WIND RIVER SYSTEMS INC
S-8, 1999-09-01
COMPUTER PROGRAMMING SERVICES
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<PAGE>

As filed with the Securities and Exchange Commission on September 1, 1999
                                                          Registration No. 333-
===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  ------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                                  ------------
                            WIND RIVER SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

                                  ------------

           DELAWARE                                     94-2873391
    (State of Incorporation)                (I.R.S. Employer Identification No.)

                               500 WIND RIVER WAY
                            ALAMEDA, CALIFORNIA 94501
                                 (510) 748-4100
                    (Address of principal executive offices)

                        1993 EMPLOYEE STOCK PURCHASE PLAN
                       1998 NON-OFFICER STOCK OPTION PLAN

                             -----------------------

                                RICHARD W. KRABER
              VICE PRESIDENT OF FINANCE AND CHIEF FINANCIAL OFFICER
                            WIND RIVER SYSTEMS, INC.
                               500 WIND RIVER WAY
                            ALAMEDA, CALIFORNIA 94501
                                 (510) 748-4100

                             -----------------------

       (Name, address, including zip code, and telephone number, including
                        area code, of agent for service)

                                  ------------

                                   Copies to:
       ANDREA VACHSS, ESQ.                              WENDI OKUN, ESQ.
        COOLEY GODWARD LLP                          WIND RIVER SYSTEMS, INC.
        5 PALO ALTO SQUARE                             500 WIND RIVER WAY
       3000 EL CAMINO REAL                          ALAMEDA, CALIFORNIA 94501
   PALO ALTO, CALIFORNIA 94306                           (510) 748-4100
          (650) 843-5000

                                  ------------

                          CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================== ====================== ========================= ========================== =========================
 TITLE OF SECURITIES TO        AMOUNT TO BE           PROPOSED MAXIMUM          PROPOSED MAXIMUM
      BE REGISTERED             REGISTERED           OFFERING PRICE PER     AGGREGATE OFFERING PRICE    AMOUNT OF REGISTRATION
                                                         SHARE (1)                     (1)                       FEE
========================== ====================== ========================= ========================== =========================
<S>                        <C>                    <C>                       <C>                        <C>
Stock Options and Common         1,650,000                 $15.59                  $25,723,500                  $7,151
Stock (par value $.001)
========================== ====================== ========================= ========================== =========================
</TABLE>
 (1)     Estimated solely for the purpose of calculating the amount of the
         registration fee pursuant to Rule 457(h). The offering price per share
         and aggregate offering price are based upon the average of the high and
         low prices of Registrant's Common Stock on August 25, 1999 as reported
         on the Nasdaq National Market.

===============================================================================

<PAGE>

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The following documents filed by Wind River Systems, Inc. (the
"Company") with the Securities and Exchange Commission are incorporated by
reference into this Registration Statement:

         (a)    The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1999;

         (b)    The Company's quarterly report on Form 10-Q for the quarter
ended April 30, 1999; and

          (c)   The description of the Company's Common Stock set forth in its
Registration Statement on Form 8-A filed with the Commission on March 12, 1993.

         All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

          Under Section 145 of the Delaware General Corporation Law the Company
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 "Securities Act"). The Company's By-laws also
provide that the Company will indemnify its directors and executive officers,
and may indemnify its other officers, employees and other agents, to the fullest
extent not prohibited by Delaware law.

         The Company's Restated Certificate of Incorporation (the "Restated
Certificate") provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its stockholders. These provisions do not eliminate the directors' 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 Company, for acts omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
any transaction from which the director derived an improper personal benefit,
and for payment of dividends or approval of stock repurchases or redemptions
that are unlawful under Delaware law. The provision also does not affect a
director's responsibilities under any other laws, such as the federal securities
laws or state or federal environmental laws.

         The Company has been authorized by the Board to enter into agreements
with its directors and officers that require the Company to indemnify such
persons to the fullest extent authorized or permitted by the provisions of the
Restated Certificate and Delaware law against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred (including
expenses of a derivative action) in connection with any proceeding, whether
actual or threatened, to which any such person may be made a party by reason of
the fact that such person is or was a director, officer, employee or other agent
of the Company or any of its affiliated enterprises. Delaware law permits such
indemnification provided such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interest of the
Company and, with respect to any criminal proceeding, had o reasonable cause to
believe his or her conduct was unlawful. The indemnification agreements also set
forth certain procedures that will apply in the event of a claim for
indemnification thereunder.

