MATRIX PHARMACEUTICAL INC/DE, S-8, 1999-07-27

MATRIX PHARMACEUTICAL INC/DE
S-8, 1999-07-27
PHARMACEUTICAL PREPARATIONS

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<PAGE>

As filed with the Securities and Exchange Commission on July 27, 1999
Registration No. 333-____________
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------
MATRIX PHARMACEUTICAL, INC.
(Exact name of issuer as specified in its charter)

DELAWARE 94-2957068
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

34700 CAMPUS DRIVE
FREMONT, CALIFORNIA 94555
(Address of principal executive offices) (Zip Code)
------------
MATRIX PHARMACEUTICAL, INC.
1988 RESTRICTED STOCK PLAN
1999 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plans)
------------
MICHAEL D. CASEY
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
MATRIX PHARMACEUTICAL, INC.
34700 CAMPUS DRIVE
FREMONT, CALIFORNIA 94555
(Name and address of agent for service)
(510) 742-9900
(Telephone number, including area code, of agent for service)
------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Registered Amount to be Offering Price Aggregate Amount of
Registered(1) Price Offering Registration Fee
per Share(2) Price(2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1988 RESTRICTED STOCK PLAN 400,000 shares $ 3.84 $1,536,000 $ 427.01
Common Stock, $0.01 par value

1999 EMPLOYEE STOCK PURCHASE PLAN 700,000 shares $ 3.84 $2,688,000 $ 747.26
Common Stock, $0.01 par value
Aggregate Registration Fee $ 1,174.27
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Registrant's 1988
Restricted Stock Plan and the 1999 Employee Stock Purchase Plan by reason
of any stock dividend, stock split, recapitalization or other similar
transaction effected without the Registrant's receipt of consideration
which results in an increase in the number of the Registrant's outstanding
shares of Common Stock.

(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 selling prices per share of the Registrant's Common Stock on July
22, 1999 as reported by the Nasdaq National Market.

<PAGE>

PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

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

(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 filed with the SEC on March
26, 1999;

(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999 filed with the SEC on May 12,
1999; and

(c) The Registrant's Registration Statement on Forms 8-A and 8-A/A
filed with the SEC on December 19, 1991 and May 19, 1995, and
as subsequently amended on January 23, 1992 and January 27,
1992, respectively, in which there is described the terms,
rights and provisions applicable to the 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 Securities Exchange
Act of 1934 (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 CAPITAL STOCK

Inapplicable.

Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

Inapplicable.

Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Pursuant to the Delaware General Corporation Law, the
Registrant has adopted provisions in its Restated Certificate of Incorporation
which eliminate the personal liability of its directors and officers to the
Registrant and its stockholders for monetary damages for breach of their
fiduciary duties in certain circumstances and which authorize the Registrant to
indemnify its directors, officers and other agents, by bylaw, agreement or
otherwise, to the fullest extent permitted by law.

The Registrant's Bylaws require the Registrant to indemnify
its directors, officers, employees and other agents to the fullest extent
permitted by law. The Registrant's Restated Certificate of Incorporation and
Bylaws expressly authorize the use of indemnification agreements and, with the
approval of its stockholders, the Registrant has entered into separate
Indemnification Agreements with its directors and certain of its officers. These
Indemnification Agreements may require the Registrant, among other things, to
indemnify its directors and officers

II-1
<PAGE>

against certain liabilities that may arise by reason of their status or service
as directors and officers and to advance their expenses incurred as a result of
any proceeding against them as to which they could be indemnified. The
Registrant maintains an insurance policy covering directors and officers, under
which the insurer has agreed to pay, subject to certain exclusions (including
certain violations of securities laws) the amount of insured claims made against
the insured officers and directors of the Registrant for wrongful acts that such
officers or directors may otherwise be required to pay or for which the
Registrant is required to indemnify such officers and directors.

Item 7. EXEMPTION FROM REGISTRATION CLAIMED

Inapplicable.

Item 8. EXHIBITS

<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement on Form 8-A, as
amended, and the exhibits thereto, which are incorporated
herein by reference pursuant to Item 3(c) of this Registration
Statement.
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
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 Matrix Pharmaceutical, Inc. 1988 Restricted Stock Plan (as
amended and restated through March 2, 1999).
99.2* Form of Stock Option Agreement with Notice of Grant -
Installment Option.
99.3** Form of Stock Option Agreement with Notice of Grant -
Immediately Exercisable Option.
99.4** Form of Stock Purchase Agreement.
99.5** Form of Restricted Stock Purchase Agreement.
99.6*** Form of Stock Issuance Agreement - Shared Investment Program.
99.7 Matrix Pharmaceutical, Inc. 1999 Employee Stock Purchase Plan
99.8 Form of Enrollment/Change Form.
99.9 Form of Stock Purchase Agreement.
</TABLE>

* Exhibit 99.2 is incorporated herein by reference to Exhibit 99.2 of
Registrant's Registration Statement No. 33-79908 on Form S-8 which was filed
with the SEC on June 7, 1994.

** Exhibits 99.3 through 99.5 are incorporated herein by reference to
Exhibits 28.2 through 28.4, respectively, of Registrant's Registration Statement
No. 33-65542 on Form S-8 which was filed with the SEC on July 2, 1993.

*** Exhibit 99.6 is incorporated herein by reference to Exhibit 99.6 of
Registrant's Registration Statement No. 333-32213 on Form S-8 which was filed
with the SEC on July 28, 1997.

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 Securities Act of 1933, as amended (the "1933 Act"),
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this 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 this Registration Statement,
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that clauses (1)(i) and (1)(ii) shall not apply if the information
required to be included in

II-2
<PAGE>

a post-effective amendment by those paragraphs is contained in periodic reports
filed by the 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 upon the termination of the
1988 Restricted Stock Plan or the 1999 Employee Stock Purchase Plan.

B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this 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 and controlling persons of
the Registrant pursuant to the indemnification provisions summarized in Item 6
above, or otherwise, the Registrant has been advised 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 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 1933 Act and will be governed by the final
adjudication of such issue.

II-3
<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 Fremont, State of California, on this 27th day
of July, 1999.

MATRIX PHARMACEUTICAL, INC.

