IMP INC, S-8, 1996-10-29

IMP INC
S-8, 1996-10-29
SEMICONDUCTORS & RELATED DEVICES

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1996

REGISTRATION NO. 333-___________

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

Under

The Securities Act of 1933

IMP, INC.

(Exact name of Registrant as specified in its charter)

Delaware 94-2722142
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

2830 North First Street
San Jose, California 95134
(Address of principal executive offices) (zip code)

IMP, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
STOCK OPTION PLAN
(Full Title of the Plans)

David A. Laws
President and Chief Executive Officer
IMP, INC.
2830 North First Street, San Jose, California 95134
(408) 432-9100
(Telephone number, including area code, of agent for service)

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
Proposed Proposed maxi-
maximum mum aggregate
Title of Securities Amount to be offering price offering Amount of
to be registered registered(1) per share(2) price(2) registration fee
- ---------------- ------------- ------------ -------- ----------------
<S> <C> <C> <C> <C>
1996 Employee Stock Purchase Plan

Common Stock, $.001 par value 750,000 shares $3.3125 $2,484,375 $ 857

Stock Option Plan

Options to Purchase Common Stock 750,000 N/A N/A N/A

Common Stock, $.001 par value 750,000 shares $3.3125 $2,484,375 $ 857

Aggregate Filing Fee $1,714
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the IMP, Inc. 1996 Employee
Stock Purchase Plan and/or Stock Option Plan by reason of any stock
dividend, stock split, recapitalization or any other similar
transaction without receipt of consideration which results in an
increase in the number of outstanding shares of Common Stock of IMP,
Inc.

(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low prices for the Common Stock of IMP, Inc. on
October 23, 1996 as reported by the Nasdaq National Market.

<PAGE> 2

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference

IMP, Inc. ("Registrant") hereby incorporates by reference into
this Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "SEC"):

(a) Registrant's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996, and filed with the SEC on June 29, 1996;

(b) Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 28, 1996, filed with the SEC on August 13, 1996;

(c) Registrant's Registration Statement No. 00-269562 on Form 8-A
filed with the SEC on May 13, 1987, as amended by Amendment
No. 1 filed on June 30, 1987 pursuant to Section 12 of the
Securities and Exchange Act of 1934 (the "1934 Act") in which
there is described the terms, rights and provisions applicable
to Registrant's outstanding Common Stock.

All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4. Description of Securities

Not applicable.

Item 5. Interests of Named Experts and Counsel

Not applicable.

Item 6. Indemnification of Directors and Officers

Under Section 145 of the Delaware General Corporation Law ("Delaware
Law"), the Registrant has broad powers to indemnify its directors and officers
against liabilities they may incur in such capacities, including liabilities
under the Securities Act of 1933, as amended (the "1933 Act"). The Registrant's
Bylaws provide that the Registrant will indemnify its directors and officers to
the fullest extent permitted by law and require the Registrant to advance
litigation expenses upon receipt by the Registrant of an undertaking by the
director or officer to repay such advances if it is ultimately determined that
the director or officer is not entitled to indemnification. The Bylaws further
provide that rights conferred under such Bylaws shall not be deemed to be
exclusive of any other right such persons may have or acquire under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.

II-1.

<PAGE> 3

The Registrant's Certificate of Incorporation provides that, pursuant
to Delaware Law, its directors shall not be liable for monetary damages for
breach of the director's fiduciary duty of care to the Registrant and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware Law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant or its
stockholders, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, for actions leading to improper
personal benefit to the director and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware Law. The
provision also does not effect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.

In addition, the Registrant has entered into agreements to indemnify
its directors and certain of its officers in addition to the indemnification
provided for in the Certificate of Incorporation and Bylaws. These agreements
will, among other things, indemnify the Registrant's directors and certain of
its officers for certain expenses (including attorneys' fees), judgments, fines
and settlement amounts incurred by such person in any action or proceeding,
including any action by or in the right of the Registrant, on account of
services as a director or officer of the Registrant or as a director or officer
of any other company or enterprise that the person provides services to at the
request of the Registrant.

Item 7. Exemption from Registration Claimed

Not Applicable.

Item 8. Exhibits

Exhibit Number Exhibit

4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-269562
on Form 8-A, as amended, which is incorporated herein by
reference pursuant to Item 3(c).

5 Opinion and consent of Brobeck, Phleger & Harrison LLP.

23.1 Consent of Independent Auditors - Price Waterhouse LLP.

23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.

24 Power of Attorney. Reference is made to page II.4 of this
Registration Statement.

99.1 1996 Employee Stock Purchase Plan.

99.2 Form of Stock Purchase Agreement.

99.3 Form of Enrollment/Change Form.

99.4 IMP, Inc. Stock Option Plan

99.5 Form of Notice of Grant with Option Agreement to be
generally used in connection with the automatic grant
program of the Stock Option Plan (incorporated by
reference to Exhibit No. 99.2 of Registration Statement
No. 33-62751).

99.6 Form of Stock Purchase Agreement to be generally used in
connection with the automatic grant program of the Stock
Option Plan (incorporated by reference to Exhibit 99.3 of
Registration Statement No. 33-62751).

99.7 Form of Notice of Grant with Option Agreement to be
generally used in connection with the Stock Option Plan
(incorporated by reference to Exhibit No. 28.2 of
Registration Statement No. 33-65578).

99.8 Form of Notice of Grant with Option Agreement - Officer,
to be generally used in connection with the Stock Option
Plan (incorporated by reference to Exhibit No. 28.3 of
Registration Statement No. 33-65578).

II-2.

<PAGE> 4

Item 9. Undertakings

A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Registrant pursuant to
Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference
into the Registration Statement; (2) that for the purpose of determining any
liability under the 1933 Act each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the IMP, Inc. Stock Option Plan.

B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers or controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the 1933 Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by Registrant of expenses incurred or paid by a director, officer or
controlling person of Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act, and
will be governed by the final adjudication of such issue.

II-3.

<PAGE> 5

SIGNATURES

Pursuant to the requirements of the 1933 Act, Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on October 18, 1996.

IMP, INC.

By: /s/ David A. Laws
-------------------------------
David A. Laws, President, Chief
Executive Officer and Director

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned officers and directors of IMP, Inc., a
Delaware corporation, do hereby constitute and appoint David A. Laws and Charles
S. Isherwood, and each of them, the lawful attorneys-in-fact and agents, with
full power and authority to do any and all acts and things and to execute any
and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the 1933 Act, and any rules or regulations or requirements of the
SEC in connection with this Registration Statement. Without limiting the
generality of the foregoing power and authority, the powers granted include the
power and authority to sign the names of the undersigned officers and directors
in the capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement and to any and all instruments or documents filed as part
of or in conjunction with this Registration Statement or to amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any one of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.

Pursuant to the requirements of the 1933 Act, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ David A. Laws President, Chief Executive Officer October 18, 1996
- ----------------------------------- (Principal Executive Officer) and Director
David A. Laws

/s/ Charles S. Isherwood Chief Financial Officer (Principal October 18, 1996
- ----------------------------------- Financial Officer), Secretary and
Charles S. Isherwood Sr. Vice President, Corporate Services
</TABLE>

II-4.

<PAGE> 6

<TABLE>
<S> <C> <C>
/s/ George Rassam Controller (Principal Accounting Officer) October 18, 1996
- ----------------------------------------
George Rassam

/s/ Zvi Grinfas Director October 18, 1996
- ----------------------------------------
Zvi Grinfas

/s. Peter D. Olson Director October 18, 1996
- ----------------------------------------
Peter D. Olson

/s/ Bernard V. Vonderschmitt Director October 18, 1996
- ----------------------------------------
Bernard V. Vonderschmitt
</TABLE>

II-5.

<PAGE> 7

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

EXHIBITS

FORM S-8

UNDER

SECURITIES ACT OF 1933

IMP, INC.

<PAGE> 8

EXHIBIT INDEX

Exhibit
Number Exhibit

5 Opinion and consent of Brobeck, Phleger & Harrison LLP.

23.1 Consent of Independent Auditors - Price Waterhouse LLP.

23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.

24 Power of Attorney. Reference is made to page II.4 of this
Registration Statement.

99.1 1996 Employee Stock Purchase Plan.