         At present, there is no pending litigation or proceeding involving a
director or officer of the Company as to which indemnification is being sought
nor is the Company aware of any threatened litigation that may result in claims
for indemnification by any officer or director.

<PAGE>

                                    EXHIBITS

EXHIBIT
NUMBER

 5.1            Opinion of Cooley Godward LLP

23.1            Consent of PricewaterhouseCoopers LLP

23.2            Consent of Cooley Godward LLP is contained in Exhibit 5.1 to
                this Registration Statement

24.1            Power of Attorney is contained on the signature page

99.1            1993 Employee Stock Purchase Plan, as amended

99.2            1998 Non-Officer Stock Option Plan, as amended


                                 UNDERTAKINGS

1.       The undersigned registrant hereby undertakes:

         (a)    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 Securities 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. Notwithstanding the foregoing,
                        any increase or decrease in volume of securities offered
                        (if the total dollar value of securities offered would
                        not exceed that which was registered) and any deviation
                        from the low or high end of the estimated maximum
                        offering range may be reflected in the form of
                        prospectus filed with the Commission pursuant to Rule
                        424(b) (Section 230.424(b) of this chapter) if, in the
                        aggregate, the changes in volume and price represent no
                        more than a 20% change in the maximum aggregate offering
                        price set forth in the "Calculation of Registration Fee"
                        table in the effective registration statement.

                (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 paragraphs (a)(i) and (a)(ii) do not
         apply if the information required to be included in a post-effective
         amendment by those paragraphs is contained in periodic reports filed by
         the issuer pursuant to section 13 or section 15(d) of the Exchange Act
         that are incorporated by reference herein.

         (b)    That, for the purpose of determining any liability under the
                Securities Act, each such post-effective amendment shall be
                deemed to be a new registration statement relating to the
                securities offered herein, and the offering of such securities
                at that time shall be deemed to be the initial bona fide
                offering thereof.

         (c)    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 offering.
<PAGE>
2.       The undersigned registrant hereby undertakes that, for purposes of
         determining any liability under the Securities Act, each filing of the
         registrant's annual report pursuant to Section 13(a) or Section 15(d)
         of the Exchange Act (and, where applicable, each filing of an employee
         benefit plan's annual report pursuant to section 15(d) of the Exchange
         Act) that is incorporated by reference in the Registration Statement
         shall be deemed to be a new registration statement relating to the
         securities offered herein, and the offering of such securities at that
         time shall be deemed to be the initial bona fide offering thereof.

3.       Insofar as indemnification for liabilities arising under the Securities
         Act may be permitted to directors, officers and controlling persons of
         the registrant pursuant to the foregoing provisions, or otherwise, the
         registrant has been advised that in the opinion of the Securities and
         Exchange Commission such indemnification is against public policy as
         expressed in the Securities Act and is, therefore, unenforceable. In
         the event that a claim for indemnification against such liabilities
         (other than the payment by the registrant of expenses incurred or paid
         by a director, officer or controlling person of the 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, the 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
         Securities Act and will be governed by the final adjudication of such
         issue.

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, as amended,
the 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 Alameda, State of California, on August 31,
1999.

                                       WIND RIVER SYSTEMS, INC.



                                       By:     /s/ Richard W. Kraber
                                               ------------------------------
                                               Richard W. Kraber
                                               CHIEF FINANCIAL OFFICER AND
                                               VICE PRESIDENT


         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jerry L. Fiddler and Richard W. Kraber,
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities 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/ Richard W. Kraber                            Chief Financial Officer                     August 31, 1999
- --------------------------------------------              (Principal Financial Officer)
         (Richard W. Kraber)


         /s/ Jerry L. Fiddler                             Chairman of the Board                       August 31, 1999
- --------------------------------------------
         (Jerry L. Fiddler)


         /s/ Ronald A. Abelmann                           Director                                    August 31, 1999
- --------------------------------------------
         (Ronald A. Abelmann)


         /s/ William B. Elmore                            Director                                    August 31, 1999
- --------------------------------------------
         (William B. Elmore)


         /s/ Grant M. Inman                               Director                                    August 31, 1999
- --------------------------------------------
         (Grant M. Inman)