By /s/ Michael D. Casey
-----------------------------------------------
Michael D. Casey
Chairman, President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned officers and directors of Matrix
Pharmaceutical, Inc., a Delaware corporation, do hereby constitute and appoint
Michael D. Casey and David G. Ludvigson, the lawful attorneys and agents, with
full power and authority to do any and all acts and things and to execute any
and all instruments which said attorney and agent determines may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission 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 amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents, or
any 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 Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

Signatures Title Date
- ---------- ----- ----
<S> <C> <C>

/s/ Michael D. Casey
- ----------------------------- Chairman, President and Chief Executive July 27, 1999
Michael D. Casey Officer (Principal Executive Officer)

II-4
<PAGE>

<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>

/s/ David G. Ludvigson Senior Vice President and Chief Financial July 27, 1999
- ----------------------------- Officer (Principal Financial and
David G. Ludvigson Accounting Officer)

/s/ J. Stephan Dolezalek Secretary and Director July 27, 1999
- -----------------------------
J. Stephan Dolezalek

/s/ Marvin E. Jaffe Director July 27, 1999
- -----------------------------
Marvin E. Jaffe

/s/ Bradley G. Lorimier Director July 27, 1999
- -----------------------------
Bradley G. Lorimier

/s/ Edward E. Luck Director July 27, 1999
- -----------------------------
Edward E. Luck

Director , 1999
- -----------------------------
Julius L. Pericola

/s/ James R. Glynn Director July 27, 1999
- -----------------------------
James R. Glynn

</TABLE>

II-5
<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

EXHIBITS

FORM S-8

UNDER

SECURITIES ACT OF 1933

MATRIX PHARMACEUTICAL, INC.

<PAGE>

EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement on Form 8-A, as
amended, and the exhibits thereto, which are incorporated
herein by reference pursuant to Item 3(c) of this
Registration Statement.
5 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
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 Matrix Pharmaceutical, Inc. 1988 Restricted Stock Plan (as
amended and restated through March 2, 1999).
99.2* Form of Stock Option Agreement with Notice of Grant -
Installment Option.
99.3** Form of Stock Option Agreement with Notice of Grant -
Immediately Exercisable Option.
99.4** Form of Stock Purchase Agreement.
99.5** Form of Restricted Stock Purchase Agreement.
99.6*** Form of Stock Issuance Agreement - Shared Investment Program.
99.7 Matrix Pharmaceutical, Inc. 1999 Employee Stock Purchase Plan
99.8 Form of Enrollment/Change Form.
99.9 Form of Stock Purchase Agreement.
</TABLE>

* Exhibit 99.2 is incorporated herein by reference to Exhibit 99.2 of
Registrant's Registration Statement No. 33-79908 on Form S-8 which was filed
with the SEC on June 7, 1994.

*** Exhibit 99.6 is incorporated herein by reference to Exhibit 99.6 of
Registrant's Registration Statement No. 333-32213 on Form S-8 which was filed
with the SEC on July 28, 1997.

<PAGE>

EXHIBIT 5

OPINION OF BROBECK, PHLEGER & HARRISON LLP

July 26, 1999

Matrix Pharmaceutical, Inc.
34700 Campus Dive
Fremont, California 94555

Re: MATRIX PHARMACEUTICAL, INC. REGISTRATION STATEMENT ON
FORM S-8 FOR AN AGGREGATE OF 1,100,000 SHARES OF COMMON
STOCK

Ladies and Gentlemen:

We have acted as counsel to Matrix Pharmaceutical, Inc., a
Delaware corporation (the "Company"), in connection with the registration on
Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended, of an (i) additional 400,000 shares of the Company's common stock
("Common Stock") authorized for issuance under the Company's 1988 Restricted
Stock Plan (the "Restricted Plan") and (ii) an initial reserve of 700,000 shares
of Common Stock of the Company under the Company's 1999 Employee Stock Purchase
Plan (the "Purchase Plan").

This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.

We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the amendment of
the Restricted Plan and the establishment of the Purchase Plan. Based on such
review, we are of the opinion that if, as and when the shares of Common Stock
are issued and sold (and the consideration therefor received) pursuant to (a)
the provisions of option agreements duly authorized under the Restricted Plan
and in accordance with the Registration Statement, or (b) duly authorized stock
purchase rights granted and exercised under the Purchase Plan and in accordance
with the Registration Statement, such shares will be duly authorized, legally
issued, fully paid and non-assessable.

We consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement.

This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Restricted Plan or the Purchase Plan or the shares of Common Stock
issuable under such plans.

Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP

<PAGE>

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Matrix Pharmaceutical, Inc. 1988 Restricted Stock Plan
and the 1999 Employee Stock Purchase Plan of our report dated January 25, 1999,
with respect to the consolidated financial statements for Matrix Pharmaceutical,
Inc. included in the Annual Report (Form 10-K) for the year ended December 31,
1998, filed with the Securities and Exchange Commission.

ERNST & YOUNG LLP

/s/ Ernst & Young LLP

Palo Alto, California
July 26, 1999

<PAGE>

EXHIBIT 99.1

MATRIX PHARMACEUTICAL, INC.

1988 RESTRICTED STOCK PLAN

AS AMENDED AND RESTATED EFFECTIVE MARCH 2, 1999

<PAGE>

MATRIX PHARMACEUTICAL, INC.

1988 RESTRICTED STOCK PLAN

AS AMENDED AND RESTATED EFFECTIVE MARCH 2, 1999

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1. Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . 1
2. Structure of the Plan . . . . . . . . . . . . . . . . . . . . . . 1
3. Administration of the Plan. . . . . . . . . . . . . . . . . . . . 2
4. Option Grants and Share Issuances . . . . . . . . . . . . . . . . 2
5. Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II OPTION GRANT PROGRAM. . . . . . . . . . . . . . . . . . . . . . . 5

1. Terms and Conditions of Options . . . . . . . . . . . . . . . . . 5
2. Incentive Options . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . .10
4. Corporate Transaction . . . . . . . . . . . . . . . . . . . . . .11
5. Cancellation and New Grant of Options . . . . . . . . . . . . . .12
6. Extension of Exercise Period. . . . . . . . . . . . . . . . . . .12

ARTICLE III STOCK ISSUANCE PROGRAM . . . . . . . . . . . . . . . . . . . . .13

1. Terms and Conditions of Stock Issuances . . . . . . . . . . . . .13
2. Corporate Transaction . . . . . . . . . . . . . . . . . . . . . .16

ARTICLE IV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .17

1. Loans or Installment Payments . . . . . . . . . . . . . . . . . .17
2. Amendment of the Plan and Awards. . . . . . . . . . . . . . . . .17
3. Effective Date and Term of Plan . . . . . . . . . . . . . . . . .18
4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . .20
5. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . .20
6. Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . .20
7. No Employment/Service Rights. . . . . . . . . . . . . . . . . . .21

SPECIAL ADDENDUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

</TABLE>

i
<PAGE>

MATRIX PHARMACEUTICAL, INC.

1988 RESTRICTED STOCK PLAN

(AS AMENDED AND RESTATED THROUGH MARCH 2, 1999)

ARTICLE I

GENERAL

1. PURPOSE OF THE PLAN

(a) This 1988 Restricted Stock Plan (the "Plan") is intended to
promote the interests of Matrix Pharmaceutical, Inc., a Delaware corporation
(the "Corporation"), by providing incentives to eligible individuals to acquire
a proprietary interest, or otherwise increase their proprietary interest, in the
Corporation and to remain in the employ or service of the Corporation (or its
parent or subsidiary corporations).