99.2 Form of Stock Purchase Agreement.

99.3 Form of Enrollment/Change Form.

99.4 IMP, Inc. Stock Option Plan

<PAGE> 1

EXHIBIT 5

OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP

October 23, 1996

IMP, Inc.
2830 North First Street
San Jose, California 95134

Re: IMP, Inc. Registration Statement for Offering
of an aggregate of 1,500,000 Shares of Common Stock

Ladies and Gentlemen:

We refer to your registration on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended, of (i) 750,000 shares of Common
Stock under the IMP, Inc. 1996 Employee Stock Purchase Plan, and (ii) 750,000
shares of Common Stock under the IMP, Inc. Stock Option Plan. We advise you
that, in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the IMP, Inc. 1996 Employee Stock Purchase Plan and
Stock Option Plan, and in accordance with the Registration Statement, such
shares will be validly issued, fully paid and nonassessable shares of the
Company's Common Stock.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated April 30, 1996, which appears on page
15 of the 1996 Annual Report to Stockholders of IMP, Inc., which is
incorporated by reference in IMP, Inc.'s Annual Report on Form 10-K for the
year ended March 31, 1996. We also consent to the incorporation by reference of
our report on the Financial Statement Schedules which appears on page II-1 of
such Annual Report on Form 10-K.

/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Jose, California
October 23, 1996

<PAGE> 1
EXHIBIT 99.1

IMP, INC.

1996 EMPLOYEE STOCK PURCHASE PLAN

I. PURPOSE OF THE PLAN

This Employee Stock Purchase Plan is intended to promote the
interests of IMP, Inc. by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.

Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.

II. ADMINISTRATION OF THE PLAN

The Compensation Committee of the Board in its capacity as
Plan Administrator shall have full authority to interpret and construe any
provision of the Plan and to adopt such rules and regulations for proper
administration of the Plan as it may deem necessary or appropriate. Decisions of
the Plan Administrator shall be final and binding on all parties having an
interest in the Plan.

III. STOCK SUBJECT TO PLAN

A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 750,000 shares.

B. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and class of securities
issuable under the Plan, (ii) the maximum number and class of securities
purchasable per Participant on any one Purchase Date and (iii) the number and
class of securities and the price per share in effect under each outstanding
purchase right in order to prevent the dilution or enlargement of benefits
thereunder.

IV. OFFERING PERIODS

A. Shares of Common Stock shall be offered for purchase under
the Plan through a series of successive offering periods until such time as (i)
the maximum number of

<PAGE> 2

shares of Common Stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated.

B. Each offering period shall be of such duration (not to
exceed twenty-four (24) months) as determined by the Plan Administrator prior to
the start date. The initial offering period shall commence on October 1, 1996
and terminate on the last business day in September 1998. The next offering
period shall begin on the first business day in October 1998 and terminate on
the last business day in September 2000. Subsequent offering periods shall begin
as designated by the Plan Administrator.

C. Each offering period shall be comprised of a series of
successive semi-annual Purchase Intervals. Purchase Intervals shall run from the
first business day in October to the last business day in March each year and
from the first business day in April each year to the last business day in
September in the following year. Accordingly, there shall be a maximum of four
(4) semi-annual Purchase Intervals within each offering period. However, the
first Purchase Interval in effect for the initial offering period under the Plan
shall begin on October 1, 1996 and continue through March 31, 1997.

D. Should the Fair Market Value per share of Common Stock on
any Purchase Date within an offering period be less than the Fair Market Value
per share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new offering
period shall have a duration of twenty-four (24) months, unless the Plan
Administrator establishes a shorter duration within five (5) business days
following the start date of that offering period.

E. Under no circumstances shall any shares of Common Stock be
issued under the Plan until such time as (i) the Plan shall have been approved
by the Corporation's stockholders and (ii) the Corporation shall have complied
with all applicable requirements of the Securities Act, all applicable listing
requirements of any securities exchange (or the Nasdaq National Market if
applicable) on which shares of the Common Stock are listed for trading and all
other applicable statutory and regulatory requirements.

V. ELIGIBILITY

A. Each individual who is an Eligible Employee on the start
date of any offering period may join that offering period at that time or on any
subsequent Quarterly Entry Date within that offering period, provided such
individual remains an Eligible Employee.

B. An individual who first becomes an Eligible Employee after
the start date of any offering period may join such offering period on any
Quarterly Entry Date within that offering period on which he or she remains an
Eligible Employee.

<PAGE> 3

C. The date an Eligible Employee enters an offering period
shall be designated his or her Entry Date for purposes of that offering period.

D. To participate in the Plan for a particular offering
period, the Eligible Employee must complete the enrollment forms prescribed by
the Plan Administrator (including a stock purchase agreement and payroll
deduction authorization) and file such forms with the Plan Administrator (or its
designate) prior to his or her scheduled Entry Date into that offering period.
However, each individual who is a Participant in an offering period on the date
such offering period terminates pursuant to Paragraph IV.D shall automatically
be enrolled in the new offering period which commences immediately after such
termination date.

VI. PAYROLL DEDUCTIONS

A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock in an offering period may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of fifteen
percent (15%). The deduction rate so authorized shall continue in effect for the
remainder of the offering period, except to the extent such rate is changed in
accordance with the following guidelines:

- The Participant may, not less than ten (10) days
prior to any Quarterly Adjustment Date within the offering period, file
the appropriate form with the Plan Administrator to increase or
decrease the rate of his or her payroll deduction for the remainder of
that offering period. The new rate (which may not exceed the fifteen
percent (15%) maximum) shall become effective on the first Quarterly
Adjustment Date following the filing of such form.

B. Payroll deductions shall begin on the first pay day
following the start date of the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be held in
any segregated account or trust fund and may be commingled with the general
assets of the Corporation and used for general corporate purposes.

C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.

D. The Participant's acquisition of Common Stock under the
Plan on any Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Purchase Date, whether within the
same or a different offering period.

VII. PURCHASE RIGHTS

<PAGE> 4

A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments
during the remainder of such offering period, upon the terms set forth below.
The Participant shall execute a stock purchase agreement embodying such terms
and such other provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.

Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.

B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall
be automatically exercised in installments on each Purchase Date within the
offering period, and shares of Common Stock shall accordingly be purchased on
behalf of each Participant (other than any Participant whose payroll deductions
have previously been refunded in accordance with the Termination of Purchase
Right provisions below) on each such Purchase Date. The purchase shall be
effected by applying the Participant's payroll deductions for the Purchase
Interval ending on such Purchase Date to the purchase of whole shares of Common
Stock at the purchase price in effect for the Participant for that Purchase
Date.

C. PURCHASE PRICE. The purchase price per share at which
Common Stock will be purchased on the Participant's behalf on each Purchase Date
within the offering period shall be equal to eighty-five percent (85%) of the
lower of (i) the Fair Market Value per share of Common Stock on the
Participant's Entry Date into that offering period or (ii) the Fair Market Value
per share of Common Stock on that Purchase Date.

D. NUMBER OF PURCHASABLE SHARES. The number of shares of
Common Stock purchasable by a Participant on each Purchase Date during the
offering period shall be the number of whole shares obtained by dividing the
amount collected from the Participant through payroll deductions during the
Purchase Interval ending with that Purchase Date by the purchase price in effect
for the Participant for that Purchase Date. However, the maximum number of
shares of Common Stock purchasable per Participant on any one Purchase Date
shall not exceed 1,000 shares, subject to periodic adjustments in the event of
certain changes in the Corporation's capitalization.

E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not
applied to the purchase of shares of Common Stock on any Purchase Date because
they are not sufficient to purchase a whole share of Common Stock shall be held
for the purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.

<PAGE> 5

F. TERMINATION OF PURCHASE RIGHT. The following provisions
shall govern the termination of outstanding purchase rights:

(i) A Participant may, not later than ten (10) days
prior to the next Purchase Date in the offering period, terminate his
or her outstanding purchase right for that offering period by filing
the appropriate form with the Plan Administrator (or its designate),
and no further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right. Any payroll
deductions collected during the Purchase Interval in which such
termination occurs shall be refunded as soon as possible.

(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which the terminated purchase right was granted. In
order to resume participation in any subsequent offering period, such
individual must re-enroll in the Plan (by making a timely filing of the
prescribed enrollment forms) prior to his or her Entry Date into that
offering period.