         /s/ David B. Pratt                               Director                                    August 31, 1999
- -----------------------------------------------------
         (David B. Pratt)

</TABLE>

<PAGE>


                                     EXHIBIT INDEX


EXHIBIT
NUMBER                             DESCRIPTION

 5.1          Opinion of Cooley Godward LLP

23.1          Consent of PricewaterhouseCoopers LLP

23.2          Consent of Cooley  Godward LLP is contained in Exhibit 5.1 to
              this Registration Statement

24.1          Power of Attorney is contained on the signature page

99.1          1993 Employee Stock Purchase Plan, as amended

99.2          1998 Non-Officer Stock Option Plan, as amended


<PAGE>

                                  [LETTERHEAD]

August 31, 1999

Wind River Systems, Inc.
500 Wind River Way
Alameda, CA  94501

Ladies and Gentlemen:

You have requested our opinion with respect to certain matters in connection
with the filing by Wind River Systems., Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 150,000 shares of the
Company's Common Stock, $.001 par value, pursuant to the Company's Employee
Stock Purchase Plan (the "Purchase Plan") and 1,500,000 shares pursuant to the
Company's 1998 Non-Officer Stock Option Plan (together with the Purchase Plan
referred to as the "Plans").

In connection with this opinion, we have examined the Registration Statement,
your Certificate of Incorporation and By-laws, as amended, and such other
documents, records, certificates, memoranda and other instruments as we deem
necessary as a basis for this opinion. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.

On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plans, the
Registration Statement and the related Prospectus, will be validly issued, fully
paid, and nonassessable.

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

Very truly yours,

COOLEY GODWARD LLP



By:  /s/ Andrea Vachss
     ------------------------------------
          Andrea Vachss



<PAGE>


                         CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 24, 1999 relating to the
consolidated financial statements and financial statement schedule of Wind River
Systems, Inc., which appears in Wind River Systems, Inc.'s Annual Report on Form
10-K for the year ended January 31, 1999.


/s/ PricewaterhouseCoopers LLP
- -----------------------------------
PricewaterhouseCoopers LLP



San Jose, California
August 27, 1999

<PAGE>

                              WIND RIVER SYSTEMS, INC.
                         1998 NON-OFFICER STOCK OPTION PLAN
                       AS ADOPTED EFFECTIVE ON APRIL 23, 1998
                         STOCKHOLDER APPROVAL NOT REQUIRED
                      ADJUSTED FOR STOCK SPLIT FEBRUARY 4, 1999
                               AMENDED JUNE 24, 1999


1.   PURPOSES.

     (a)  The purpose of the Plan is to provide a means by which selected
Employees and Consultants who are not Officers or members of the Board of
Directors may be given an opportunity to benefit from increases in value of the
common stock of the Company through the granting of Nonstatutory Stock Options.
Only Nonstatutory Stock Options may be granted hereunder.

     (b)  The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Consultants who are not Officers or members of
the Board of Directors, to secure and retain the services of such new Employees
and Consultants and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.

2.   DEFINITIONS.  AS USED HEREIN, THE FOLLOWING DEFINITIONS SHALL APPLY:

     (a)   "AFFILIATE" shall mean any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code, or such other parent
corporation or subsidiary corporation designated by the Board.

     (b)  "BOARD" shall mean the Committee, if one has been appointed, or the
Board of Directors, if no Committee is appointed.

     (c)  "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company.

     (d)  "CODE" shall mean the Internal Revenue Code of 1986, as amended.

     (e)  "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.

     (f)  "COMMON STOCK" shall mean the Common Stock of the Company.

     (g)  "COMPANY" shall mean Wind River Systems, Inc., a Delaware corporation.

     (h)  "CONSULTANT" shall mean any consultants, independent contractors or
advisers to the Company or an Affiliate (provided that such persons render bona
fide services not in connection with the offering and sale of securities in
capital raising transactions) excluding officers and directors of the Company
and stockholders beneficially owning 10% or more of the Company's Common Stock.


<PAGE>

     (i)  "CONTINUOUS SERVICE" shall mean the absence of any interruption or
termination of service to the Company, an Affiliate, or any successors thereto,
whether as an Employee or Consultant.  The Board or the Chief Executive Officer
of the Company may determine, in that party's sole discretion, whether
Continuous Service as an Employee or Consultant shall be considered interrupted
in the case of:  (i) any leave of absence approved by the Board or the Chief
Executive Officer of the Company, including sick leave, military leave, or any
other personal leave; or (ii) transfers between the Company, Affiliates or their
successors.

