Document:

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                                                                   Exhibit 10.38

                      AMERISOURCE PRIMARY VENDOR AGREEMENT

This Primary Vendor Agreement (this "Agreement") is made and entered into this
8th day of May 2001 between AmeriSource Corporation (hereinafter referred to as
"AmeriSource") located at 1300 Morris Drive, Suite 100, Chesterbrook, PA 19087-
5594 and Horizon Pharmacies, Inc. (hereinafter referred to as "Pharmacy"),
located at 531 W. Main St., Suite 100 Denison, TX 75020.

                      STATEMENT OF THE PARTIES' INTENTIONS
                      ------------------------------------

AmeriSource and Pharmacy desire to enter into a Pharmacy Primary Vendor
Agreement wherein AmeriSource shall serve as a Primary Supplier of
pharmaceuticals and related products to Pharmacy pursuant to this Agreement, and
Pharmacy shall, in turn, receive special pricing and services from AmeriSource.

                              TERMS AND CONDITIONS
                              --------------------

NOW THEREFORE, In consideration of the mutual agreements herein contained and
the promises herein expressed, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, and intending to be legally bound
hereby, the Parties do agree as follows:

1.   TERM AND RENEWAL: The term of this Agreement shall be three (3) years
commencing on the effective date of this Agreement, unless sooner terminated
pursuant to the terms of this Agreement (the "Term").  This Agreement shall
automatically renew thereafter for up to two (2) additional successive one (1)
year periods unless either party provides to the other party written notice of
its desire to terminate this Agreement at least ninety (90) days prior to the
end of the initial or any renewal term.  This Agreement shall apply to all
pharmacy locations owned by Pharmacy as of the effective date of this Agreement
as well as all pharmacy locations acquired by Pharmacy during the term hereof.

2.   BREACH: Either party shall be entitled to terminate this Agreement if the
other party fails to perform in any material respect any obligation required of
such party hereunder (or under the Security Agreement, as hereafter defined),
and such default continues for ten (10) days after the giving of written notice
by the non-defaulting party, specifying the nature and extent of such default.
Any such default that is not cured within the cure period described above is
referred to herein as a "default."
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3.    PRICE OF GOODS GRID:

<TABLE>
<CAPTION>
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HORIZON PHARMACIES, INC.
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Annual Volume          Daily                    OTC            HBC Source
Commitment             Wire Transfer
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<S>                    <C>                      <C>            <C>
$*                     *                        *              *
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$*                     *                        *              *
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$*                     *                        *              *
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</TABLE>

Terms: Pharmacy shall pay by electronic funds transfer (EFT) on * terms.
Payment for each day's purchases shall be due and payable * later, on a daily
basis.  Pharmacy shall receive a credit limit of *.

        .   This proposal is offered with Pharmacy agreeing to fully participate
            in all AmeriSource generic formularies and applicable programs.

    Home healthcare items, AmeriSource contracted generics, Private label items,
    HBC Source, and certain slow-moving items are excluded from this cost
    pricing definition and are instead net billed.

AmeriSource reserves the right to charge and collect interest on late payments
at the lesser of (i) the rate of 1.5% per month, and (ii) the highest rate
allowed under applicable law, and to put the account on credit hold preventing
shipment in the event of late payment.

4.   PURCHASE MONEY SECURITY INTEREST:  AmeriSource shall have a purchase money
security interest in all goods sold to Pharmacy under this Agreement, as
evidenced  by that certain Security Agreement of even date herewith (the
"Security Agreement") between AmeriSource and Pharmacy.

5.   DEFINITION OF COST:  "Cost" means (i) the manufacturer's invoice cost on
the date the order is shipped to the Pharmacy, or (ii) the contract/bid price of
the item, as the case may be, in each case exclusive of discounts for prompt
payment given to AmeriSource by its vendors.  Any reduction in this customary
discount will cause "Cost" to be increased as appropriate.  Home health care
items, AmeriSource contracted items, generics, Health Services Plus items, HBC
Source items, Health Centre items and slow moving items are excluded from this
definition of cost and are instead net billed.  In addition, special rebates
given to AmeriSource on generic drugs with vendor distribution allowances do not
affect the determination of Cost. All Pharmacy contracted items will be priced
at the Pharmacy's negotiated contract price.