(iii) Should the Participant cease to remain an
Eligible Employee for any reason (including death, disability or change
in status), then his or her outstanding purchase right shall
immediately terminate, and the Participant's payroll deductions for the
Purchase Interval in which such purchase right so terminates shall be
immediately refunded. However, should the Participant cease to remain
in active service by reason of an approved unpaid leave of absence,
then the Participant shall have the right, exercisable up until the
last business day of the Purchase Interval in which such leave
commences, to (a) withdraw all the payroll deductions collected to date
on his or her behalf for that Purchase Interval or (b) have such funds
held for the purchase of shares on his or her behalf on the next
scheduled Purchase Date. In no event, however, shall any further
payroll deductions be collected on the Participant's behalf during such
leave. Upon the Participant's return to active service, his or her
payroll deductions under the Plan shall automatically resume at the
rate in effect at the time the leave began.

G. CORPORATE TRANSACTION. The Participant's outstanding
purchase right shall automatically be exercised, immediately prior to the
effective date of any Corporate Transaction, by applying the payroll deductions
of such Participant for the Purchase Interval in which such Corporate
Transaction occurs to the purchase of whole shares of Common Stock at a purchase
price per share equal to eighty-five percent (85%) of the lower of (i) the Fair
Market Value per share of Common Stock on his or her Entry Date into the
offering period in which such Corporate Transaction occurs or (ii) the Fair
Market Value per share of Common Stock immediately prior to the effective date
of such Corporate Transaction. However, the applicable limitation on the number
of shares purchasable per Participant shall continue to apply to any such
purchase.

<PAGE> 6

The Corporation shall use its best efforts to provide at least
ten (10)-days prior written notice of the occurrence of any Corporate
Transaction, and each Participant shall, following the receipt of such notice,
have the right to terminate his or her outstanding purchase right prior to the
effective date of the Corporate Transaction.

H. PRORATION OF PURCHASE RIGHTS. Should the total number of
shares of Common Stock which are to be purchased pursuant to outstanding
purchase rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of the aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded.

I. ASSIGNABILITY. The purchase right shall be exercisable only
by the Participant and shall not be assignable or transferable by the
Participant.

J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.

VIII. ACCRUAL LIMITATIONS

A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right granted under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value of such stock on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.

B. For purposes of applying such accrual limitations to the
purchase rights granted under this Plan, the following provisions shall be in
effect:

(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series of installments on
each successive Purchase Date during the offering period for which such
right is granted.

(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the Participant
has already

<PAGE> 7

accrued in the same calendar year the right to acquire Common Stock
under one (1) or more other purchase rights at a rate equal to
Twenty-Five Thousand Dollars ($25,000) worth of Common Stock
(determined on the basis of the Fair Market Value per share on the date
or dates of grant) for each calendar year such rights were at any time
outstanding.

C. If by reason of such accrual limitations, the purchase
right of a Participant does not accrue for a particular Purchase Interval, then
the payroll deductions which the Participant made during that Purchase Interval
with respect to such purchase right shall be promptly refunded.

D. In the event there is any conflict between the provisions
of this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.

IX. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan was adopted by the Board on May 15, 1996 and shall
become effective on October 1, 1996 as the successor to the Corporation's 1987
Employee Stock Purchase Plan. The initial purchase rights under the Plan shall
be granted on such effective date. However, no such purchase right shall be
exercised, and no shares of Common Stock shall be issued, under the Plan unless
the Plan is approved by the Corporation's stockholders at the 1996 Annual
Meeting. In the event such stockholder approval is not obtained, then all
outstanding purchase rights under this Plan shall immediately terminate, all
payroll deductions collected with respect to those terminated rights shall be
refunded, and no further purchase rights shall be granted under the Plan.

B. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in October 2006, (ii)
the date on which all shares available for issuance under the Plan shall have
been sold pursuant to purchase rights exercised under the Plan or (iii) the date
on which all purchase rights are exercised in connection with a Corporate
Transaction. No further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following such
termination.

X. AMENDMENT OF THE PLAN

The Board may alter, amend, suspend or discontinue the Plan at
any time to become effective immediately following the close of any Purchase
Interval. However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan or the maximum number of shares purchasable per
Participant on any one Purchase Date, except for permissible adjustments in the
event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under

<PAGE> 8

the Plan, or (iii) materially increase the benefits accruing to Participants
under the Plan or materially modify the requirements for eligibility to
participate in the Plan.

XI. GENERAL PROVISIONS

A. All costs and expenses incurred in the administration of
the Plan shall be paid by the Corporation.

B. The provisions of the Plan shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws rules.

C. Nothing in the Plan shall confer upon the Participant any
right to continue in the employ of the Corporation or any Corporate Affiliate
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with or
without cause.

<PAGE> 9

SCHEDULE A

CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN

AS OF THE EFFECTIVE DATE

IMP, INC.

<PAGE> 10

APPENDIX

The following definitions shall be in effect under the Plan:

A. BASE SALARY shall mean the regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan, plus any
pre-tax contributions made by the Participant to any Code Section 401(k) salary
deferral plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Corporation or any Corporate Affiliate. The following items
of compensation shall NOT be included in Base Salary: (i) all overtime payments,
bonuses, commissions (other than those functioning as base salary equivalents),
profit-sharing distributions and other incentive-type payments and (ii) any and
all contributions (other than Code Section 401(k) or Code Section 125
contributions) made on the Participant's behalf by the Corporation or any
Corporate Affiliate under any employee benefit or welfare plan now or hereafter
established.

B. BOARD shall mean the Corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as
amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE AFFILIATE shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or

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

G. CORPORATION shall mean IMP, Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of IMP, Inc. which shall by appropriate action adopt the Plan.

A-1.

<PAGE> 11

H. ELIGIBLE EMPLOYEE shall mean any person who is engaged, on
a regularly-scheduled basis of more than twenty (20) hours per week for more
than five (5) months per calendar year, in the rendition of personal services to
any Participating Corporation as an employee for earnings considered wages under
Code Section 3401(a).

I. ENTRY DATE shall mean any of the Quarterly Entry Dates in
effect for an offering period on which an Eligible Employee joins that offering
period in accordance with the provisions of Article V. The earliest Entry Date
under the Plan shall be October 1, 1996.

J. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.

K. PARTICIPANT shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the Plan.

L. PARTICIPATING CORPORATION shall mean the Corporation and
such Corporate Affiliate or Affiliates as may be authorized from time to time by
the Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the initial offering period are
listed in attached Schedule A.

M. PLAN shall mean the Corporation's 1996 Employee Stock
Purchase Plan, as set forth in this document.

N. PLAN ADMINISTRATOR shall mean the Compensation Committee of
the Board in its capacity as administrator of the Plan.

A-2.

<PAGE> 12

O. PURCHASE INTERVAL shall mean each successive period within
the offering period at the end of which there shall be purchased shares of
Common Stock on behalf of each Participant. The initial Purchase Interval under
the Plan shall run from October 1, 1996 to March 31, 1997.

P. PURCHASE DATE shall mean the last business day of each
Purchase Interval. The initial Purchase Date shall be March 31, 1997.

Q. QUARTERLY ADJUSTMENT DATE shall mean the quarterly date in
each offering period as of which a Participant may increase or decrease his or
her rate of payroll deduction under the Plan for the remainder of that offering
period. The Quarterly Adjustment Dates for each offering period shall be the
first business day in January, April, July and October each year.

R. QUARTERLY ENTRY DATE shall mean any quarterly date within
an offering period on which an Eligible Employee may enter that offering period.
The Quarterly Entry Dates for each offering period shall be the first business
day in January, April, July and October each year. However, the earliest
Quarterly Entry Date under the Plan shall be the October 1, 1996 start date of
the initial offering period under the Plan.

S. SECURITIES ACT shall mean the Securities Act of 1933, as
amended.

T. STOCK EXCHANGE shall mean either the American Stock
Exchange or the New York Stock Exchange.

A-3.

<PAGE> 1
EXHIBIT 99.2

IMP, INC.

STOCK PURCHASE AGREEMENT

I hereby elect to participate in the Employee Stock Purchase Plan (the
"ESPP") effective with the Entry Date specified below, and I hereby subscribe to
purchase shares of Common Stock of IMP, Inc. (the "Corporation"), in accordance
with the provisions of this Agreement and the ESPP. I hereby authorize payroll
deductions from each of my paychecks following my entry into the ESPP in the 1%
multiple of my earnings (not to exceed a maximum of 15%) specified in my
attached Enrollment Form.