(b) For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:

(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a parent corporation of the Corporation, provided
each such corporation in the unbroken chain (other than the
Corporation) 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.

(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, 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.

2. STRUCTURE OF THE PLAN

The Plan shall be divided into two separate components: the Option
Grant Program specified in Article II and the Stock Issuance Program specified
in Article III. Under the Option Grant Program, eligible individuals may be
granted options to purchase shares of the Corporation's Common Stock at a
discount of up to 15% of the fair market value of such shares on the grant date.

<PAGE>

The Stock Issuance Program will allow eligible individuals to purchase
shares of the Corporation's Common Stock at discounts from the fair market value
of such shares of up to 15%. Such shares may be issued as fully-vested shares
or as shares to vest over time. Issuances may be effected either through direct
purchases or through the exercise of intervening option grants.

Unless the context clearly indicates otherwise, the provisions of
Articles I and IV of the Plan shall apply to both the Option Grant Program and
the Stock Issuance Program and shall accordingly govern the interests of all
individuals in the Plan.

3. ADMINISTRATION OF THE PLAN

(a) The Plan shall be administered by a committee ("Committee") of
two (2) or more members of the Corporation's Board of Directors appointed by the
Board. Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.

(b) The Committee as Plan Administrator shall have full power and
authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Plan and to make such determinations under the Plan and any outstanding
option grants or share issuances as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties
with an interest in the Plan.

(c) Service on the Committee shall constitute service as a Board
member, and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option granted under the
Plan.

4. OPTION GRANTS AND SHARE ISSUANCES

(a) The persons eligible to receive share issuances under the Stock
Issuance Program ("Participant") and/or option grants pursuant to the Option
Grant Program ("Optionee") are as follows:

(i) key employees (including officers) of the
Corporation (or its parent or subsidiary corporations) who render
services which contribute to the success and growth of the Corporation
(or its parent or subsidiary corporations) or which may reasonably be
anticipated to contribute to the future success and growth of the
Corporation (or its parent or subsidiary corporations);

(ii) non-employee members of the Board or the board of
directors of any parent or subsidiary corporation); and

2
<PAGE>

(iii) those consultants or independent contractors who
provide valuable services to the Corporation (or its parent or
subsidiary corporations).

(b) Non-employee members of the Board shall also be eligible to
receive automatic option grants pursuant to the provisions of the Corporation's
1991 Director Stock Option Plan.

(c) The Plan Administrator shall have full authority to determine,
(1) with respect to the option grants made under the Plan, the number of shares
to be covered by each grant, the time or times at which each granted option is
to become exercisable, the option price, and the maximum term for which the
option may remain outstanding and (II) with respect to share issuances under the
Stock Issuance Program, the number of shares to be issued to each Participant,
the vesting schedule (if any) to be applicable to the issued shares, and the
purchase price to be paid by the individual for such shares.

(d) The Plan Administrator shall have the absolute discretion to
grant options in accordance with Article II of the Plan and/or to effect share
issuances in accordance with Article III of the Plan.

5. STOCK SUBJECT TO THE PLAN

(a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired common stock ("Common
Stock"). The maximum number of shares issuable over the term of the Plan shall
not exceed 5,030,953 shares, subject to adjustment as provided in Section 5(c).
Should an outstanding option under the Plan expire or terminate for any reason
prior to exercise in full, the shares subject to the portion of the option not
so exercised will be available for subsequent option grants and share issuances
under the Plan. Any unvested shares issued under the Plan and subsequently
repurchased by the Corporation, at the option exercise or direct issue price
paid per share, pursuant to the Corporation's repurchase rights under the Plan
shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for reissuance
through one or more subsequent option grants or direct stock issuances under the
Plan. However, the shares subject to any option (or portion of an option)
surrendered or cancelled in accordance with Section 3 of Article II of the Plan
shall not be available for subsequent option grants or share issuances under the
Plan.

- -------------------------
(1) Adjusted to reflect (i) the 2.1-for-1 reverse stock split of the
outstanding Common Stock effected in January 1992, (ii) the 850,000-share
increase authorized for issuance under the Plan approved by the Board on
December 14, 1995 and approved by the stockholders at the 1996 Annual
Meeting (iii) an additional share increase of 2,000,000 shares authorized
by the Board on March 19, 1997 and approved by the stockholders at the 1997
Annual Meeting, (iv) and additional increase of 400,000 shares authorized
by the Board on March 2, 1999, subject to stockholder approval at the 1999
Annual Meeting and (v) 238,095 shares of Common Stock previously issued
under the Plan and subsequently cancelled upon repurchase by the
Corporation.

3
<PAGE>

(b) In no event may any one individual participating in the Plan be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances for more than 2,000,000 shares of Common Stock in the
aggregate over the remaining term of the Plan, subject to adjustment from time
to time in accordance with paragraph 5(c) of this Article 1. For purposes of
such limitation, no stock options, stock appreciation rights or direct stock
issuances granted prior to January 1, 1994 shall be taken into account.

(c) If any change is made to the Common Stock issuable under the Plan
by reason of any stock dividend, stock split, combination of shares,
recapitalization or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, then appropriate
adjustments will be made to (i) the number and/or class of shares issuable under
the Plan, (ii) the maximum number and/or class of shares for which stock
options, separately exercisable stock appreciation rights and direct stock
issuances may be granted to any one participant in the aggregate after December
31, 1993, and (iii) the number and/or class of shares and the option price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of rights and benefits under such options. The adjustments
determined by the Plan Administrator will be final, binding and conclusive.

(d) Common Stock issuable under the Plan, whether under the Option
Grant Program or the Stock Issuance Program, may be subject to such restrictions
on transfer, repurchase rights or other restrictions as are determined by the
Plan Administrator.

- -------------------------
(2) The increase to this limitation from 750,000 shares to 2,000,000 shares was
authorized by the Board on March 2, 1999, subject to stockholder approval
at the 1999 Annual Meeting.

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<PAGE>

ARTICLE II

OPTION GRANT PROGRAM

1. TERMS AND CONDITIONS OF OPTIONS

Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either incentive stock options qualified under Internal Revenue Code Section 422
("Incentive Options") or nonstatutory options ("Non-Statutory Options") which do
not so qualify. Individuals who are not employees of the Corporation or its
parent or subsidiary corporations may only be granted non-statutory options.
Each granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; PROVIDED, however, that each such instrument
shall comply with the terms and conditions specified below. Each instrument
evidencing an Incentive Option shall, in addition, be subject to the applicable
provisions of Section 2 of this Article II.

(a) OPTION PRICE.

(1) The option price per share shall be fixed by the
Plan Administrator, but in no event shall the option price per share
be less than eighty-five percent (85%) of the fair market value of a
share of Common Stock on the date of the option grant.