All excise, gross receipts, sales, and other taxes incurred in connection with
Pharmacy's purchases hereunder, other than net income taxes of AmeriSource, will
be paid by Pharmacy.

*Language has been intentionally omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

                                                       2
<PAGE>

6.   EXCEPTIONS TO COST PLUS PRICING: The following items shall not be subject
to Cost plus pricing:

     .   Trade Show purchases
     .   Generics, Vitamin Lines
     .   HBC Source
     .   Computer Services
     .   Other net prices categories, including, but not limited to, Home Health
         Care, and School and Office supplies.

7.   EARLY TERMINATION:  In the event that Pharmacy commits a default hereunder,
such default is not waived by AmeriSource and AmeriSource terminates this
Agreement pursuant to Section 2 hereof as a result of such default, then
Pharmacy shall pay AmeriSource * (the "Early Termination Penalty").
Notwithstanding the foregoing, the Early Termination Penalty shall be reduced by
*.  The Early Termination Penalty shall be payable to AmeriSource not later than
sixty (60) days after the date that this Agreement is terminated.  The Early
Termination Penalty shall be in addition to any other damages owed by Pharmacy
to AmeriSource as a result of a breach of this Agreement.

8.   LEVEL OF PURCHASES: Pharmacy will purchase at least * of its designated
goods per month, less returns, from AmeriSource under this Agreement. It is
agreed and understood that the prices listed in paragraph 4 are based on
AmeriSource Primary Vendor status to Pharmacy.  Should Pharmacy purchase less
than * of its needs from AmeriSource, *.

9.   SPECIAL ORDER/NEW ITEM REQUESTS: Special orders and/or new item requests
should be forwarded to customer service at each servicing division.  One-time
orders will be drop-shipped directly to each store.  Items will be stocked
accordingly based on stated usage by Pharmacy.  If there is not a significant
amount of usage, the item would be handled as a one-time drop-ship item.

10.  GENERIC FORMULARIES: Pharmacy agrees to participate in all AmeriSource's
generic formularies at the level of *.  If the level of generic purchases falls
below *, AmeriSource reserves the right to adjust the overall price of goods.

11.  RETURNED GOODS: Returns shall be accepted in accordance with the
AmeriSource Returned Goods Policy and the Prescription Drug Marketing Act, and
shall include the following financial terms:

     .   Merchandise originally purchased from AmeriSource returned in saleable
         condition within 60 days of invoice date, with the AmeriSource item
         number and invoice date information, will be credited at * of the
         original invoice amount.
     .   Merchandise originally purchased from AmeriSource returned in saleable
         condition between 61-180 days after date of invoice, with the
         AmeriSource item number and invoice date information, will be credited
         at * of cost.

*Language has been intentionally omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

                                                       3
<PAGE>

     .   Merchandise originally purchased from AmeriSource returned in saleable
         condition after 180 days of invoice date, with the AmeriSource item
         number and invoice date information, will receive credit based upon the
         respective product's manufacturer's policies.
     .   Any shortages of product must be reported to the servicing division
         within 24 hours of invoice date to be considered for credit.

12.  PRODUCT AND SHELF STICKERS: AmeriSource will make individual product
stickers available to each store providing the proper information. AmeriSource
will provide shelf stickers and other shelf sticker related supplies to
pharmacies.   Upon notification of bid award AmeriSource will distribute an
account opening packet which will include, but not be limited to, Telxon OE
unit, divisional contact sheet including all appropriated phone numbers,
addresses, emergency procedures, etc.

13.  FUTURE DISCUSSIONS-PAYMENT TERMS: Pharmacy shall pay by electronic funds
transfer (EFT) on * terms.  Payment for each day's purchases shall be due and
payable * later, on a daily basis.  Pharmacy shall receive a credit limit of *.

As Pharmacy continues to restructure its financial status, AmeriSource would be
open to a review of all terms of the Agreement, including, but not limited to,
payment terms.  No change shall be effective until mutually agreed to in writing
by both parties.