Each offering period is divided into a series of successive purchase
intervals. The initial purchase interval is to begin on October 1, 1996, and end
on March 31, 1997. Subsequent purchase intervals will each be of six (6) months
duration and will run from the first business day of April to the last business
day of September each year and from the first business day of October each year
until the last business day of March in the following year. My participation
will automatically remain in effect from one offering period to the next in
accordance with this Agreement and my payroll deduction authorization, unless I
withdraw from the ESPP or change the rate of my payroll deduction or unless my
employment status changes. I may increase or reduce the rate of my payroll
deductions for the remainder of an offering period by filing an appropriate form
with the Plan Administrator not less than ten (10) days prior to any quarterly
adjustment date (the first business day of January, April, July and October of
each year) within the offering period to become effective on the first quarterly
adjustment date following the filing of such form.

My payroll deductions will be accumulated for the purchase of shares of
the Corporation's Common Stock on the last business day of each purchase
interval within the offering period. The purchase price per share will not be
less than 85% of the lower of (i) the fair market value per share of Common
Stock on my entry date into the offering period or (ii) the fair market value
per share on the semi-annual purchase date. I will also be subject to ESPP
restrictions (i) limiting the maximum number of shares which I may purchase on
any one purchase date to 1,000 shares and (ii) prohibiting me from purchasing
more than $25,000 worth of Common Stock for each calendar year my purchase right
remains outstanding.

I may withdraw from the ESPP not later than ten (10) days prior to the
last business day of a purchase interval and the Corporation will automatically
refund all my payroll deductions for that purchase interval. However, I may not
rejoin that particular offering period at any later date. Upon the termination
of my employment for any reason, including death or disability, or my loss of
eligible employee status, my participation in the ESPP will immediately cease
and all my payroll deductions for the purchase interval in which my employment
terminates or my loss of eligibility occurs will automatically be refunded.

If I take an unpaid leave of absence, my payroll deductions will
immediately cease, and any payroll deductions for the purchase interval in which
my leave begins will, at my election, either be refunded or applied to the
purchase of shares of Common Stock at the end of that purchase interval. Upon my
return to active service, my payroll deductions will automatically resume at the
rate in effect when my leave began.

A stock certificate for the shares purchased on my behalf at the end of
each purchase interval will automatically be deposited into a brokerage account
which the Corporation will open on my behalf. I will notify the Corporation of
any sale or disposition of my ESPP shares, and I will satisfy all applicable
income and employment tax withholding requirements at the time of such sale or
disposition.

The Corporation has the right, exercisable in its sole discretion, to
amend or terminate the ESPP at any time, with such amendment or termination to
become effective immediately following the exercise of outstanding purchase
rights at the end of any current purchase interval. Should the Corporation elect
to terminate the ESPP, I will have no further rights to purchase shares of
Common Stock pursuant to this Agreement.

I have received a copy of the official Plan Prospectus summarizing the
major features of the ESPP. I have read this Agreement and the Prospectus and
hereby agree to be bound by the terms of both this Agreement and the ESPP. The
effectiveness of this Agreement is dependent upon my eligibility to participate
in the ESPP.

Date:_____________________ , 199__

______________________________
Signature of Employee
Printed Name:_______________

Entry Date: _____________, 199__

<PAGE> 1
EXHIBIT 99.3

EMPLOYEE STOCK PURCHASE PLAN ("ESPP")
ENROLLMENT/CHANGE FORM

<TABLE>
<CAPTION>
Action Complete Sections:
<S> <C>
SECTION 1:
/ / New Enrollment 2, 3, 7 and sign attached
ACTION Stock Purchase Agreement
/ / Change Payroll Deductions 2, 4, 7
/ / Terminate Payroll Deductions 2, 5, 7
/ / Leave of Absence 2, 6, 7

SECTION 2:
Name___________________________________________________________________
PERSONNEL Last First MI Dept.
DATA
Home Address___________________________________________________________
Street

___________________________________________________________________
City State Zip Code

Social Security #:/ / / /-/ / /-/ / / / /

SECTION 3:
Effective with the Purchase

NEW Interval Beginning: Payroll Deduction Amount: _____% of base salary*
ENROLLMENT / / October 1, 199
/ / April 1, 199 * Must be a multiple of 1% up to a maximum of 15% of
base salary
SECTION 4:
Effective with the I authorize the following new level of payroll
CHANGE Pay Period Beginning: _____________________ deductions: % of base salary*
PAYROLL Month, Day and Year
DEDUCTIONS * Must be a multiple of 1% up to a maximum of 15% of
base salary

NOTE: You may increase or reduce your rate of payroll deductions no later than ten (10) days prior
to any quarterly adjustment date (the first business day of January, April, July or October)
to become effective as of that quarterly adjustment date.

SECTION 5:
Effective with the Your election to terminate your payroll deductions
TERMINATE Pay Period Beginning: _______________________ for the balance of the offering period cannot be
PAYROLL Month, Day and Year changed, and you may not rejoin the offering period
DEDUCTIONS at a later date. You will not be able to resume
participation in the ESPP until a new offering
period begins.

Your ESPP payroll deductions collected to date for the purchase interval in which you file
this termination notice will be refunded to you.

NOTE: If your employment terminates for any reason or your eligibility status changes (less than 20
hrs/wk or less than 5 months/yr), you will immediately cease to participate in the ESPP, and
your ESPP payroll deductions collected in that purchase interval will automatically be
refunded to you.

SECTION 6
LEAVE OF In connection with my unpaid leave of absence, I elect the following action with respect to my ESPP
ABSENCE payroll deductions to date in the current purchase interval:

/ / Purchase IMP, Inc., shares at end of the interval
OR
/ / Refund ESPP payroll deductions collected

NOTE: If you take an unpaid leave of absence, your payroll deductions will immediately cease. Upon
your return to active service, your payroll deductions will automatically resume at the rate
in effect for you at the time you went on leave.
</TABLE>

SECTION 7
AUTHORIZATION

I hereby authorize the specific action or actions indicated above.

______________________________ _________________________
Date Signature of Employee

<PAGE> 1
EXHIBIT 99.4

IMP, INC.
STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH MAY 15, 1996)

ARTICLE ONE
GENERAL

I. PURPOSES OF THE RESTATED PLAN

This IMP, Inc. Stock Option Plan (the "Plan"), is intended to
promote the interests of IMP, Inc., a Delaware corporation (the "Company"), by
providing a method whereby key employees and key consultants of the Company or
its parent or subsidiary corporations who perform valuable services for the
Company and its parent and subsidiary corporations and the non-employee members
of the Company's Board of Directors may be offered incentives or rewards which
will encourage them to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Company and continue to render services to
the Company or its parent and subsidiary corporations.

For purposes of the Plan, each corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company shall
be considered to be a SUBSIDIARY of the Company, provided each such corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. Each corporation (other than the Company) in an unbroken chain of
corporations ending with the Company shall be considered to be a PARENT of the
Company, provided each such corporation (other than the Company) in the unbroken
chain owns, at the time of determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

II. ADMINISTRATION OF THE PLAN

A. A Committee of two (2) or more non-employee Board members
appointed by the Board (the "Primary Committee") shall have sole and exclusive
authority to administer the Discretionary Option Grant Program of Article Two
with respect to Section 16 Insiders. No non-employee Board member shall be
eligible to serve on the Primary Committee if such individual has, during the
twelve (12)-month period immediately preceding the date of his or her
appointment to the Committee received an option grant or stock award under the
Plan or any other stock option, stock appreciation, stock bonus or other stock
plan of the Company (or any parent or subsidiary), other than pursuant to the
automatic option grant provisions of Article Three. For purposes of the Plan,
SECTION 16 INSIDER shall mean an officer or director of the Company subject to
the short-swing profit liabilities of Section 16 of the Securities Exchange Act
of 1934, as amended (the "1934 Act").

<PAGE> 2

B. Administration of the Discretionary Option Grant Program of
Article Two with respect to all other persons eligible to participate in that
program may, at the Board's discretion, be vested in the Primary Committee or in
a Secondary Committee of one (1) or more Board members appointed by the Board
(the "Secondary Committee"), or the Board may retain the power to administer
that program with respect to all such persons. The Board may provide the
Secondary Committee with exclusive authority to administer the Discretionary
Option Grant Program with respect to non-Section 16 Insiders or may provide the
Secondary Committee with such authority on a separate but concurrent basis with
the Primary Committee so that both such committees may make grants under the
Discretionary Option Grant Program to non-Section 16 Insiders. The members of
the Secondary Committee may be Board members who are Employees eligible to
receive discretionary option grants under the Plan or any other stock option,
stock appreciation, stock bonus or other stock plan of the Company (or any
parent or subsidiary).

C. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time.

D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant Program of Article Two and to
make such determinations under, and issue such interpretations of, the
provisions of such programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Option Grant Program under its jurisdiction or any stock option
thereunder.

E. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.

F. Administration of the Automatic Option Grant Program of
Article Three shall be self-executing in accordance with the terms of that
program, and no Plan Administrator shall exercise any discretionary functions
with respect to option grants made thereunder.

III. ELIGIBILITY FOR OPTION GRANTS

A. The persons eligible to receive options pursuant to the
Discretionary Option Grant Program shall be limited to the following
individuals: (i) key Employees (including officers and directors) and key
consultants of the Company or its parent or subsidiary corporations as the

<PAGE> 3

Plan Administrator shall select from time to time and (ii) the non-employee
Board members (other than those at the time serving as members of the Primary
Committee). Non-employee Board members (including those at the time serving as
members of the Primary Committee) shall also be eligible to receive one or more
option grants pursuant to the provisions of the Automatic Option Grant Program.

B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine the
number of shares to be covered by each grant made under the Discretionary Option
Grant Program of Article Two, whether the granted option is to be an incentive
stock option ("Incentive Option") which satisfies the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
non-statutory option not intended to meet such requirements, the time or times
at which each such option is to be granted and is to become exercisable, and the
maximum term for which the option is to be outstanding.

IV. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of the
Company's authorized but unissued or reacquired Common Stock, $.001 par value
per share ("Common Stock"). The maximum number of shares which may be issued
over the term of the Plan shall not exceed 5,427,000* shares. The total number
of shares issuable under the Plan shall be subject to adjustment from time to
time in accordance with Section IV.D below.

B. In no event may which any one individual participating in the
Plan be granted stock options or separately exercisable stock appreciation
rights for more than 1,000,000 shares of Common Stock in the aggregate over the
term of the Plan, subject to periodic adjustment in accordance with the
provisions of Section IV.D of this Article One. However, for purposes of such
limitation, any stock options or stock appreciation rights granted prior to July
31, 1994 shall not be taken into account.

C. Should an option expire or terminate for any reason prior to
exercise or surrender in full (including options cancelled in accordance with
the cancellation-regrant provisions of Section IV of Article Two of the Plan),
the shares subject to the portion of the option not so exercised or surrendered
shall be available for subsequent option grants under the Plan. Shares subject
to any option or portion thereof surrendered or cancelled in accordance with
Section V of Article Two of the Plan or Section III of Article Three of the Plan
and all share issuances under the Plan, whether or not subsequently repurchased
by the Company pursuant to

- --------

* The share reserve includes the 750,000 share increase authorized by the
Board on May 15, 1996, subject to stockholder approval at the 1996 Annual
Meeting. From and after June 30, 1996, the maximum number of shares which may be
issued under the Plan shall not exceed 3,009,908 shares, subject to adjustment
under Section IV.D.

<PAGE> 4

its repurchase rights under the Plan, shall reduce on a share-for-share basis
the number of shares of Common Stock available for subsequent option grants
under this Plan. In addition, should the exercise price of an outstanding option
under the Plan be paid with shares of Common Stock, then the number of shares
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares of
Common Stock issued to the option holder.

D. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, combination of
shares, recapitalization or other change affecting the outstanding Common Stock
as a class without the Company's receipt of consideration, then, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the maximum number and/or class of securities for
which any one individual may be granted stock options and separately exercisable
stock appreciation rights over the remaining term of the Plan, (iii) the number
and/or class of securities for which options are to be granted to newly-elected
or continuing non-employee Board members pursuant to the automatic grant
provisions of Article Three and (iv) the number and/or class of securities and
the option price per share in effect under each outstanding option (including
automatic grants made under Article Three) in order to prevent the dilution or
enlargement of benefits thereunder.

<PAGE> 5

ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM

I. TERMS AND CONDITIONS OF OPTIONS

Discretionary option grants under the Plan shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or non-statutory options. Individuals
who are not employees of the Company or its parent or subsidiary corporations
may only receive non-statutory options under the Plan. Each such discretionary
grant shall be evidenced by an instrument in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
and incorporate the terms and conditions specified below. Each instrument
evidencing an Incentive Option shall, in addition, comply with the applicable
provisions of Section II.

A. Option Price.

1. The option price per share shall be fixed by the Plan
Administrator but shall in no event be less than eighty-five percent (85%) of
the fair market value per share of Common Stock on the date of grant (the "Grant
Date"). For such purpose, the Grant Date shall be the date on which the Plan
Administrator approves the option or, if later, the date the optionee commences
Service (as defined below in Section I.C.6 of this Article Two).

2. If any individual to whom an Incentive Option or a
non-statutory option is to be granted pursuant to the provisions of the Plan is
on the Grant Date the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined voting power
of all classes of stock of the Company or any one of its parent or subsidiary
corporations (such person to be herein referred to as a 10% Stockholder), then
the option price per share shall not be less than one hundred ten percent (110%)
of the fair market value per share of Common Stock on the Grant Date.

3. The option price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section VI of
this Article Two, be payable in one of the alternative forms specified below:

(i) payment in cash or check payable to the Company's order;

(ii) payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Company's reported
earnings and valued at fair market value on the Exercise Date (as such
term is defined below); or

<PAGE> 6

(iii) to the extent the option is exercised for vested
shares, payment through a broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide irrevocable written
instructions (I) to a Companydesignated broker-dealer to effect the
immediate sale of the purchased shares and remit to the Company, out of
the sale proceeds available on the settlement date, an amount equal to
the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Company by reason of such purchase and (II) to the
Company to deliver the certificates for the purchased shares directly to
such broker-dealer.

For purposes of this subparagraph 3, the Exercise Date shall be
the date on which written notice of the option exercise is delivered to the
Company. Except to the extent the sale and remittance procedure specified above
is utilized for the exercise of the option, payment of the option price for the
purchased shares must accompany such notice.

4. The fair market value per share of Common Stock on any
relevant date under subparagraph 1, 2 or 3 above (and for all other valuation
purposes under the Plan) shall be determined in accordance with the following
provisions:

(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded on the Nasdaq
National Market, the fair market value shall be the closing selling
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the
closing selling price on the last preceding date for which such
quotation exists shall be determinative of fair market value.

(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value shall be
the closing selling price per share of Common Stock on the date in
question on the stock exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such prices are
officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such exchange
on the date in question, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such
quotation exists.

B. Term and Exercise of Options. Each option granted under the
Plan shall become exercisable at such time or times, during such period, and for
such number of shares as shall be determined by the Plan Administrator and set
forth in the instrument evidencing such option; provided, however, that no such
option shall have a term in excess of ten (10) years from the Grant Date. During
the lifetime of the optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the optionee and
shall

<PAGE> 7

not be assignable or transferable by the optionee except for any transfer of the
option effected by will or by the laws of descent and distribution following the
optionee's death.

C. Effect of Termination of Service.

1. Should an optionee cease to remain in Service for any
reason (including death or permanent disability as defined in Section 22(e)(3)
of the Internal Revenue Code) while the holder of one or more outstanding
options under the Plan, then each such option shall in no event remain
exercisable for more than a twelve (12) month period (or such shorter period
determined by the Plan Administrator and specified in the instrument evidencing
the option) following the date of such cessation of Service. Under no
circumstances shall any such option be exercisable after the specified
expiration date of the option term. Each such option shall, during the
applicable twelve (12) month or shorter period, be exercisable only to the
extent of the number of vested shares (if any) for which the option is
exercisable on the date of the optionee's cessation of Service. Upon the
expiration of such twelve (12) month or shorter period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
exercisable. However, the option shall immediately, upon the optionee's
cessation of Service, terminate and cease to be outstanding to the extent it is
not otherwise at that time exercisable for vested shares.

2. Should the optionee cease Service and thereafter die while
holding one or more outstanding options under the Plan, then each such option
may be exercised, but only to the extent of the number of vested shares (if any)
for which the option is exercisable on the date of the optionee's cessation of
Service (less any shares for which the option is subsequently exercised by
optionee prior to his or her death), by the personal representative of the
optionee's estate or by the person or persons to whom the option is transferred
pursuant to the optionee's will or in accordance with the laws of descent and
distribution, provided and only if such exercise occurs prior to the earlier of
(i) the first anniversary of the date of the optionee's death or (ii) the
specified expiration date of the option term. Upon the occurrence of the earlier
event, the option shall terminate and cease to be exercisable.