(2) The option price will become immediately due upon
exercise of the option and, subject to the provisions of Article IV,
Section 1 and the instrument evidencing the grant, will be payable in
one of the following alternative forms:

(A) full payment in cash or check payable to the
Corporation; or

(B) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
fair market value on the Exercise Date (as such term is defined
below); or

(C) full payment in a combination of shares of Common
Stock held by the Optionee for the requisite period necessary to avoid
a charge to the Corporation's earnings for financial reporting
purposes and valued at fair market value on the Exercise Date and cash
or check payable to the Corporation; or

(D) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable instructions to a designated brokerage firm to effect the
immediate sale of the

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<PAGE>

purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
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 Corporation in connection with such purchase and
(II) shall provide directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.

For purposes of this subsection (a)(2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.

(3) For purposes of subsection (a)(1) above (and for
all other valuation purposes under the Plan), the fair market value of
a share of Common Stock on any relevant date under the Plan will be
determined in accordance with the following provisions:

(A) 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 System, the fair market value will be the closing
selling price of one share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers through the Nasdaq National Market System or any successor
system. If there is no reported 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.

(B) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value
will be the closing selling price of one 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 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 will 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
will be exercisable at such time or times and during such period as is
determined by the Plan Administrator and set forth in the stock option agreement
evidencing such grant. However, no option granted under this Plan will have a
term in excess of ten (10) years measured from the grant date.

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<PAGE>

(c) LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, Non-Statutory Options
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.

(d) 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 such option or
options shall in no event remain exercisable for more than a twelve
(12) month period (or such shorter period as is determined by the Plan
Administrator and set forth in the option agreement) following the
date of such cessation of Service (and under no circumstances shall
any such option be exercisable after the specified expiration date of
the option term). Each such option shall, during such twelve (12)
month or shorter period, be exercisable only to the extent of the
number of shares (if any) for which the option is exercisable on the
date of such 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.

(2) Any option granted to an Optionee under the Plan
and exercisable in whole or in part on the date of the Optionee's
death may be subsequently exercised, but only to the extent of the
number of shares (if any) for which the option is exercisable on the
date of the Optionee's cessation of Service (less any shares
subsequently purchased by the Optionee thereunder 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, PROVIDED AND ONLY IF such exercise occurs prior to the
earlier of 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) The Plan Administrator shall have complete
discretion, exercisable either at the time the option is granted or at
any time the option remains outstanding, to permit one or more options
granted under this

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<PAGE>

Article II to be exercised, during the applicable exercise period under
subparagraph (1) or (2) above, not only for the number of shares for which
each such option is exercisable at the time of the optionee's cessation of
Service but also for one or more subsequent installments of purchasable
shares for which the option would otherwise have become exercisable had
such cessation of Service not occurred.

(4) For purposes of the foregoing provisions of this
Section l(d), an Optionee shall be deemed to remain in Service for so
long as such individual renders services to the Corporation or any
parent or subsidiary corporation on a periodic basis in the capacity
of an Employee, a non-employee Board member or an independent
consultant or advisor. The Optionee shall be deemed to be an Employee
of the Corporation for so long as the Optionee remains in the employ
of the Corporation 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.

(e) STOCKHOLDER RIGHTS. An Optionee shall have none of the rights of
a stockholder with respect to any shares covered by the option until such
Optionee has exercised the option, paid the option price for the purchased
shares and been issued a stock certificate for the purchased shares.

(f) REPURCHASE RIGHTS. The shares of Common Stock acquired upon the
exercise of options granted under the Plan may be subject to one or more
repurchase rights of the Corporation in accordance with the following
provisions:

(1) The Plan Administrator may in its discretion
subject one or more shares of Common Stock issued under this Article
II to repurchase by the Corporation. Any such repurchase right shall
be exercisable by the Corporation, at the option price paid per share,
for any or all unvested shares of Common Stock held by the Optionee
under this Article II at the time of his or her cessation of Service.
The specific terms and conditions upon which such repurchase right
shall be so exercisable by the Corporation, including the
establishment of the appropriate vesting schedule and other provision
for the expiration of such right in one or more installments over the
optionee's period of Service, shall be determined by the Plan
Administrator and set forth in the instrument evidencing such right.

(2) All of the Corporation'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 4 of this Article II,
except to the extent: (i) any such repurchase right is, in connection
with such Corporate Transaction, to be assigned

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<PAGE>

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.

(3) The Plan Administrator shall have the
discretionary authority, exercisable either before or after the
optionee's cessation of Service, to cancel the Company's outstanding
repurchase rights with respect to one or more shares purchased or
purchasable by the optionee under this Article II and thereby
accelerate the vesting of such shares in connection with the
optionee's cessation of Service.

2. INCENTIVE OPTIONS

The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Corporation. 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 of a share of Common Stock on the date
of grant.

(b) DOLLAR LIMITATION. The aggregate fair market value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other option
plan of the Corporation 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 of such options as incentive stock options under the Federal tax
laws shall be applied on the basis of the order in which such options were
granted.

(c) 10% STOCKHOLDER. If any individual to whom an Incentive Option
is granted is at the time of such grant 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 outstanding classes of stock of the Corporation or
any parent or subsidiary corporation, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of the Common Stock on the grant date, and the option term shall not
exceed five (5) years, measured from the grant date.

Except as modified by the preceding provisions of this Section 2, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.

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<PAGE>

3. STOCK APPRECIATION RIGHTS

(a) One or more Optionee may, upon such terms and conditions as the
Plan Administrator may establish at the time of the option grant or at any time
thereafter, be granted 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 such vested shares. No
surrender of an option, however, shall be effective 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 subsection
3(a) 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.

(b) 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
surrender date and may exercise such rights at any time prior to the later of
(i) the expiration of the 5 business-day period following receipt by the option
holder 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 following the date of the option grant.

(c) Notwithstanding the foregoing provisions of this Section 3, one
or more officers of the Corporation 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 II. Each outstanding option with
such a limited stock appreciation right shall automatically be cancelled, to the
extent exercisable for vested shares of Common Stock, upon the occurrence of a
Hostile Take-Over, and the Optionee shall in return be entitled to a cash
distribution from the Corporation 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 aggregate option price payable for such vested shares.
Such cash distribution shall be made within five (5) days following the
consummation of the Hostile Take-Over. The Plan Administrator shall pre-approve,
at the time the limited stock appreciation right is granted, the subsequent
exercise of that right in accordance with the terms of the grant and the
provisions of this subsection 3(c). No additional approval of the Plan
Administrator or the Board shall be required at the time of the actual option
surrender 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.

(d) For purposes of Section 3(c) above, a Hostile Take-Over shall be
deemed to occur in the event any person or related group of persons (other than
the Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) acquires ownership of
securities possessing more than fifty percent (50%) of the

10
<PAGE>

total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept.