14.  COST REPORTING:  Pharmacy understands that rebates and discounts may need
to be reported as a part of its cost for purposes of federal and/or state
healthcare programs, including for purposes of 42 CFR 1001.952(h).

15.  PROPRIETARY SOFTWARE:  AmeriSource grants to Pharmacy a non-exclusive non-
transferable license the ("License") to use the AmeriSource's proprietary
software (the "Software"), including without limitation the ECHO system and the
iECHO software, solely for the purposes of this Agreement at the Pharmacy
locations, in accordance with, and subject to, the terms and conditions of this
Agreement.

AmeriSource will provide the Software in the form of a CD-ROM, diskettes or
other media containing machine-readable object-code.  AmeriSource may provide
the Software to Pharmacy on more than one medium.  Regardless of the type or
size of the medium that Pharmacy receives, Pharmacy only use the medium
appropriate for its designated computer or network server.

AmeriSource or its suppliers retain all rights to the Software and related
documentation (including, but not limited to any images, "applets," photographs,
animations, video, audio, music and text incorporated therein, copyright, trade
secrets and other proprietary rights), which are not expressly granted, to
Pharmacy under this Agreement.  All updates, enhancements, modifications and
additions to the software developed by AmeriSource or any other entity will be
the sole and exclusive property of AmeriSource.

*Language has been intentionally omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

                                                       4
<PAGE>

Pharmacy agrees that it and its locations will not copy, duplicate, or prepare
derivative works from any element of the Software except that (i) Pharmacy may
make one (1) back-up or archival copy of the Software at each Pharmacy location
as permitted by the copyright law of the United States; and/or (ii) install the
Software on a single hard disk at each Pharmacy location.  Pharmacy shall not
remove any copyright or proprietary rights notice included in or on any Program
element, and shall reproduce all such notices in or on all copies made by
Pharmacy.

16.  ECHO HARDWARE: The following hardware (the "Hardware") will be provided by
AmeriSource to each Pharmacy location, at additional cost, upon written request
by Pharmacy:

500 MHz Processor
6.4/13 GB Hard Drive
64 MB Ram
Color Monitor (15 inch)
56K Baud Modem
Windows 98

17.  PROPRIETARY SOFTWARE/HARDWARE LIMITED WARRANTY:  AmeriSource warrants that
the Software, if operated as directed, will perform substantially in accordance
with its documentation for a period of ninety (90) days from the date of
installation at each Pharmacy location.  AmeriSource also warrants that the
Hardware provided by AmeriSource, and the diskettes, CD-ROMs, or other media on
which the Software is provided, will be free from defects and workmanship under
normal use for a period of ninety (90) days from the date of installation at
Pharmacy.  Other than as set forth in this paragraph, (a) AmeriSource makes no
warranty, express or implied, including without limitation, any implied warranty
of merchantability or fitness for a particular purpose, and (b) no oral or
written information provided by AmeriSource or its employees, agents or
representatives will create any representation or warranty.

AmeriSource's entire liability, and Pharmacy's exclusive remedy, for breach of
the warranties contained in this paragraph shall be, at AmeriSource's option, to
(i) repair or replace the Software so that it performs substantially in
accordance with its documentation; (ii) advise Pharmacy how to achieve
substantially the same functionality with the Software as described in any
documentation through a procedure different from that set forth in any
documentation, or (iii) replace defective media returned within ninety (90) days
of the date that Pharmacy receives such defective media.  Any replacement
software shall not serve to extend the original ninety (90) day warranty.

18.  INDEMNIFICATION: Each party agrees to indemnify, defend and hold harmless
the other party, its subsidiaries, officers, directors and successors and
assigns from and against all claims, losses, damages, liabilities and expenses
(including but not limited to attorneys' fees and court costs) arising as a
result of negligence, illegality or wrongdoing of any kind alleged or actual on
the part of such party.

19.  LIMITATION OF LIABILITY: In all cases, each party's liability shall be
limited to actual damages proven by the other party, except as specifically
provided for otherwise in this

                                                       5
<PAGE>

Agreement. In no event shall a party be entitled to indirect, special,
consequential or punitive damages.