3. Should the optionee die prior to cessation of Service, then
each option under the Plan held by such optionee at the time of death may be
subsequently exercised, for all or any part of the vested shares of Common Stock
at the time subject to such option, by the personal representative of the
optionee's estate or by the person or persons to whom the option is transferred
pursuant to the optionee's will or in accordance with the laws of descent and
distribution, provided and only if such exercise occurs prior to the earlier of
(i) the first anniversary of the date of the optionee's death or (ii) the
specified expiration date of the option term. Upon the occurrence of the earlier
event, the option shall terminate and cease to be exercisable.

4. If (i) the optionee's Service is terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct, fraud
or embezzlement or any unauthorized disclosure or use of confidential
information or trade secrets) or (ii) the optionee

<PAGE> 8

makes or attempts to make any unauthorized use or disclosure of confidential
information or trade secrets of the Company or its parent or subsidiary
corporations, then in any such event each outstanding option held by the
optionee under the Plan shall immediately terminate and cease to be exercisable.

5. Notwithstanding subparagraphs 1 and 2 above, the Plan
Administrator shall have complete discretion, exercisable either at the time the
option is granted or at any while the option remains outstanding, to establish
as a provision applicable to the exercise of one or more options granted under
the Plan that during the limited period of exercisability following cessation of
Service as provided in Section I.C.1 above or following the Employee's death as
provided in Section I.C.2 or Section I.C.3 above, the option may be exercised
not only with respect to the number of vested shares for which it is exercisable
at the time of the optionee's cessation of Service or death but also with
respect to one or more subsequent installments of purchasable shares in which
the optionee would otherwise have vested had such cessation of Service not
occurred.

6. For purposes of the foregoing provisions of this Section I
of Article Two (and all other provisions of the Plan), unless it is specifically
provided otherwise in the option agreement evidencing the option grant and/or
the purchase agreement evidencing the shares purchased under such option, the
optionee shall be deemed to remain in Service for so long as such individual
renders services on a periodic basis to the Company or any parent or subsidiary
corporation in the capacity of an Employee, a non-employee member of the board
of directors or an independent consultant or advisor. The optionee shall be
considered to be an Employee for so long as such individual remains in the
employ of the Company or one or more of its parent or subsidiary corporations
subject to the control and direction of the employer entity not only as to the
work to be performed but also as to the manner and method of performance.

D. Stockholder Rights. An option holder shall have none of the
rights of a stockholder with respect to any shares covered by the option until
such individual shall have exercised the option, paid the option price for the
purchased shares and been issued a stock certificate for those shares. No
adjustment shall be made for dividends or distributions (whether paid in cash,
securities or other property) for which the record date is prior to the date
such stock certificate is issued.

E. Repurchase Rights. The shares of Common Stock acquired upon
the exercise of options granted under the Plan may be subject to repurchase by
the Company in accordance with the following provisions:

1. The Plan Administrator shall have the discretion to grant
options which are exercisable for unvested shares of Common Stock. Should the
optionee cease Service while holding such unvested shares, then the Company
shall have the right to repurchase, at the option exercise price paid per share,
any or all of those unvested shares. Any such repurchase right shall be
exercisable by the Company (or its assignees) upon such terms and conditions
(including the establishment of the appropriate vesting schedule and other
provisions for the

<PAGE> 9

expiration of such right in one or more installments over the optionee's period
of Service) as the Plan Administrator may specify in the instrument evidencing
such right.

2. The Plan Administrator may assign the Company's repurchase
rights under subparagraph 1 above to any person or entity selected by the Plan
Administrator, including one or more stockholders of the Company.

3. All of the Company's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction under
Section III of Article Two, except to the extent that: (i) any such repurchase
right is, in connection with the Corporate Transaction, to be assigned to the
successor corporation (or parent thereof) or (ii) such termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is granted.

II. INCENTIVE OPTIONS

The terms and conditions specified below shall be applicable to
all Incentive Options granted under the Plan. Only Employees may be granted
Incentive Options. Options which are specifically designated as "non-statutory"
options when issued under the Plan shall not be subject to such terms and
conditions.

A. Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value per share of Common Stock on the Grant
Date.

B. Dollar Limitation. The aggregate fair market value (determined
as of the respective Grant Date or Dates) of the Common Stock for which one or
more options granted to any Employee under the Plan (or any other option plan of
the Company or its parent or subsidiary corporations) may for the first time
become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two or more such options which become exercisable for the first
time in the same calendar year, the foregoing limitation on the exercisability
thereof as Incentive Options shall be applied on the basis of the order in which
such options are granted.

C. 10% Stockholder. If any Employee to whom an Incentive Option
is to be granted pursuant to the provisions of the Plan is on the Grant Date a
10% Stockholder, then the option shall not have a term in excess of five (5)
years from the Grant Date.

Except as modified by the preceding provisions of this Section
II, all the provisions of the Plan shall be applicable to the Incentive Options
granted hereunder.

III. CORPORATE TRANSACTION

<PAGE> 10

A. In the event of one or more of the following
stockholder-approved transactions (a "Corporate Transaction"):

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

(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or

(iii) any reverse merger in which the Company is the
surviving entity, but in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred to holders different
from those who held the stock immediately prior to such merger, each
option outstanding under the Plan shall automatically accelerate so that

each such option shall, immediately prior to the
specified effective date for the Corporate Transaction, become fully exercisable
with respect to the total number of shares of Common Stock at the time subject
to that option and may be exercised for all or any portion of such shares.
However, no such acceleration of the outstanding options under the Plan shall
occur if and to the extent (i) the outstanding options are, in connection with
the Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or (ii) the
acceleration of the options is subject to other applicable limitations imposed
by the Plan Administrator at the time of grant. Immediately following the
consummation of the Corporate Transaction, all outstanding options under the
Plan shall, except to the extent assumed by the successor corporation or its
parent company, terminate and cease to be outstanding.

B. If the Company is the surviving entity in any merger or other
business combination, then each option which remains outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities which would be issuable, in consummation of such merger or business
combination, to an actual holder of the same number of shares of Common Stock as
are subject to such option immediately prior to such merger or business
combination, and appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for the option
shares shall remain the same. Appropriate adjustments shall also be made to the
class and number of securities available for issuance under the Plan on both an
aggregate and per participant basis following the consummation of such merger or
business combination.

C. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar ($100,000)
limitation is not exceeded. To the extent

10.

<PAGE> 11

such dollar limitation is exceeded, the accelerated portion of such option shall
be exercisable as a non-statutory option under the Federal tax laws.

D. The grant of options under this Plan shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

IV. CANCELLATION AND NEW GRANT OF OPTIONS

The Primary Committee shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan (other than the
automatic grants made pursuant to Article Three) and to grant in substitution
therefor new options under the Plan covering the same or different numbers of
shares of Common Stock but having an option price per share not less than
eighty-five percent (85%) of the fair market value per share of Common Stock on
the new Grant Date (or one hundred percent (100%) of such fair market value in
the case of an Incentive Option or, in the case of a 10% Stockholder, one
hundred ten percent (110%) of such fair market value).

V. SURRENDER OF OPTIONS FOR CASH OR STOCK

A. One or more option holders may be granted, upon such terms and
conditions as the Plan Administrator may establish at the time of the option
grant or at any time thereafter, the right to surrender all or part of an
unexercised option in exchange for a distribution equal in amount to the excess
of (i) the fair market value (on the surrender date) of the number of shares in
which the optionee is at the time vested under the surrendered option or portion
thereof over (ii) the aggregate option price payable for those vested shares.

B. No surrender of an option shall be effective hereunder unless
it is approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the option holder shall accordingly become entitled
under this Section V may be made in shares of Common Stock valued at fair market
value at date of surrender, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.

C. If the surrender of an option is rejected by the Plan
Administrator, then the option holder shall retain whatever rights the option
holder had under the surrendered option (or surrendered portion thereof) on the
date of surrender and may exercise such rights at any time prior to the later of
(i) the expiration of the five (5)-business day period following receipt of the
rejection notice or (ii) the last day on which the option is otherwise
exercisable in accordance with the terms of the instrument evidencing such
option, but in no event may such rights be exercised at any time after ten (10)
years (or five (5) years in the case of a 10% Stockholder) after the date of the
option grant.