(e) 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 grants or share issuances under the Plan.

4. CORPORATE TRANSACTION

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

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

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

(iii) any reverse merger in which the Corporation is
acquired but continues in existence as a separate entity,

each outstanding option under the Plan shall automatically accelerate
so that each such option shall, immediately prior to the specified effective
date for such Corporate Transaction, become fully exercisable with respect to
the total number of shares of Common Stock at the time subject to such option
and may be exercised for all or any portion of such shares. However, an
outstanding option shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof or to 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 such option is subject to other
applicable limitations imposed by the Plan Administrator in the relevant option
agreement. The determination of comparability under clause (i) or clause (ii)
above shall be made by the Plan Administrator, and its determination shall be
final and conclusive.

(b) Upon the consummation of the Corporate Transaction, all
outstanding options under the Plan shall immediately terminate and cease to be
exercisable, except to the extent assumed by the successor corporation or parent
thereof.

(c) The exercisability as incentive stock options under the Federal
tax laws of any options accelerated in connection with the Corporate Transaction
shall remain subject to the applicable dollar limitation of Section 2(b).

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<PAGE>

(d) If the outstanding options under the Plan are assumed by the
successor corporation (or parent thereof) in the Corporate Transaction or are
otherwise to continue in effect following such Corporate Transaction, then each
such assumed or continuing option shall, immediately after such Corporate
Transaction, be appropriately adjusted to apply and pertain to the number and
class of securities or other property which would have been issued to the option
holder, in consummation of the Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities or other property shall
remain the same. In addition, the number and class of securities or other
property available for issuance under the Plan following the consummation of
such Corporate Transaction shall be appropriately adjusted.

(e) The grant of options under this Plan shall in no way affect the
right of the Corporation 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.

5. CANCELLATION AND NEW GRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the Plan 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 (i) eighty-five percent (85%) of the fair market value of the Common Stock
on such grant date or (ii) one hundred percent (100%) of such fair market value
in the case of an Incentive Option.

6. EXTENSION OF EXERCISE PERIOD

The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to extend, either at the time the option is
granted or at any time while 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; provided, however, that in no event shall such option be
exercisable at any time after the specified expiration date of the option term.

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<PAGE>

ARTICLE III

STOCK ISSUANCE PROGRAM

1. TERMS AND CONDITIONS OF STOCK ISSUANCES

Shares may be issued under the Stock Issuance Program either through
direct and immediate purchases without any intervening option grant under the
Option Grant Program or upon the subsequent exercise of outstanding options
under the Option Grant Program. The issued shares will be evidenced by a
Restricted Stock Purchase Agreement ("Purchase Agreement") that complies with
each of the terms and conditions of this Article

(a) SHARE PRICE.

(1) The purchase price per share will be fixed by the Plan
Administrator, but in no event will it be less than eighty-five percent
(85%) of the fair market value of the shares at the time of issuance. Such
fair market value shall be determined in accordance with Article II,
Section (1)(a)(3).

(2) Shares shall be issued under this Article Ill
for such consideration as the Plan Administrator shall from time to
time determine, provided that in no event shall shares be issued for
consideration other than:

(A) cash or check payable to the Corporation; or

(B) promissory note payable to the Corporation's
order, which may be subject to cancellation by the Corporation in
whole or in part upon such terms and conditions as the Plan
Administrator shall specify.

(b) VESTING SCHEDULE.

(1) The interest of a Participant in the shares
of Common Stock issued to him or her under this Article III may, in
the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more
installments in accordance with the vesting provisions of subsection
(b)(4). Except as otherwise provided in subsection (b)(2), the
Participant may not transfer any of the Common Stock in which he or
she does not have a vested interest; accordingly, all unvested shares
issued to the Participant under this Article III of the Plan shall
bear the restrictive legend specified in subsection (c)(1), until such
legend is removed in accordance with subsection (c)(2). The
Participant, however, shall have all the rights of a stockholder with
respect to the issued shares of Common Stock, whether or not such
shares are vested. Accordingly, the Participant shall have the right
to vote such shares and to receive any regular cash dividends or other
distributions paid or made with respect to such shares. Any new,
substituted or additional securities

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<PAGE>

or other property (including money paid other than as a regular cash
dividend) which the holder of unvested Common Stock may have the right to
receive by reason of a stock dividend, stock split, stock combination,
recapitalization or similar transaction affecting the Corporation's
outstanding securities without receipt of consideration, or in the event of
the conversion of the Corporation's outstanding Common Stock into cash or
other shares or securities of the Corporation or any other corporation as a
result of a merger, consolidation, liquidation or other reorganization
involving the Corporation shall be issued to such holder, subject to (i)
the same vesting requirements under subsection (b)(4) applicable to his or
her unvested Common Stock and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.

(2) As used in this Article III, the term
"transfer" shall include (without limitation) any sale, pledge,
encumbrance, gift or other disposition of any unvested shares acquired
under the Stock Issuance Program. However, the Participant shall have
the right to make a gift of one or more of such unvested shares to his
or her spouse, parents or children or to a trust established for such
spouse, parents or children, provided the donee of such shares
delivers to the Corporation a written agreement to be bound by all the
provisions of the Plan and other instruments executed by the
Participant to evidence his or her prior acquisition of such shares.
Any gift made in accordance with the foregoing limitations shall not
trigger the exercise of the Corporation's repurchase rights under
subsection (b)(3).

(3) In the event a Participant should, while his
or her interest in the acquired shares remains unvested, (i) attempt
to transfer (other than by way of a permissible gift under subsection
(b)(2)) any of the unvested shares or any interest therein or (ii)
cease to remain in Service (as defined in Section l(c)(4) of Article
II) for any reason whatsoever, then the Corporation shall have the
right to repurchase the unvested shares at the original purchase price
paid by the Participant and the Participant shall thereafter have no
further stockholder rights with respect to the repurchased shares.

(4) Any shares of Common Stock issued under the
Stock Issuance Program which are not vested at the time of such
issuance shall vest in one or more installments thereafter. The
elements of the vesting schedule, namely the number of installments in
which the shares are to vest, the interval or intervals (if any) which
are to lapse between installments and the effect which death,
disability or other event designated by the Plan Administrator is to
have upon the vesting schedule, shall be determined by the Plan
Administrator and shall be specified in the Purchase Agreement
executed by the Corporation and the Participant at the time of
issuance of the unvested shares.

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<PAGE>

(5) The Plan Administrator may in its discretion
elect not to exercise, in whole or in part, its repurchase rights with
respect to any unvested Common Stock or other assets which would
otherwise at the time be subject to repurchase pursuant to the
provisions of subsection (b)(3). Such an election may be made at any
time the repurchase right is outstanding and shall result in the
immediate vesting of the Participant's interest in the shares of
Common Stock as to which the election applies.