     (j)  "EMPLOYEE" shall mean any person employed by the Company or by any
Affiliate, excluding officers and directors of the Company and stockholders
beneficially owning 10% or more of the Company's Common Stock.

     (k)  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

     (l)  "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:

          (i)    If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in Common Stock) on the trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;

          (ii)   In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

     (m)   "NONSTATUTORY STOCK OPTION" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

     (n)  "OFFICER" shall mean a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder and any other Employees of the Company whom the Board or
the Committee classifies as "Officer" in its sole discretion.

     (o)  "OPTION" shall mean a Nonstatutory Stock Option granted pursuant to
the Plan.

     (p)  "OPTION AGREEMENT" shall mean a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant.  Each Option Agreement shall be subject to the terms and conditions of
the Plan.

     (q)  "OPTIONED STOCK" shall mean the Common Stock subject to an Option.

     (r)  "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.

     (s)  "PLAN" shall mean this 1998 Non-Officer Stock Option Plan.


                                          2
<PAGE>

     (t)  "SHARE" shall mean a share of Common Stock, as adjusted in accordance
with Section 11 of the Plan.

3.   STOCK SUBJECT TO THE PLAN.

     Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan is three million
four hundred fifty thousand (3,450,000) shares of Common Stock.  The Shares may
be authorized, but unissued, or reacquired Common Stock.  If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan.

4.   ADMINISTRATION OF THE PLAN.

     (a)  PROCEDURE.  The Plan shall be administered by the Board of Directors.
The Board of Directors may appoint a Committee consisting of not less than two
members of the Board of Directors to administer the Plan on behalf of the Board
of Directors, subject to such terms and conditions as the Board of Directors may
prescribe.  Once appointed, the Committee shall continue to serve until
otherwise directed by the Board of Directors.  From time to time the Board of
Directors may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in
substitution therefor, fill vacancies however caused and remove all members of
the Committee, and thereafter directly administer the Plan.  Notwithstanding
anything in this Section 4 to the contrary, at any time the Board of Directors
or the Committee may delegate to a committee of one or more members of the Board
of Directors the authority to grant Options to all Employees and Consultants or
any portion or class thereof.

     (b)  POWERS OF THE BOARD.  Subject to the provisions of the Plan, the Board
shall have such authority with regard to the Plan and the options as determined
by the Board of Directors, including the authority, in its discretion: (i) to
grant options under the Plan, provided, however, that only nonstatutory options
may be granted under the Plan; (ii) to determine, upon review of relevant
information and in accordance with Section 8(c) of the Plan, the Fair Market
Value of the Common Stock; (iii) to determine the exercise price per share of
Options to be granted, which exercise price shall be determined in accordance
with Section 8(a) of the Plan; (iv) to determine the Employees or Consultants to
whom, and the time or times at which, Options shall be granted and the number of
Shares to be represented by each Option, provided that no Options may be granted
to persons who are neither Employees nor Consultants; (v) to interpret the Plan;
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vii) to determine the terms and provisions of each Option granted (which need
not be identical) in accordance with the Plan, and, with the consent of the
holder thereof with respect to any adverse change, modify or amend each Option;
(viii) to accelerate or defer (the latter with the consent of the Optionee) the
exercise date and vesting of any Option; (ix) to authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Board; and (x) to make all other determinations
deemed necessary or advisable for the administration of the Plan.


                                          3
<PAGE>

     (c)  EFFECT OF BOARD'S DECISION.  All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

5.   ELIGIBILITY.

     Options may be granted only to Employees or Consultants as defined in
Section 2 hereof.  An Employee or Consultant who has been granted an Option may,
if he or she is otherwise eligible, be granted an additional Option or Options.
Notwithstanding the foregoing, no Employee who is an Officer of the Company or
who is a member of the Board of Directors shall be entitled to receive the grant
of an Option under the Plan.

     The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting with the Company, nor shall it
interfere in any way with the Optionee's right or the Company's right to
terminate the Optionee's employment at any time or the Optionee's consulting for
the Company pursuant to the terms of the Consultant's agreement with the
Company.