11.

<PAGE> 12

D. Notwithstanding the foregoing provisions of this Section V,
one or more officers of the Company subject to the short-swing profit
restrictions of the Federal securities laws may, in the Plan Administrator's
sole discretion, be granted limited stock appreciation rights in tandem with
their outstanding options under this Article Two. Each outstanding option with
such a limited stock appreciation right in effect for at least six (6) months
shall automatically be cancelled, to the extent exercisable for vested shares of
Common Stock, upon the occurrence of a Hostile Take-Over (as defined below), and
the optionee shall in return be entitled to a cash distribution from the Company
in an amount equal to the excess of (i) the fair market value (on the
cancellation date) of the number of shares in which the optionee is at the time
vested under the cancelled option or cancelled portion over (ii) the Take-Over
Price (as defined below) payable for such vested shares. Such cash distribution
shall be made within five (5) days following the consummation of the Hostile
Take-Over. Neither the approval of the Plan Administrator nor the consent of the
Board shall be required in connection with such option cancellation and cash
distribution. The balance (if any) of each such option shall continue in full
force and effect in accordance with the terms and conditions of the instrument
evidencing such grant.

E. For purposes of Section V.D, the following definitions shall
be in effect:

A Hostile Take-Over shall be deemed to occur in the event
(i) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders which the Board does not recommend such stockholders to
accept and (ii) more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer are accepted from holders
other than Section 16 Insiders.

The Take-Over Price per share shall be deemed to be equal
to the greater of (a) the fair market value per share on the date of
option cancellation, as determined pursuant to the valuation provisions
of Section I.A.4 of this Article Two, or (b) the highest reported price
per share of Common Stock paid in effecting such Hostile Take-Over.
However, if the cancelled option is an Incentive Option, the Take-Over
Price shall not exceed the clause (a) price per share.

F. The shares of Common Stock subject to any option surrendered
or cancelled for an appreciation distribution pursuant to this Section V shall
NOT be available for subsequent option grant under the Plan.

VI. FINANCING

The Plan Administrator may assist any optionee (including any
officer or director) in the exercise of one or more options under this Article
Two of the Plan by (a) authorizing the extension of a loan to such optionee from
the Company or (b) permitting the optionee to pay the

12.

<PAGE> 13

option price for the purchased Common Stock in installments over a period of
years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) will be established by the Plan
Administrator in its sole discretion; provided, however, that loans and
installment payments may be granted without security or collateral, but the
maximum credit available to the optionee shall not exceed the sum of the
aggregate option price of the purchased shares (less their par value), plus any
Federal and State income and employment tax liability incurred by the optionee
in connection with such exercise. The Plan Administrator may, in its absolute
discretion, determine that one or more loans extended under this Section VI
shall be subject to forgiveness by the Company in whole or in part upon such
terms and conditions as the Plan Administrator in its discretion deems
appropriate.

VII. EXTENSION OF EXERCISE PERIODS

The Plan Administrator shall have full power and authority
exercisable in its sole discretion to extend, at the time the option is granted
or at any time the option remains outstanding, the period of time for which the
option is to remain exercisable following the optionee's cessation of Service
from the twelve (12) month or shorter period set forth in the option agreement
to such greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the specified expiration date of the option term.

13.

<PAGE> 14

ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM

I. AUTOMATIC GRANTS

A. Grant Dates. Option grants shall be made pursuant to the
provisions of this Article Three as follows:

(i) Each individual who is serving as a Board member on the
date of the 1989 Annual Stockholders Meeting and is neither an employee of the
Company nor any of its parent or subsidiary corporations shall automatically be
granted on such date a non-statutory option under the Plan to purchase 20,000
shares of Common Stock.

(ii) Each individual who first becomes a non-employee Board
member after the date of the 1989 Annual Stockholders Meeting, whether through
appointment by the Board or election by the Company's stockholders, shall, on
the date of such election or appointment, receive an automatic option grant to
purchase 20,000 shares of Common Stock.

(iii) Each individual who continues to serve as a
non-employee Board member shall receive additional automatic option grants, each
for 20,000 shares of Common Stock, at successive four (4)-year intervals over
his or her period of continued Board service. The first such additional grant
shall be made on the later of (A) the date of the 1994 Annual Stockholders
Meeting or (B) the date of the Annual Stockholders Meeting held in the calendar
year in which occurs the fourth anniversary of the grant date of the initial
automatic option grant made to such individual under this Article Three,
provided he or she is re-elected to the Board at that Annual Meeting. Additional
automatic grants for 20,000 shares each shall be made to such individual at
every fourth Annual Stockholders Meeting thereafter over such individual's
period of continued service as a non-employee Board member.

B. Limitation. Except for the automatic grants to be made
pursuant to the provisions of this Article Three, non-employee Board members
shall not be eligible to receive any additional option grants under this Plan or
any other stock plan of the Company (or its parent or subsidiary corporations).

C. Adjustment. The number and/or class of securities subject to
each automatic option grant to be made to the non-employee Board members under
this Article Three shall be subject to periodic adjustment pursuant to the
applicable provisions of Section IV.D of Article One.

II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

A. Option Price. The option price per share shall be equal to one
hundred percent (100%) of the fair market value per share of Common Stock on the
automatic grant date.

14.

<PAGE> 15

B. Payment. The option price shall be payable in one of the
alternative forms specified below:

(i) payment in cash or check payable to the Company's order;

(iii) to the extent the option is exercised for vested
shares, payment through a broker-dealer sale and remittance procedure
pursuant to which the optionee shall provide irrevocable written
instructions (I) to a Company-designated broker-dealer to effect the
immediate sale of the purchased shares and remit to the Company, out of
the sale proceeds available on the settlement date, an amount equal to
the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Company by reason of such purchase and (II) to the
Company to deliver the certificates for the purchased shares directly to
such broker-dealer.

For purposes of this Section II.B, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the Company,
and the fair market value per share of Common Stock on any relevant date shall
be determined in accordance with the provisions of Section I.A.4 of Article Two.
Except to the extent the sale and remittance procedure specified above is
utilized for the exercise of the option, payment of the option price for the
purchased shares must accompany such notice.

C. Option Term. Each automatic grant under this Article Three
shall have a maximum term of ten (10) years measured from the automatic grant
date.

D. Exercisability. Each automatic grant shall become exercisable
for all the option shares upon the optionee's completion of six (6) months of
Board service measured from the automatic grant date, but any shares purchased
under the option shall be subject to the repurchase rights of the Company under
Section II.E of this Article Three.

E. Repurchase Right. The shares purchased under each automatic
option grant shall be subject to repurchase by the Company, at the option price
paid per share, in the event the optionee ceases to serve as a Board member.
However, the Company's repurchase right shall lapse in accordance with the
following schedule:

(i) The repurchase right will lapse with respect to 25% of
the option shares upon the optionee's completion of one year of Board
service measured from the automatic grant date.

15.

<PAGE> 16

(ii) The repurchase right will lapse with respect to the
remaining option shares in a series of thirty-six (36) successive equal
monthly installments over the optionee's period of continued Board
service, with the first such installment to lapse on the 13th calendar
month after the automatic grant date.

(iii) The repurchase right shall also terminate in its
entirety should any of the following events occur prior to the
optionee's cessation of Board service: (A) the death or permanent
disability of the optionee, (B) a Change in Control under Section III of
this Article Three or (C) a Corporate Transaction under Section III of
this Article Three.

F. Non-Transferability. During the lifetime of the optionee, the
option, together with the special stock appreciation right pertaining to such
option under Section III.C of this Article Three, shall be exercisable only by
the optionee and shall not be assignable or transferable by the optionee except
for any transfer of the option effected by will or by the laws of descent and
distribution following the optionee's death.

G. Effect of Termination of Board Membership.

1. Should the optionee cease to serve as a Board member for
any reason (other than death) while holding an automatic option grant under this
Article Three, then the optionee shall have a six (6)-month period following the
date of such cessation of Board service in which to exercise that option for any
or all of the shares of Common Stock in which the optionee is vested at the time
of such cessation of Board service. The option shall immediately, upon the
optionee's cessation of Board service for any reason, terminate and cease to be
outstanding with respect to any option shares in which the optionee is not
otherwise at that time vested.