20.  INSOLVENCY:  In the event of any proceedings, voluntary or involuntary, in
bankruptcy or insolvency by or against either party, the inability of either
party to meet its debts as they become due, or in the event of the appointment,
with or without either party's consent, of an assignee for the benefit of
creditors or of a receiver, then other party shall be entitled, at its sole
option, to immediately terminate this Agreement without notice.

21.  INSURANCE: During the Term of this Agreement, Pharmacy shall maintain
professional liability insurance in the amounts of not less than one million
dollars ($1,000,000.00) per incident and five million dollars ($5,000,000.00) in
the aggregate. AmeriSource shall be named on Pharmacy's policy as an additional
insured.

22.  ENTIRE AGREEMENT: This Agreement supersedes all prior agreements between
the parties with regard to the subject matter hereof and there are no other
understandings or agreements between them. No representations, warranties, or
promises pertaining to this Agreement have been made by, or shall be binding on,
any of the parties, except as expressly stated in this Agreement. This Agreement
may not be changed orally, but only by an agreement signed by the party against
whom enforcement of any such change is sought.

23.  SEVERABILITY: If any provision or clause of this Agreement conflicts with
applicable law, such conflict shall not affect other provisions of the Agreement
if the provisions can be given effect without the conflicting provision. To this
end the provisions of this Agreement are declared to be severable. If any
provision of this Agreement is held to be invalid or unenforceable for any
reason whatsoever, including any conflict with applicable law, the remaining
provisions shall remain valid and unimpaired, and shall continue in full force
and effect.

24.  WAIVERS: Failure of either party to enforce strict performance of any
obligations under this Agreement shall not constitute a waiver of such party's
right to thereafter enforce every term and condition hereof.

25.  FORCE MAJEURE:  If either party to this Agreement is delayed in or
prevented from performing any of its obligations hereunder (other than payment
obligations) by reason of labor problems, inability to procure materials, power
failure, restrictive government laws or regulations, acts of God or other
similar events beyond the reasonable control of such party, then such
performance shall be excused for the period of the delay.

26.  NOTICES: All notices required to be given hereunder shall be made in
writing and shall be deemed sufficiently given if delivered by certified or
registered mail return receipt requested, overnight or same-day delivery (such
as Federal Express or special courier), at the addresses set forth. The notice
shall be effective on the date indicated on the return receipt in the case of
certified or registered mail, effective on the date following the date of
mailing in the case of overnight delivery and effective the date of delivery in
the case of same-day delivery at the

                                                       6
<PAGE>

addresses below or at such addresses as may subsequently be provided in writing
to the respective parties:

Jeff Greer                                  Michael Loy
Vice President, National Accounts           Chief Financial Officer
AmeriSource Corporation                     Horizon Pharmacies, Inc.
1300 Morris Drive, Suite 100                531 W. Main St., Suite 100
Chesterbrook, PA  19087-5594                Denison, TX  75020

With a copy to:                             With a copy to:

General Counsel                             William W. Meier, III
AmeriSource Corporation                     Hallett & Perrin, P.C.
1300 Morris Drive, Suite 100                717 N. Harwood Street
Chesterbrook, PA  19087-5594                Suite 1400
                                            Dallas, TX 75201

27.  GOVERNING LAW: The construction, application and enforcement of this
Agreement shall be governed by the laws of the State of Texas.

28.  ASSIGNABILITY:  This Agreement may not be transferred, assigned, pledged or
hypothecated by either party hereto without the prior written consent of the
other party to this Agreement.

29.  CAPTIONS:  The captions, headings and arrangements used in this Agreement
are for convenience only and do not in any way affect, limit or amplify the
provisions hereof.

30.  COUNTERPARTS:  This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original for all purposes and all of which
shall be deemed collectively to be one agreement.

                                                       7
<PAGE>

IN WITNESS WHEREOF, the Parties, intending to be bound by the terms of this
Agreement and having the authority to bind their respective corporations, hereby
execute this Agreement by placing their signatures below:

AMERISOURCE CORPORATION             HORIZON PHARMACIES, INC.