6.   TERM OF THE PLAN.

     The Plan shall become effective upon its adoption by the Board of
Directors.  It shall continue in effect until terminated under Section 13 of the
Plan.

7.   TERM OF OPTION.

     The term of each Option shall be ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.

8.   EXERCISE PRICE, CONSIDERATION AND VESTING.

     (a)  EXERCISE PRICE.  The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be no less than 85% of the Fair
Market Value per Share on the date of grant.  Notwithstanding the foregoing, an
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

     (b)  CONSIDERATION.  The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash or check; (ii)
other shares of the Common Stock of the Company having a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which the Option shall be exercised, including by delivering to the Company an
attestation of ownership of owned and unencumbered shares of the Common Stock of
the Company in a form approved by the Company; (iii) payment pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds; (iv) any
combination of such methods of payment; or (v) such other consideration and


                                          4
<PAGE>

method of payment for the issuance of Shares to the extent permitted under
applicable law.  In making its determination as to the type of consideration to
accept, the Board shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

     (c)  VESTING.  The total number of Shares subject to an Option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal).  The Option Agreement may provide that, from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the Shares allotted to that period, and may be
exercised with respect to some or all of the Shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised.  The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate.  The provisions of this
Section 8(c) are subject to any Option provisions governing the minimum number
of Shares as to which an Option may be exercised.

9.   EXERCISE OF OPTION.

     (a)  PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.

          An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company.  Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option.  No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.  An Option
may not be exercised for a fraction of a Share.

          Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          The Option may, but need not, include a provision whereby the Optionee
may elect at any time while an Employee or Consultant (or while an officer or
director of the Company) to exercise the Option as to any part or all of the
shares subject to the Option, subject to a repurchase right in favor of the
Company on such terms as the Board shall establish.

     (b)  TERMINATION OF SERVICE AS AN EMPLOYEE OR CONSULTANT.  If an Optionee's
Continuous Service as an Employee or Consultant ceases for any reason other than
death or disability, the Optionee may, but only within three (3) months (or such
other period of time as is


                                          5
<PAGE>

determined by the Board) after the date the Optionee's Continuous Service as an
Employee or Consultant ceases, exercise the Option to the extent that the
Optionee was entitled to exercise it at the date of such termination.  To the
extent that the Optionee was not entitled to exercise the Option at the date of
such termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.

     (c)  DEATH OF OPTIONEE.  In the event of the death during the term of the
Option of an Optionee who is at the time of his or her death an Employee or
Consultant and who shall have been in Continuous Service as an Employee or
Consultant since the date of grant of the Option, or in the event of the death
of an Optionee within three (3) months following the termination of the
Optionee's Continuous Service as an Employee or Consultant for any other reason,
the Option may be exercised at any time within eighteen (18) months (or such
other period of time as is determined by the Board) following the date of death
by the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, to the extent that the Optionee was entitled
to exercise it at the date of such termination.  To the extent that the Optionee
was not entitled to exercise the Option at the date of such termination, or if
the Option is not exercised (to the extent the Optionee was entitled to
exercise) within the time specified herein, the Option shall terminate.

     (d)  DISABILITY OF OPTIONEE.  In the event of the disability during the
term of the Option of an Optionee who is at the time of his or her disability an
Employee or Consultant and who shall have been in Continuous Service as an
Employee or Consultant since the date of grant of the Option, the Optionee may,
but only within twelve (12) months (or such other period of time as is
determined by the Board) after the date the Optionee ceases to be an Employee or
Consultant on account of such disability, exercise the Option to the extent that
the Optionee was entitled to exercise it at the date of such termination.  To
the extent that the Optionee was not entitled to exercise the Option at the date
of such termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.

     (e)  WITHHOLDING.  To the extent provided by the terms of the Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
( in addition to the Company's right to withhold from any compensation paid to
Optionee by the Company)or by a combination of such means:  (i) tendering a cash
payment; (ii) authorizing the Company to withhold Shares from the Shares
otherwise issuable to the Optionee as a result of the exercise of the Option; or
(iii) delivering to the Company owned and unencumbered shares of the Common
Stock of the Company.

