent that the Grantee was entitled to exercise the
Award as of the date of termination, within twelve (12) months from the date of
death (but in no event later than the expiration of the term of such Award as
set forth in the Award Agreement).  To the extent that, at the time of death,
the Grantee was not entitled to exercise the Award, or if the Grantee's estate
or a person who acquired the right to exercise the Award by bequest or
inheritance does not exercise such Award to the extent so entitled within the
time specified herein, the Award shall terminate.

          (e) Buyout Provisions.  The Administrator may at any time offer to buy
              -----------------
out for a payment in cash or Shares, an Award previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Grantee at the time that such offer is made.

     9.   Conditions Upon Issuance of Shares.
          -----------------------------------

          (a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

          (b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.

     10.  Repurchase Right.  If the provisions of an Award Agreement grant to
          ----------------
the Company the right to repurchase Shares upon termination of the Grantee's
Continuous Service, the Award Agreement shall (or may, with respect to Awards
granted or issued to Officers, Directors or Consultants) provide that:

          (a) the right to repurchase must be exercised, if at all, within
ninety (90) days of the termination of the Grantee's Continuous Service (or in
the case of Shares issued upon exercise of Awards after the date of termination
of the Grantee's Continuous Service, within ninety (90) days after the date of
the Award exercise);

                                       10
<PAGE>

          (b) the consideration payable for the Shares upon exercise of such
repurchase right shall be made in cash or by cancellation of purchase money
indebtedness within the ninety (90) day periods specified in Section 10(a);

          (c) the amount of such consideration shall (i) be equal to the
original purchase price paid by Grantee for each such Share; provided, that the
right to repurchase such Shares at the original purchase price shall lapse at
the rate of at least twenty percent (20%) of the Shares subject to the Award per
year over five (5) years from the date the Award is granted (without respect to
the date the Award was exercised or became exercisable), and (ii) with respect
to Shares, other than Shares subject to repurchase at the original purchase
price pursuant to clause (i) above, not less than the Fair Market Value of the
Shares to be repurchased on the date of termination of Grantee's Continuous
Service; and

          (d) the right to repurchase Shares, other than the right to repurchase
Shares at the original purchase price pursuant to clause (i) of Section 10(c),
shall terminate on the Registration Date.

     11.  Adjustments Upon Changes in Capitalization or Corporate Transaction.
          --------------------------------------------------------------------

          (a) Adjustments upon Changes in Capitalization.  Subject to any
              ------------------------------------------
required action by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Shares, or similar transaction affecting the Shares, (ii) any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock to which Section
424(a) of the Code applies or a similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator and its determination shall be final, binding and
conclusive.  Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to an Award.

          (b) Corporate Transaction.  In the event of a Corporate Transaction
              ---------------------
each Award which is at the time outstanding under the Plan shall automatically
become fully vested and exercisable and be released from any restrictions on
transfer (other than transfer restrictions applicable to Options) and repurchase
or forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by such
Award unless the Award is assumed by the successor corporation or the Parent
thereof in connection with the Corporate Transaction.  Effective upon the
consummation of the Corporate Transaction, each outstanding Award under the Plan
shall terminate unless the Award is assumed by the successor corporation or the
Parent thereof in connection with the Corporate Transaction.  For the purposes
of accelerating the vesting and the release of restrictions applicable to Awards
pursuant to this subsection (but not for purposes of termination of such
Awards), the Award shall be considered assumed if, in connection with the
Corporate Transaction, the Award is replaced with a comparable Award with
respect to shares of capital stock of the successor corporation or Parent
thereof or is replaced with a cash incentive program of the successor
corporation or Parent thereof which preserves the compensation element of such
Award existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule

                                       11
<PAGE>

applicable to such Award. The determination of Award comparability above shall
be made by the Administrator and its determination shall be final, binding and
conclusive.

     12.  Effective Date and Term of Plan.  The Plan shall become effective upon
          -------------------------------
the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company.  It shall continue in effect for a term of ten (10)
years unless sooner terminated.  Subject to Section 16, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

     13.  Amendment, Suspension or Termination of the Plan.
          -------------------------------------------------

          (a) The Board may at any time amend, suspend or terminate the Plan.
To the extent necessary to comply with Applicable Laws, the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.

          (b) No Award may be granted during any suspension of the Plan or after
termination of the Plan.

          (c) Any amendment, suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or terminated, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing
and signed by the Grantee and the Company.

     14.  Reservation of Shares.
          ----------------------

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

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

     15.  No Effect on Terms of Employment/Consulting Relationship.  The Plan
          --------------------------------------------------------
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.

     16.  No Effect on Retirement and Other Benefit Plans.  Except as
          -----------------------------------------------
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation.  The
Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.

     17.  Shareholder Approval.  Continuance of the Plan shall be subject to
          --------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws.  Any Award exercised
before shareholder approval is obtained shall be rescinded if shareholder
approval

                                       12
<PAGE>

is not obtained within the time prescribed, and Shares issued on the exercise of
any such Award shall not be counted in determining whether shareholder approval
is obtained.

     18.  Information to Grantees.  The Company shall provide to each Grantee,
          -----------------------
during the period for which such Grantee has one or more Awards outstanding,
copies of financial statements at least annually.

                                       13

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