By: /s/ Jeff Greer                    By: /s/ Rick D. McCord
    --------------------------            --------------------------
Name: Jeff Greer                      Name: Rick D. McCord
Title: Vice President, National       Title: President and Chief Executive
       Accounts                              Officer

Date: May 8, 2001                     Date: May 8, 2001
      --------------------------            --------------------------

                                                       8<PAGE>

                                                                    Exhibit 10.3
                             1999 STOCK OPTION PLAN

                                       OF

                        MULTILINK TECHNOLOGY CORPORATION

     Section 1.01. Purpose. The purpose of this 1999 Stock Option Plan of
                   -------
Multilink Technology Corporation (the "Plan") is to promote the growth and
general prosperity of Multilink Technology Corporation, a California corporation
(the "Company"), by permitting the Company to grant options to purchase shares
of the Company's Class A Common Stock ("Shares"). The Plan is designed to help
attract and retain superior personnel for positions of substantial
responsibility with the Company and to provide directors, officers, employees
and consultants with an additional incentive to contribute to the success of the
Company. Options granted pursuant to the provisions of the Plan may be either
"incentive stock options," within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or non-statutory stock options,
as determined by the Plan Administrator and set forth in the stock option
agreements. Options granted under this Plan must be labeled either as an
"Incentive Stock Option" or a "Non-Statutory Stock Option." As used in the Plan,
the terms "parent corporation" and "subsidiary corporation" shall have the
meanings set forth in subsections (e) and (f), respectively, of Section 424 of
the Code.

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

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

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

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

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

     Section 3.01. Maximum Number of Shares Subject to the Plan. Subject to
                   --------------------------------------------
the provisions of Section 13.01(a), the maximum aggregate number of authorized
and unissued Shares that may be optioned and sold under the Plan is Eighteen
Million (18,000,000) Shares. If any of the options granted under the Plan expire
or terminate for any reason before they have been exercised in full, the
unpurchased Shares subject to those expired or terminated options shall again be
available for the purposes of the Plan. Notwithstanding the foregoing, at any
such time as the offer and sale of Shares pursuant to the Plan is subject to
compliance with Section 260.140.45 of Title 10 of the California Code of
Regulations, the total number of Shares issuable upon the exercise of all
outstanding options (together with options outstanding under any other stock
option plan of the Company) and the total number of shares provided for under
any stock bonus or similar plan of the Company shall not exceed thirty percent
(30%) of the then outstanding shares of the Company as calculated in accordance
with the conditions and exclusions of Section 260.140.45, unless a higher
percentage than thirty percent (30%) is approved by at least two-thirds of the
outstanding shares entitled to vote.

                                      -2-
<PAGE>

     Section 4.01. Eligibility and Participation.  Only full-time employees of
                   -----------------------------
the Company or of any subsidiary corporation or any parent corporation shall be
eligible for selection by the Plan Administrator to receive incentive stock
options and directors, consultants and full-time employees of the Company or of
any subsidiary corporation or any parent corporation shall be eligible to
receive non-statutory stock options.

     Section 5.01. Effective Date and Term of Plan. The Plan shall become
                   -------------------------------
effective upon its adoption by the Board of Directors of the Company subject to
the receipt of the approval of the Plan required by Section 16.01. The Plan
shall remain in effect for a term of 10 years, unless sooner terminated under
Section 14.01.

     Section 5.02. Duration of Options.  Each option and all rights thereunder
                   -------------------
granted pursuant to the terms of the Plan shall expire on the date determined by
the Plan Administrator, but in no event shall any option granted under the Plan
expire later than the (10) years from the date on which the option is granted.
In addition, each option shall be subject to early termination as provided in
the Plan.

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

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

                                      -3-
<PAGE>

at least 110% of the fair market value (as determined under Section 5.03 by the
Plan Administrator) of the Shares subject to the option at the time the option
is granted.