(1) Each certificate representing unvested shares
of Common Stock (or other securities) issued under the Plan shall bear
a restrictive legend substantially as follows:

"The securities represented by this certificate are unvested and
subject to repurchase by the Corporation pursuant to the provisions of
the Restricted Stock Purchase Agreement between the Corporation and
the registered holder of the securities (or his predecessor in
interest). Such agreement grants certain repurchase rights to the
Corporation in the event the registered holder (or his predecessor in
interest) terminates his employment or service with the Corporation
prior to vesting in the securities. A copy of such agreement is on
file at the principal office of the Corporation."

(2) As the interest of the Participant vests with
respect to any stock certificate representing shares acquired under
the Stock Issuance Program, the Corporation shall, upon the
Participant's delivery of such certificate during the period or
periods designated each year by the Plan Administrator, issue a new
certificate for the vested shares without the restrictive legend of
subsection (c)(1) and a second certificate for the balance of the
shares with such legend. If the Participant's shares are held in
escrow at the time of vesting, then the stock certificates for the
vested shares shall be released from escrow (without the restrictive
legend of subsection (c)(1)) and delivered to the Participant during
the period or periods designated by the Plan Administrator at least
semi-annually for such purpose and promptly upon Participant's
cessation of Service. If the Corporation repurchases any unvested
shares of the Participant pursuant to the provisions of subsection
(b)(3), the Corporation shall at the time the repurchase is effected
deliver a new certificate, without the restrictive legend of
subsection (c)(1), representing the number of shares (if any) in which
the Participant is vested and which are accordingly no longer subject
to repurchase by the Corporation pursuant to the provisions of
subsection (b)(3).

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<PAGE>

2. CORPORATE TRANSACTION

All of the Corporation's outstanding repurchase rights under this
Article III shall automatically terminate, and all shares of Common Stock
subject to such repurchase rights shall immediately vest in full, upon the
occurrence of a Corporate Transaction, except to the extent: (i) the
Corporation's outstanding repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction or
(ii) the termination of such repurchase rights and the acceleration of vesting
are precluded by other limitations imposed by the Plan Administrator under the
terms of the applicable Purchase Agreements.

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<PAGE>

ARTICLE IV

MISCELLANEOUS

1. LOANS OR INSTALLMENT PAYMENTS

(a) The Plan Administrator may, in its discretion, assist any
Optionee or Participant (including an Optionee or Participant who is an officer
of the Corporation) in the exercise of one or more options granted to such
Optionee under the Article II Option Grant Program or the purchase of one or
more shares issued to such Participant under the Article III Stock Issuance
Program by (i) authorizing the extension of a loan from the Corporation to such
Optionee or Participant or (ii) permitting the Optionee or Participant to pay
the option price or purchase price for the purchased Common Stock in
installments over a period of years. The terms of any such loan or installment
method of payment (including the interest rate and terms of repayment) shall be
upon such terms as the Plan Administrator shall specify in the stock option
agreement or restricted stock purchase agreement. Such loans and installment
payments may be made or permitted with or without security or collateral.
However, the maximum credit available to the Optionee or Participant may not
exceed the sum of (i) the aggregate option price or purchase price payable for
the purchased shares (less the par value) plus (ii) any federal and state income
and employment tax liability incurred by the Optionee or Participant in
connection with such exercise or purchase.

(b) The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under subsection (a) above shall be subject to
forgiveness by the Corporation in whole or in part upon such terms and
conditions as the Plan Administrator in its discretion deems appropriate.

2. AMENDMENT OF THE PLAN AND AWARDS

(a) The Board has the power and authority to amend or modify the Plan
in any or all respects whatsoever; provided, however, that no such amendment or
modification may adversely affect the rights and obligations of the option
holders with respect to their outstanding options under the Plan, nor adversely
affect the rights of any Participant with respect to any unvested shares of
Common Stock issued under the Plan prior to such Board action, unless the
Optionee or Participant consents to such amendment. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.

(b) (i) Options to purchase shares of Common Stock may be granted
under the Option Grant Program and (ii) shares of Common Stock may be issued
under the Stock Issuance Program, which are in excess of the number of shares
then available for issuance under the Plan, provided (A) 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 or the issuance of any such
shares and is thereafter submitted to the Corporation's shareholders for
approval and (B) any excess shares actually issued under the Option Grant
Program or the Stock Issuance Program are held in escrow until such stockholder
approval is obtained. If such stockholder approval is not

17
<PAGE>

obtained within twelve (12) months from the date the share increase amendment
is adopted by the Board, then (i) any unexercised options granted on the
basis of such increase shall terminate and cease to be exercisable and
(ii) the Corporation shall promptly refund to the Participants the purchase
price paid for any excess shares issued under the Plan and held in escrow,
together with interest (at the interest rate necessary to avoid the
imputation of interest income under the Federal tax laws) for the period the
shares were held in escrow.

3. EFFECTIVE DATE AND TERM OF PLAN

(a) The Plan was initially adopted by the Board on September 2, 1988
and approved by the Corporation's stockholders on February 28, 1989. On May 30,
1991, the Board approved a 523,809-share increase in the number of shares of
Common Stock issuable under the Plan, and the Plan was restated in its entirety
on September 6, 1991. Both the 523,809-share increase and the September 1991
restatement of the Plan were approved by the stockholders in January 1992. On
April 8, 1992, the Board adopted a new ,restatement of the Plan to (i) conform
the Plan to the requirements of Rule 16b-3 under the Federal securities laws,
(ii) revise the events in which an acceleration of options would occur and (iii)
provide that the non-employee members of the Board would no longer be eligible
to participate in the Plan. The stockholders approved the amendment and
restatement on May 11, 1993. On March 15, 1994, the Board amended the Plan to
(i) increase the number of shares issuable thereunder by 450,000 shares and (ii)
limit the number of shares of Common Stock for which any one individual may be
granted stock options, stock appreciation rights and direct stock issuances in
the aggregate under the Plan after December 31, 1993 to a maximum of twenty five
percent (25%) of the number of shares from time to time authorized for issuance
under the Plan (the "25% Unit"). The stockholders approved the amendment on May
24, 1994. The Board amended the Plan on December 14, 1995 to (i) increase the
maximum number of shares of Common Stock issuable thereunder by an additional
850,000 shares and (ii) replace the 25% Limit on the maximum number of shares
for which any one individual may be granted stock options, stock appreciation
rights and direct stock issuances in the aggregate after December 31, 1993 with
a specific limit of 750,000 shares. The 850,000-share increase became effective
when adopted by the Board. The new 750,000 share limit on the maximum number of
shares for which any one individual may be granted stock options, stock
appreciation rights and direct stock issuances in the aggregate under the Plan
became effective when adopted by the Board on December 14, 1995. The
stockholders approved the amendment on May 16, 1996.