10.  TRANSFERABILITY OF OPTIONS.

     Except as otherwise expressly provided in the terms of the Option
Agreement, the Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.  Notwithstanding the foregoing, the Optionee
may, by delivering written notice to the Company, in a form satisfactory to the
Company,


                                          6
<PAGE>

designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.

11.  ADJUSTMENTS UPON CHANGES IN STOCK.

     (a)  If any change is made in the stock subject to the Plan, or subject to
any Option, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan and the outstanding Options will be appropriately adjusted in
the class(es) and number of securities and price per share of stock subject to
such outstanding Options.  Such adjustments shall be made by the Board, the
determination of which shall be final, binding and conclusive.  (The conversion
of convertible securities, cashless exercise of options and net exercise of
warrants shall not be treated as transactions "without receipt of consideration"
by the Company.)

     (b)  In the event of:  (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then, subject to paragraph
(c) of this Section 11, at the sole discretion of the Board and to the extent
permitted by applicable law:  (i) any surviving corporation shall assume any
Options outstanding under the Plan or shall substitute similar Options for those
outstanding under the Plan, (ii) such Stock Awards shall continue in full force
and effect, or (iii) the time during which such Stock Awards become vested or
may be exercised shall be accelerated and any outstanding unexercised rights
under any Stock Awards terminated if not exercised prior to such event. In the
event any surviving corporation or acquiring corporation refuses to assume such
Options or to substitute similar Options for those outstanding under the Plan,
then with respect to Options held by Optionees whose Continuous Service has not
terminated, the vesting shall be accelerated in full, and the Options shall
terminate if not exercised at or prior to such event.  With respect to any other
Options outstanding under the Plan, such Options shall terminate if not
exercised prior to such event.

     (c)  In the event of either (i) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or an Affiliate of the Company) of
the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, which acquisition has not been approved by
resolution of the Company's Board of Directors, or (ii) a change in a majority
of the membership of the Company's Board of Directors within a twenty-four (24)
month period where the selection of such majority either (A) was not approved by
a majority of the members of the Board of Directors at the beginning of such
twenty-four (24) month period or (B) occurred as the result of an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of


                                          7
<PAGE>

any person other than the Board (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest,
then to the extent not prohibited by applicable law, the time during which
options outstanding under the Plan may be exercised shall be accelerated prior
to such event, but only to the extent that such options would have become
exercisable within thirty (30) months of the date of such event, and the options
terminated if not exercised after such acceleration and at or prior to such
event.

12.  TIME OF GRANTING OPTIONS.

     The date of grant of an Option shall, for all purposes, be the date on
which the Board makes the determination granting such Option.  Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

13.  AMENDMENT AND TERMINATION OF THE PLAN.

     (a)  AMENDMENT AND TERMINATION.  The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable.

     (b)  EFFECT OF AMENDMENT OR TERMINATION. Options granted before amendment
of the Plan shall not be impaired any amendment unless mutually agreed otherwise
between the Optionee and the Company, which agreement must be in writing and
signed by the Optionee and the Company.

14.  SECURITIES LAW COMPLIANCE.

     Notwithstanding any provisions relating to vesting contained herein or in
an Option, no Option granted hereunder may be exercised unless the shares
issuable upon exercise of such option are then registered under the Securities
Act of 1933, as amended.

15.  RESERVATION OF SHARES.

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

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

16.  OPTION AGREEMENT.

     Options shall be evidenced by written Option Agreements in such form or
forms as the Board or the Committee shall approve.


                                          8


<PAGE>

                                 WIND RIVER SYSTEMS

                            EMPLOYEE STOCK PURCHASE PLAN

                       Adjusted for Stock Split May 24, 1996
                      Adjusted for Stock Split March 10, 1997
                     Adjusted for Stock Split February 4, 1999
                               Amended April 22, 1999
                       Approved by Stockholders June 24, 1999



1.   PURPOSE.

          (a)  The purpose of the Employee Stock Purchase Plan (the "Plan") is
to provide a means by which employees of Wind River Systems, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.

          (b)  The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").

          (c)  The Company, by means of the Plan, seeks to retain the services
of its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.

          (d)  The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.

     2.   ADMINISTRATION.

          (a)  The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c).  Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.

          (b)  The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

               (i)    To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).


<PAGE>

               (ii)   To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.

               (iii)  To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration.  The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

               (iv)   To amend the Plan as provided in paragraph 13.

               (v)    Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.