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

     Section 6.01. Exercise of Options.  Subject to Section 6.03, each option
                   -------------------
shall be exercisable in one or more installments prior to its expiration or
termination at such times as determined by the Plan Administrator at the time of
grant; provided, however, that no option may be exercisable by a non-employee
director until six (6) months after the date of the grant and, with the
exception of an option granted to an officer, director or consultant, no option
shall become exercisable at a rate of less than twenty percent (20%) per year
over a period of five (5) years from the effective date of grant of such option,
subject to the optionee's continued employment by the Company. The right to
exercise may be cumulative as determined by the Plan Administrator. No option
may be exercised for a fraction of a Share or other than on a business day of
the Company. The full purchase price of any Shares purchased shall be paid at
the time of the exercise of the option in cash or by certified or cashier's
check payable to the order of the Company. The purchase price may also be paid,
at the sole discretion of the Company and as permitted by applicable law, (i) by
delivering Shares already owned by the optionee having a fair market value (as
determined by the Plan Administrator) equal to an amount not less than the
aggregate purchase price of the Shares being purchased, (ii) by the optionee's
promissory note in a form approved by the Company, (iii) by the assignment of
the proceeds of a sale or a loan with respect to some or all of the Shares being
acquired upon the exercise of the option, and (iv) any combination of the
foregoing as determined by the Plan Administrator with respect to the Option
Shares to be purchased.

     Unless otherwise provided by the Plan Administrator, an option may not be
exercised by delivery to the Company of the Company's Shares owned by the
optionee unless such Shares either have been owned by the optionee for more than
six (6) months or were not acquired, directly or indirectly, from the Company.

     Any permitted promissory note shall be on such terms as the Plan
Administrator shall determine at the time the option is granted. The Plan
Administrator shall have the authority to permit or require the optionee to
secure any promissory note used to exercise an option with the Shares acquired
upon the exercise of the option or with other collateral acceptable to the
Company and the amount of the promissory note shall not exceed the exercise
price of the Shares with respect to which the option is being exercised plus
applicable local, state, federal and foreign taxes attributable to such
exercise. Unless otherwise provided by the Board, if the Company at any time is
subject to the regulations promulgated by the Board of Governors of the Federal
Reserve System or any other governmental entity affecting the extension of
credit in

                                      -4-
<PAGE>

connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.

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

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

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

     Section 7.02 Transfer Restrictions.  Shares issued under the Plan may be
                  ---------------------
subject to a right of first refusal or other conditions and restrictions as
determined by the Plan Administrator in its sole discretion at the time the
option is granted. Upon request by the Company, each optionee shall execute any
agreement evidencing such transfer restrictions prior to the receipt of Shares
hereunder and shall promptly present to the Company any and all certificates
representing Shares acquired hereunder for the placement on such certificates of
appropriate legends evidencing such transfer restrictions.

     Section 8.01. Employment of Optionee.  Nothing in the Plan or in any option
                   ----------------------
granted hereunder shall confer upon any optionee (i) any right to continued
employment by the Company or any parent corporation or subsidiary corporation,
or limit in any way the right of the employer at any time to terminate or alter
the terms of that employment or (ii) any right to sue the Company, or any parent
corporation or subsidiary corporation for any adverse tax consequences

                                      -5-
<PAGE>

in connection with the grant or exercise of any option or the disposition of any
Shares acquired pursuant to this Plan.

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

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

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

     Section 12.01. Options Not Transferable.  Options granted pursuant to the
                    ------------------------
terms of the Plan, may not be sold, pledged, assigned, or transferred in any
manner, other than by will or the laws of descent and distribution, and may be
exercised during the lifetime of an optionee only by that optionee.

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

                                      -6-
<PAGE>

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

     (b)  Notwithstanding any other provision of this Plan, upon a Change of
Control of the Company, the Plan and any option theretofore granted hereunder
shall terminate. For purposes of the Plan, a "Change of Control" shall be deemed
to have occurred upon any of the following events:

          (i)    following the date hereof, a person or entity or group of
persons or entities, acting in concert, shall become the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act) of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the issued and outstanding capital stock of the
Company (a "Significant Owner"), unless such shares are originally issued to
such Significant Owner by the Company;

          (ii)   the majority of the Company's Board of Directors is no longer
comprised of (A) the incumbent directors who constitute the Board of Directors
on the date hereof and (B) any other individual(s) who becomes a director
subsequent to the date hereof whose initial election or nomination for election
as a director, as the case may be, was approved by at least a majority of the
directors who comprised the incumbent directors as of the date of such election
or nomination;

          (iii)  the dissolution or liquidation of the Company;

          (iv)   the transfer of substantially all of the assets of the Company
to another entity;

          (v)    the approval by the shareholders of the Company of any
reorganization, merger, or consolidation of the Company with one or more other
entities in which the Company is not the surviving corporation, or which would
result in the occurrence of any event described above in this Section 13.01(b).