2. Should the optionee die while a Board member or during
the six (6)-month period following his or her cessation of Board service, then
the option may subsequently be exercised, for any or all of the shares of Common
Stock in which the optionee is vested at the time of his or her cessation of
Board service (less any option shares subsequently purchased by the optionee
prior to death), by the personal representative of the optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
optionee's will or in accordance with the laws of descent and distribution. The
right to exercise such option shall terminate upon the earlier of (i) the first
anniversary of the optionee's death or (ii) the expiration date of the option
term.

3. For purposes of this Article Three, an optionee will be
deemed to remain in Board service for so long as such optionee remains a member
of the Board or of the board of directors of any parent or subsidiary
corporation of the Company.

4. In no event shall any automatic grant under this Article
Three remain exercisable after the specified expiration date of the ten
(10)-year option term. Upon the

16.

<PAGE> 17

expiration of the applicable exercise period in accordance with subparagraphs 1
and 2 above or (if earlier) upon the expiration of the ten (10)-year option
term, the automatic grant shall terminate and cease to be exercisable with
respect to any vested option shares for which the option has not otherwise been
exercised.

H. Stockholder Rights. The holder of an automatic option grant
under this Article Three shall have no stockholder rights with respect to any
shares covered by that option until such individual shall have exercised the
option, paid the exercise price for the purchased shares and been issued a stock
certificate for such shares. No adjustment shall be made for dividends or
distributions (whether paid in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.

I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the prototype Non-Employee
Director Automatic Grant Agreement attached as Exhibit A to the Plan.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL/
HOSTILE TAKE-OVER

A. In the event of any Corporate Transaction (as such term is
defined in Section III of Article Two above), the option shares at the time
subject to each automatic option grant outstanding under this Article Three
shall immediately vest in full so that each such option shall, immediately prior
to the specified effective date for the Corporate Transaction, become fully
exercisable for all of those shares as fully-vested shares of Common Stock and
may be exercised for all or any portion of those vested shares. Immediately
following the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to be outstanding,
unless assumed by the successor corporation or parent thereof.

B. In the event of any Change in Control of the Company, the
option shares at the time subject to each automatic option grant outstanding
under this Article Three shall immediately vest in full so that each such option
shall, immediately prior to the effective date of such Change in Control, become
fully exercisable for all of those shares as fully-vested shares of Common Stock
and may be exercised for all or any portion of those vested shares. For purposes
of this Article Three, a Change in Control shall be deemed to occur in the
event:

(i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities
pursuant to a tender or exchange offer which the Board does not
recommend the Company's stockholders to accept; or

17.

<PAGE> 18

(ii) there is a change in the composition of the Board over
a period of twenty-four (24) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more proxy
contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least two-thirds of
the Board members described in clause (A) who were still in office at
the time such election or nomination was approved by the Board.

C. Upon the occurrence of a Hostile Take-Over, each automatic
option grant at the time outstanding under this Article Three shall
automatically be cancelled, provided that option has been so outstanding for a
period of at least six (6) months. The optionee shall in return receive a cash
distribution from the Company in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to the
cancelled option (whether or not those shares are vested) over (ii) the
aggregate option price payable for such shares. The cash distribution payable
upon such cancellation shall be made within five (5) days following the
consummation of the Hostile Take-Over. Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
such option cancellation and cash distribution.

D. Hostile Take-Over shall have the meaning assigned to such term
in Section V.E of Article Two, and the Take-Over Price per share shall be deemed
to be equal to the greater of (a) the fair market value per share on the option
cancellation date, as determined pursuant to the valuation provisions of Section
I.A.4 of Article Two, or (b) the highest reported price per share of Common
Stock paid in effecting such Hostile Take-Over.

E. The shares of Common Stock subject to each option cancelled in
connection with the Hostile Take-Over shall NOT be available for subsequent
issuance under this Plan.

F. The automatic option grants outstanding under this Article
Three shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS

The provisions of this Automatic Option Grant Program, and any
automatic option grants outstanding under this Article Three, may not be amended
at intervals more frequently than once every six (6) months, other than to the
extent necessary to comply with applicable Federal income tax laws and
regulations.

18.

<PAGE> 19

ARTICLE FOUR
MISCELLANEOUS

I. AMENDMENT OF THE PLAN

The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects whatsoever. However, (i) no
such amendment or modification shall, without the consent of the holders,
adversely affect rights and obligations with respect to options at the time
outstanding under the Plan and (ii) any amendment made to the Automatic Option
Grant Program (or any options outstanding thereunder) shall be in compliance
with Section IV of Article Three. In addition, the Board shall not, without the
approval of the stockholders of the Company, (i) increase the maximum number of
shares issuable under the Plan or the number of shares for which any one
individual participating in the Plan may be granted stock options and separately
exercisable stock appreciation rights over the remaining term of the Plan,
except for permissible adjustments under Section IV.D of Article One or Section
III.B of Article Two, (ii) materially modify the eligibility requirements for
the grant of options under the Plan or (iii) otherwise materially increase the
benefits accruing to participants under the Plan.

II. EFFECTIVE DATE AND TERM OF PLAN

A. The Company's 1981 Stock Option Plan was initially adopted by
the Board in October 1981. The 1981 Stock Option Plan was restated in its
entirety by the Board on December 16, 1986, and such restatement was approved by
the stockholders on February 26, 1987. The Plan as so restated was subsequently
amended on several occasions, and those amendments were approved by the
Company's stockholders on August 3, 1988 and August 2, 1989. On May 13, 1992,
the Plan was further restated by the Board, and the 1992 restatement was
subsequently approved by the Company's stockholders. On August 18, 1994, the
Plan was again restated to authorize the automatic option grants provided
pursuant to Section I.A.(iii) of Article Three. Such restatement was approved by
the Company's stockholders at the 1995 Annual Meeting. On November 8, 1995 the
Board further amended the Plan to authorize the appointment of a secondary
committee of Board Members to administer the Discretionary Option Grant Program
of Article Two of the Plan with respect to individuals other than Section 16
Insiders.

B. The provisions of the 1994 restatement shall apply only to
options granted under the Plan on or after August 18, 1994. All options issued
and outstanding under the Plan prior to such date shall continue to be governed
by the terms and conditions of the Plan (and the instrument evidencing each such
option) as in effect on the date each such option was previously granted, and
nothing in the 1994 restatement shall be deemed to affect or otherwise modify
the rights or obligations of the holders of those options.

C. The special sale and remittance procedure for the exercise of
outstanding options under the Plan shall be in effect for all
currently-outstanding options which already

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include such procedure as a method of exercise and for all options granted after
May 13, 1992. In addition, such procedure shall be available for all
non-statutory options currently held by officers and directors which do not
otherwise include such procedure and for any disqualifying dispositions of
Incentive Option shares effected after May 13, 1992.

D. The Plan was amended on May 15, 1996 to (i) increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Plan by an additional 750,000 shares and (ii) allow the non-employee
Board members (other than those at the time serving as members of the Primary
Committee). However, no shares granted on the basis of the 750,000-share
increase to the Plan shall become exercisable in whole or in part unless and
until such increase is approved by the Corporation's stockholders. Should such
stockholder approval not be obtained at the 1996 Annual Meeting, then any
options granted on the basis of the 750,000-share increase shall terminate
without ever becoming exercisable for any of the option shares, and no further
option grants shall be made on the basis of such share increase. In addition,
without such stockholder approval, the non-employee Board members (other than
those serving on the Primary Committee) shall not become eligible to receive
option grants under the Discretionary Option Grant Program, but will continue to
participate in the Automatic Option Grant Program.

E. Unless sooner terminated in accordance with Section III of
Articles Two and Three, the Plan shall terminate upon the earlier of (i) August
16, 2005 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise of options or
stock appreciation rights granted hereunder. If the date of termination is
determined under clause (i) above, then any options outstanding on such date
shall thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such options.

F. Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance under
the Plan, provided (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and within one year thereafter such amendment is approved by the
stockholders of the Company and (ii) each option so granted is not to become
exercisable, in whole or in part, at any time prior to the obtaining of such
stockholder approval.

III. USE OF PROCEEDS

Any cash proceeds received by the Company from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.

IV. MISCELLANEOUS PROVISIONS

A. The implementation of the Plan, the granting of any option
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the

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procurement by the Company of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the stock issued pursuant to it.

B. Neither the action of the Company in establishing or restating
the Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the right
to remain in the employ or service of the Company (or any parent or subsidiary)
for any period of specific duration, and the Company (or such parent or
subsidiary corporation) may terminate such individual's employment or service at
any time and for any reason, with or without cause.

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