          (c)  The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee").  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

     3.   SHARES SUBJECT TO THE PLAN.

          (a)  Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate one million five hundred
thousand (1,500,000) of the Company's common stock (the "Common Stock").  If any
right granted under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall again become
available for the Plan.

          (b)  The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

     4.   GRANT OF RIGHTS; OFFERING.

          The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee.  Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate.  If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder:  (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.  The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by


                                          2
<PAGE>

reference in the Offering or otherwise) the substance of the provisions
contained in paragraphs 5 through 8, inclusive.

     5.   ELIGIBILITY.

          (a)  Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company.  Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years.  In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is at least twenty (20) hours per week and at
least five (5) months per calendar year.

          (b)  The Board or the Committee may provide that, each person who,
during the course of an Offering, first becomes an eligible employee of the
Company or designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an eligible
employee or occurs thereafter, receive a right under that Offering, which right
shall thereafter be deemed to be a part of that Offering.  Such right shall have
the same characteristics as any rights originally granted under that Offering,
as described herein, except that:

               (i)    the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;

               (ii)   the Purchase Period (as defined below) for such right
shall begin on its Offering Date and end coincident with the end of such
Offering; and

               (iii)  the Board or the Committee may provide that if such
person first becomes an eligible employee within a specified period of time
before the end of the Purchase Period (as defined below) for such Offering, he
or she will not receive any right under that Offering.

          (c)  No employee shall be eligible for the grant of any rights under
the Plan if, immediately after any such rights are granted, such employee owns
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or of any Affiliate.  For purposes
of this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply
in determining the stock ownership of any employee, and stock which such
employee may purchase under all outstanding rights and options shall be treated
as stock owned by such employee.

          (d)  An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the


                                          3
<PAGE>

Company and any Affiliates, as specified by Section 423(b)(8) of the Code, do
not permit such employee's rights to purchase stock of the Company or any
Affiliate to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of fair market value of such stock (determined at the time such rights
are granted) for each calendar year in which such rights are outstanding at any
time.

          (e)  Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.

     6.   RIGHTS; PURCHASE PRICE.

          (a)  On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined in Section 7(a)) during the period which
begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no more than twenty-seven (27) months after the
Offering Date (the "Purchase Period").  In connection with each Offering made
under this Plan, the Board or the Committee shall specify a maximum number of
shares which may be purchased by any employee as well as a maximum aggregate
number of shares which may be purchased by all eligible employees pursuant to
such Offering.  In addition, in connection with each Offering which contains
more than one Exercise Date (as defined in the Offering), the Board or the
Committee may specify a maximum aggregate number of shares which may be
purchased by all eligible employees on any given Exercise Date under the
Offering.  If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.

          (b)  The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:

               (i)    an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or

               (ii)   an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Exercise Date.

     7.   PARTICIPATION; WITHDRAWAL; TERMINATION.

          (a)  An eligible employee may become a participant in an Offering by
delivering a participation agreement to the Company within the time specified in
the Offering, in such form as the Company provides.  Each such agreement shall
authorize payroll deductions of up to the maximum percentage specified by the
Board or the Committee of such employee's


                                          4
<PAGE>

Earnings during the Purchase Period.  "Earnings" is defined as the total
compensation paid to an employee, including all salary, wages (including amounts
elected to be deferred by the employee, that would otherwise have been paid,
under any cash or deferred arrangement established by the Company), overtime
pay, commissions, bonuses, and other remuneration paid directly to the employee,
but excluding profit sharing, the cost of employee benefits paid for by the
Company, education or tuition reimbursements, imputed income arising under any
Company group insurance or benefit program, traveling expenses, business and
moving expense reimbursements, income received in connection with stock options,
contributions made by the Company under any employee benefit plan, and similar
items of compensation.  The payroll deductions made for each participant shall
be credited to an account for such participant under the Plan and shall be
deposited with the general funds of the Company.  A participant may reduce
(including to zero), increase or begin such payroll deductions after the
beginning of any Purchase Period only as provided for in the Offering.  A
participant may make additional payments into his or her account only if
specifically provided for in the Offering and only if the participant has not
had the maximum amount withheld during the Purchase Period.