     In the event of the occurrence of any of the events described in clauses
(i) through (v) above, each optionee (or that person's estate or a person who
acquired the right to exercise the option from the optionee by bequest or
inheritance) shall be entitled, prior to the effective date of

                                      -7-
<PAGE>

the consummation of any such transaction, to purchase, in whole or in part, the
full number of Shares under the option or options granted to the optionee that
the optionee would otherwise have been entitled to purchase during the remaining
term of the option and without regard to any otherwise applicable restrictions
set forth in the option delaying the immediate exercise of the option. To the
extent that any such exercise relates to stock that is not otherwise available
for purchase through the exercise of the option by the optionee at that time,
the exercise pursuant to this Section 13.01(b) shall be contingent upon the
consummation of the Change of Control.

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

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

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

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

     Section 16.01. Reservation of Shares. During the term of the Plan, the
                    ---------------------
Company will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the

                                      -8-
<PAGE>

requirements of the Plan. In addition, the Company will from time to time, as is
necessary to accomplish the purposes of the Plan, seek to obtain from any
regulatory agency having jurisdiction any requisite authority in order to grant
options under the Plan and to issue and sell Shares hereunder.

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

     Section 18.01. Provision of Information.  At least annually, copies of the
                    ------------------------
Company's financial statements for the just completed fiscal year shall be made
available to each optionee and purchaser of Shares upon the exercise of an
option. The Company shall not be required to provide such information to persons
whose duties in connection with the Company assure them access to equivalent
information.

     Section 19.01. Sections-Headings.  The headings of the sections of the Plan
                    -----------------
are for convenience only and shall not be considered or referred to in resolving
questions of interpretation. References to "Section" that are not followed by a
section number and the phrase "of the Code" are references to sections of the
Plan.

     Section 19.02. Governing Law.  The Plan shall be governed by and construed
                    -------------
and interpreted in accordance with the internal laws of the State of California,
except to the extent preempted by federal law, which shall govern to such
extent.

     Section 19.03. Invalid Provision.  In the event that any provision of this
                    -----------------
Plan is found to be invalid or otherwise unenforceable under any applicable law,
such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid or unenforceable provision was not contained herein.

     Section 19.04. Adoption. The Plan was adopted by a resolution duly adopted
                    --------
by the Board of Directors of the Company on June 2, 1999. I hereby certify that
the foregoing Plan was duly adopted by the Board of Directors of MULTILINK
TECHNOLOGY CORPORATION on June 2, 1999.

Executed this 2nd day of June, 1999.

                                           /s/ Richard N. Nottenburg
                                           ___________________________
                                           Richard N. Nottenburg,
                                           Secretary

                                      -9-
<PAGE>

                       AMENDMENT TO 1999 STOCK OPTION PLAN

     Section 13.01(b) of the 1999 Plan is hereby deleted in its entirety and
replaced with the following:

     (b)  For purposes of the Plan, a "Change of Control" shall be deemed to
have occurred upon any of the following events:

          (i)    following the date hereof, a person or entity or group of
persons or entities, acting in concert, shall become the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act) of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the issued and outstanding capital stock of the Company
(a "Significant Owner"), unless such shares are originally issued to such
Significant Owner by the Company;

          (ii)   the majority of the Company's Board of Directors is no longer
comprised of (A) the incumbent directors who constitute the Board of Directors
on the date hereof and (B) any other individual(s) who becomes a director
subsequent to the date hereof whose initial election or nomination for election
as a director, as the case may be, was approved by at least a majority of the
directors who comprised the incumbent directors as of the date of such election
or nomination;
          (iii)  the dissolution or liquidation of the Company;

          (iv)   the transfer of all or substantially all of the assets of the
Company to another entity;

          (v)    the approval by the shareholders of the Company of any
reorganization, merger, or consolidation of the Company with or into one or more
other entities in which the Company is not the surviving corporation, or which
would result in the occurrence of any event described above in this Section
13.01(b).