(b) The Plan was amended and restated by the Board on March 19, 1997
(the "1997 Restatement") to effect the following changes: (i) increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Plan from 2,869,048 shares to 4,869,048 shares, (ii) extend the term of
the Plan from September 2, 1998 to December 31, 2002, (iii) render the
non-employee Board members eligible to receive option grants and direct stock
issuances under the Discretionary Option Grant and Stock Issuance Programs in
effect under the Plan, (iii) allow unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the option exercise price or
direct issue price paid per share to be reissued under the Plan, (iv) remove
certain restrictions on the eligibility of non-employee Board members to serve
as Plan Administrator, and (v) effect a series of additional changes to the
provisions of the

- --------------------------
(3) Adjusted to reflect the 2.1-for-1 reverse stock split to the outstanding
Common Stock effected in January 1992.

18
<PAGE>

Plan (including the stockholder approval requirements) in order to take
advantage of the recent amendments to Rule 16b-3 of the Securities and Exchange
Commission which exempts certain officer and director transactions under the
Plan from the short-swing liability provisions of the federal securities laws.
The 1997 Restatement was approved by the stockholders at the 1997 Annual
Meeting,

(c) The Plan was amended and restated by the Board on March 2, 1999
(the "1999 Restatement") to effect the following changes: (i) increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Plan from by an additional 400,000 shares to 5,030,095 shares (excluding
the 238,0958 shares previously issued under the Plan and cancelled upon
repurchase by the Corporation) and (ii) increase the limit on the maximum number
of shares for which any one participant may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances after December
31, 1993 from 750,000 shares to 2,000,000 shares in the aggregate. The 1999
Restatement is subject to stockholder approval, and no option grants made on the
basis of the 400,000-share increase to the share reserve under the Plan or the
1,250,000-share increase to the per participant limit shall become exercisable
in whole or in part unless and until the 1999 Restatement is approved by the
stockholders. Should such stockholder approval not be obtained, then any
options granted on the basis of the 400,000-share increase to the reserve or the
1,250,000-share increase to the per participant limit shall terminate without
ever becoming exercisable for those shares, and no further option grants or
direct stock issuances shall be made on the basis of those increases. However,
option grants and direct stock issuances may continue to be made pursuant to the
provisions of the Plan as in effect immediately prior to the 1999 Restatement
until the December 31, 2002 termination date of the Plan. Subject to the
foregoing limitations, the Plan Administrator may make option grants and direct
stock issuances under the Plan at any time before the date fixed herein for the
termination of the Plan.

(d) The provisions of each restatement of the Plan shall apply only
to options granted under the Plan from and after the effective date of that
restatement. All options issued and outstanding under the Plan immediately
prior to each such restatement 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 that
restatement shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to the acquisition of
shares of Common Stock thereunder.

(e) The sale and remittance procedure authorized for the exercise
of outstanding options under the Plan shall be available for all options
granted under the Plan on or after the effective date of the September 1991
restatement and all non-statutory options outstanding under the Plan on such
effective date. The Plan Administrator may also allow such procedure to be
utilized in connection with one or more disqualifying dispositions of
Incentive Option shares effected after the effective date of the September
1991 restatement.

19
<PAGE>

(f) Unless sooner terminated in accordance with a Corporate
Transaction, the Plan shall terminate upon the earlier of (i) December 31, 2002
(4) or (ii) the date on which all shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Option Grant Program and the issuance
or repurchase of shares under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then no options outstanding on
such date under Article II and no unvested shares issued and outstanding on such
date under Article III shall be affected by the termination of the Plan, and
each such outstanding option and unvested share issuance will thereafter
continue to have force and effect in accordance with the provisions of the stock
option agreement evidencing each such Article II option and the purchase
agreement evidencing each such unvested share issuance under Article III.

4. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the issuance of
shares of Common Stock hereunder will be used for general corporate purposes.

5. WITHHOLDING

The Corporation's obligation to deliver shares upon the exercise or
surrender of any options granted under Article II or upon the purchase of any
shares issued under Article III shall be subject to the satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.

6. REGULATORY APPROVALS

(a) The implementation of the Plan, the granting of any stock option
or stock appreciation right under the Option Grant Program, the issuance of any
shares under the Stock Issuance Program, and the issuance of Common Stock upon
the exercise or surrender of the stock options or stock appreciation rights
granted hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options and stock appreciation rights granted under it, and
the Common Stock issued pursuant to it.

(b) No shares of Common Stock or other assets shall be issued or
delivered under the Plan, unless and until, in the opinion of counsel for the
Corporation (or its successor in the event of any Corporate Transaction), there
shall have been compliance with all applicable requirements of the Federal and
state securities exchange on which stock of the same class is then listed, and
all other requirements of law or of any regulatory bodies having jurisdiction
over such issuance and delivery.

- ------------------------------
(4) The extension of the term of the Plan from September 2, 1998 to December
31, 2002 was approved by the stockholders at the 1997 Annual Meeting.

20
<PAGE>

7. NO EMPLOYMENT/SERVICE RIGHTS

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

21
<PAGE>

SPECIAL ADDENDUM

SHARED INVESTMENT PROGRAM

1. PURPOSE

The Shared Investment Program (the "Program") is hereby implemented
under the 1988 Restated Stock Plan, effective March 19, 1997. The purpose of
the Program is to provide the Corporation's officers and other key employees
with the opportunity to acquire shares of Common Stock as a long-term investment
and thereby more closely align the interests of those individuals with those of
the Corporation's stockholders. Specifically, the Program is intended to
achieve the following purposes:

a. more closely align the financial rewards of participants in the
Program with the financial rewards realized by all other holders
of the Common Stock;

b. increase the motivation of such participants to manage the
Company as owners; and

c. increase the ownership of Common Stock among the officers and
other key employees of the Company.

All capitalized terms used in this Special Addendum shall, to the
extent not specifically defined herein, have the meanings assigned to those
terms in the Plan.

2. PARTICIPATION

The individuals eligible to participate in the Program shall be
limited to the officers and other key employees of the Corporation listed in
attached Schedule I. Each such listed individual shall become a participant in
the Program to the extent he or she purchases all or any portion of the number
of shares of Common Stock allotted to such individual in attached Schedule 1.
Any such purchase must be effected in accordance with the provisions of Section
3 below.

3. PARTICIPATION

To become an actual participant in the Program ("Participant"), an
individual listed in attached Schedule I must effect the purchase of all or any
portion of his or her Common Stock allotment under Schedule I as follows:

a. submit a completed and executed Stock Purchase Agreement, in the
form approved by the Plan Administrator, which incorporates the
provisions of the Program applicable to the purchased shares,
including (without limitation) the gain/loss sharing provisions
of Section 6;

A-1
<PAGE>

b. execute and deliver a full-recourse promissory note, in
accordance with Section 4 below, in payment of the purchase price
for the purchased shares;

c. execute and deliver a stock pledge agreement, in accordance with
Section 4 below, as collateral for the promissory note; and

d. satisfy all other conditions of participation specified in the
Plan.