          (b)  At any time during a Purchase Period a participant may terminate
his or her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides.  Such withdrawal may be elected at any time prior to the end of the
Purchase Period except as provided by the Board or the Committee in the
Offering.  Upon such withdrawal from the Offering by a participant, the Company
shall distribute to such participant all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without interest, and
such participant's interest in that Offering shall be automatically terminated.
A participant's withdrawal from an Offering will have no effect upon such
participant's eligibility to participate in any other Offerings under the Plan,
but such participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.

          (c)  Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.

          (d)  Rights granted under the Plan shall not be transferable, and
shall be exercisable only by the person to whom such rights are granted.

     8.   EXERCISE.

          (a)  On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions and other
additional payments specifically provided for in the Offering (without any
increase for interest) will be applied to the purchase of whole shares of stock
of the Company, up to the maximum number of shares permitted pursuant to the
terms of the Plan and the applicable Offering, at the purchase price specified
in the Offering.  No fractional shares shall be issued upon the exercise of
rights granted


                                          5
<PAGE>

under the Plan.  The amount, if any, of accumulated payroll deductions remaining
in each participant's account after the purchase of shares which is less than
the amount required to purchase one share of stock on the final Exercise Date of
an Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after said final
Exercise Date, without interest.  The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Exercise Date of an Offering shall be distributed in full to the
participant after such Exercise Date, without interest.

          (b)  No rights granted under the Plan may be exercised to any extent
unless the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act").  If on an Exercise Date of any Offering hereunder the Plan is
not so registered, no rights granted under the Plan or any Offering shall be
exercised on said Exercise Date and the Exercise Date shall be delayed until the
Plan is subject to such an effective registration statement, except that the
Exercise Date shall not be delayed more than two (2) months and the Exercise
Date shall in no event be more than twenty-seven (27) months from the Offering
Date.  If on the Exercise Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered, no rights granted under
the Plan or any Offering shall be exercised and all payroll deductions
accumulated during the purchase period (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to the
participants, without interest.

          9.   COVENANTS OF THE COMPANY.

          (a)  During the terms of the rights granted under the Plan, the
Company shall keep available at all times the number of shares of stock required
to satisfy such rights.

          (b)  The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan.  If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.

     10.  USE OF PROCEEDS FROM STOCK.

          Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.

     11.  RIGHTS AS A STOCKHOLDER.

          A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until


                                          6
<PAGE>

the participant's shareholdings acquired upon exercise of rights under the Plan
are recorded in the books of the Company.

     12.  ADJUSTMENTS UPON CHANGES IN STOCK.

          (a)  If any change is made in the stock subject to the Plan, or
subject to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
rights will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights.

          (b)  In the event of:  (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, as determined by the Board in its
sole discretion (i) any surviving corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated payroll
deductions may be used to purchase Common Stock immediately prior to the
transaction described above and the participants' rights under the ongoing
Offering terminated.

     13.  AMENDMENT OF THE PLAN.

          (a)  The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:

               (i)    Increase the number of shares reserved for rights under
     the Plan;

               (ii)   Modify the provisions as to eligibility for participation
     in the Plan (to the extent such modification requires stockholder approval
     in order for the Plan to obtain employee stock purchase plan treatment
     under Section 423 of the Code or to comply with the requirements of
     Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
     amended ("Rule 16b-3")); or

               (iii)  Modify the Plan in any other way if such modification
     requires stockholder approval in order for the Plan to obtain employee
     stock purchase plan treatment under Section 423 of the Code or to comply
     with the requirements of Rule 16b-3.

It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to


                                          7
<PAGE>

be provided under the provisions of the Code and the regulations promulgated
thereunder relating to employee stock purchase plans and/or to bring the Plan
and/or rights granted under it into compliance therewith.

          (b)  Rights and obligations under any rights granted before amendment
of the Plan shall not be altered or impaired by any amendment of the Plan,
except with the consent of the person to whom such rights were granted or except
as necessary to comply with any laws or governmental regulation.

     14.  TERMINATION OR SUSPENSION OF THE PLAN.

          (a)  The Board may suspend or terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on November 16, 2003.  No rights may
be granted under the Plan while the Plan is suspended or after it is terminated.

          (b)  Rights and obligations under any rights granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom such rights were granted or
except as necessary to comply with any laws or governmental regulation.

     15.  EFFECTIVE DATE OF PLAN.

          The Plan shall become effective as determined by the Board, but no
rights granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company.


                                          8



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