     Upon any Change of Control, the Plan and any option theretofore granted
hereunder shall terminate. Upon such Change of Control, each optionee (or that
person's estate or a person who acquired the right to exercise the option from
the optionee by bequest or inheritance) shall be entitled, prior to the
effective date of the consummation of the Change of Control (or in the case of
subsection (v) above, the consummation of the transaction underlying the Change
of Control), to purchase, in whole or in part, the full number of Shares under
the option or options granted to the optionee that the optionee would otherwise
have been entitled to purchase during the remaining term of the option and
without regard to any otherwise applicable restrictions set forth in the option
delaying the immediate exercise of the option. To the extent that any such
exercise relates to stock that is not otherwise available for purchase through
the exercise of the option by the optionee at that time, the exercise pursuant
to this Section 13.01(b) shall be contingent upon the consummation of the Change
of Control. Notwithstanding the foregoing, the Plan and any option theretofore
granted hereunder shall not immediately terminate upon a Change in Control under
subsections (iv) or (v) above in which the acquiring entity agrees to either (A)
assume, and does assume upon the consummation of the transaction underlying the
Change of Control, each
<PAGE>

option theretofore granted hereunder which has not otherwise expired by its
terms or been terminated (the "Assumed Options"), or (B) tender, and does tender
upon the consummation of the transaction underlying the Change of Control, an
economically equivalent substitute option, award or arrangement for each option
theretofore granted hereunder which has not otherwise expired by its terms or
been terminated (together with the Assumed Options, the "Acquiror Options") (an
"Assumed Change of Control"). In the event of an Assumed Change of Control, each
optionee (or that person's estate or a person who acquired the right to exercise
the Acquiror Options from the optionee by bequest or inheritance) shall be
entitled after the earlier of (A) the date that is six (6) months following the
date of such Assumed Change of Control, or (B) the date the optionee's
employment is terminated without cause after or as a result of a Change of
Control under subsections (iv) or (v) above, to purchase, in whole or in part,
the full number of shares of capital stock under the Acquiror Options that the
optionee would otherwise have been entitled to purchase during the remaining
term of such Acquiror Options, and without regard to any otherwise applicable
restrictions set forth in the Acquiror Options delaying the immediate exercise
of the Acquiror Options.

                                      -2-
<PAGE>

                 AMENDMENT NO. 2 TO THE 1999 STOCK OPTION PLAN
                 ---------------------------------------------

          Section 12.01 of the 1999 Plan is hereby deleted in its entirety and
replaced with the following:

          "Limited Transferability of Options. During the lifetime of an
           ----------------------------------
          optionee, incentive stock options shall be exercisable only by the
          optionee and shall not be assignable or transferable other than by
          will or by the laws of descent and distribution following the
          optionee's death. Non-statutory stock options shall be subject to the
          same restrictions, except that a non-statutory stock option may, to
          the extent permitted by the Plan Administrator, be assigned in whole
          or in part during an optionee's lifetime to one or more members of the
          optionee's immediate family or to a trust established exclusively for
          one or more such family members. The terms applicable to the assigned
          portion shall be the same as those in effect for the option
          immediately prior to such assignment and shall be set forth in such
          documents issued to the assignee as the Plan Administrator may deem
          appropriate."
<PAGE>

                   AMENDMENT NO. 3 TO 1999 STOCK OPTION PLAN
                   -----------------------------------------

        The first sentence of Section 3.01 of the 1999 Plan is hereby deleted in
its entirety and replaced with the following:

                "Subject to the provisions of Section 13.01(a), the maximum
                aggregate number of authorized and unissued Shares that may be
                optioned and sold under the Plan is Eighteen Million
                (18,000,000) Shares."
<PAGE>

                   AMENDMENT NO. 4 TO 1999 STOCK OPTION PLAN
                   -----------------------------------------

     The first sentence of Section 3.01 of the 1999 Plan is hereby deleted in
its entirety and replaced with the following:

          "Subject to the provisions of Section 13.01(a), the maximum aggregate
     number of authorized and unissued Shares that may be optioned and sold
     under the Plan is Twenty-One Million (21,000,000) Shares."

                                      -1-

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