All such agreements must be in such form and submitted at such time as
specified by the Plan Administrator. No officer or other key employee listed in
attached Schedule I is required to purchase any of his or her Common Stock
allotment or otherwise to participate in the Program.

The purchases shall be effected in accordance with the provisions of
the Stock Issuance Program under the Plan, and the purchased shares shall
reduce, on a one-for-one basis, the number of shares of Common Stock reserved
for issuance under the Plan. The purchased shares shall be fully-vested upon
issuance and shall not be subject to the Corporation's repurchase rights under
Article III of the Plan.

4. PAYMENT OF PURCHASE PRICE

The purchase price for all shares of Common Stock issued under the
Program shall be equal to one hundred percent (100%) of their Fair Market Value
at the time of purchase. The purchase price shall be paid through the
Participant's delivery of a full-recourse promissory note, substantially in the
form of attached Exhibit A (the "Promissory Note"), payable to the order of the
Corporation. Each Promissory Note shall bear interest at the minimum per annum
rate, compounded semi-annually, required under the federal tax laws to avoid the
imputation of compensation income to the Participant. The Promissory Note shall
have a maximum term of nine (9) years, subject to acceleration in accordance
with the provisions of this Program. The Promissory Note shall be secured by
the Participant's pledge of the purchased shares with the Corporation.
Accordingly, the Participant shall, at the time of the purchase of those shares,
execute and deliver to the Corporation a Stock Pledge Agreement in the form of
attached Exhibit B, together with the certificate for the purchased shares
accompanied by a duly-executed assignment of stock powers.

5. SALE OF PURCHASED SHARES

Each Participant shall be permitted to sell all or any portion of the
shares of Common Stock he or she purchases under the Program (the "Purchased
Shares"), subject, however, to the following restrictions:

a. except in the event of the Participant's death, permanent
disability (as defined in Internal Revenue Code Section 22(e)(3))
or other cessation of Service or the occurrence of a Change in
Control of the Corporation, the Participant may not sell any
portion of the Purchased Shares before the first anniversary of
the date on which he or she purchased those shares (the "Purchase
Date");

A-2
<PAGE>

b. the Participant may not sell any portion of the Purchased Shares
while there is any outstanding unpaid balance (principal and
accrued interest) under his or her Promissory Note, unless the
sale proceeds are simultaneously applied first to the payment of
the principal portion of the Promissory Note attributable to
those shares plus the accrued and unpaid interest on that
principal portion; and

c. the Participant must notify the Finance Department of his or her
intention to sell the Purchased Shares before such sale is
effected.

The Plan Administrator shall have the right to impose restrictions on
the timing, amount and form of sale of the Purchased Shares with respect to any
Participant, to the extent the Plan Administrator determines that such
restrictions are in the best interests of the Corporation.

6. SHARING OF GAIN OR LOSS

If the Participant remains in Service until the first anniversary of
the Purchase Date, then the Corporation shall share the loss (if any) which the
Participant may incur upon the subsequent sale of the Purchased Shares. The
loss will be measured by the excess of (i) the purchase price paid for the
Purchased Shares over (ii) the price at which those shares are sold. The risk
of loss on the Purchased Shares shall be allocated as follows:

a. to the extent any portion of the Purchased Shares is sold before
the third anniversary of the Purchase Date, the Participant shall
be responsible for one hundred percent (100%) of the loss on that
portion of the Purchased Shares; and

b. to the extent any portion of the Purchased Shares is sold on or
after the third anniversary of the Purchase Date, the Participant
shall be responsible for only fifty percent (50%) of the loss on
that portion of the Purchased Shares.

The Corporation shall also be entitled under certain circumstances to
share in the gain (if any) which the Participant may incur upon the subsequent
sale of the Purchased Shares. The gain will be measured by the excess of (i)
the price at which the Purchased Shares are sold over (ii) the purchase price
paid for those shares. The sharing of such gain on the Purchased Shares shall
be allocated as follows:

a. to the extent any portion of the Purchased Shares is sold before
the second anniversary of the Purchase Date, the Participant
shall only be entitled to receive fifty percent (50%) of the gain
on that portion of the Purchased Shares, and the remaining fifty
percent (50%) of the gain shall be paid over to the Corporation;

b. to the extent any portion of the Purchased Shares is sold on or
after the second anniversary of the Purchase Date but before the
third anniversary of such Purchase Date, the Participant shall
only be entitled to receive

A-3
<PAGE>

seventy-five percent (75%) of the gain on that portion of the
Purchased Shares, and the remaining twenty-five percent (25%) of
the gain shall be paid over to the Corporation; and

c. to the extent any portion of the Purchased Shares is sold on or
after the third anniversary of the Purchase Date, the Participant
shall be entitled to receive one hundred percent (100%) of the
gain on that portion of the Purchased Shares.

The gain/loss sharing provisions of this Section 6 shall apply only to
the extent the Purchased Shares are sold by the Participant and the sale
proceeds are applied to payment of his or her Promissory Note in accordance with
subsection 5.b.

7. DEATH OR PERMANENT DISABILITY

Should the Participant cease Service by reason of his or her death or
permanent disability at any time while there is an outstanding unpaid balance
under his or her Promissory Note, then the Participant (or the representative of
his or her estate) may sell all or any portion of the Purchased Shares, subject
only to the restrictions specified in subsections 5.b and 5.c. Upon the death of
a Participant, her or his Promissory Note shall become immediately due and
payable.

With respect to any Purchased Shares sold after the Participant's
death or permanent disability and while there is an unpaid balance outstanding
under his or her Promissory Note, the Participant shall be not responsible for
any loss incurred on the sale of those Purchased Shares and shall be entitled to
receive one hundred percent (100%) of any gain realized on the sale of the
Purchased Shares.

This Section 7 shall not be applicable to any sale of the Purchased
Shares effected (i) before the Participant's death or permanent disability or
(ii) after the payment of the entire balance owed under his or her Promissory
Note.

8. OTHER CESSATION OF SERVICE

Should the Participant's Service terminate for any reason other than
death or permanent disability, then the following provisions shall apply:

If the Participant's Service terminates after the first anniversary of
the Purchase Date, then he or she shall remain subject to all of the terms and
conditions of the Program, as if his or her Service had not terminated,
including specifically the transfer restrictions of subsections 5.b. and 5.c.
and the gain/loss sharing provisions of Section 6.

If the Participant's Service terminates before the first anniversary
of the Purchase Date, then he or she shall be:

A-4
<PAGE>

a. permitted to sell the Purchased Shares, subject to the
restrictions specified in subsections 5.b. and 5.c.;

b. responsible for one hundred (100%) of the loss on the sale of the
Purchased Shares, whether the sale is effected before or after
his or her Promissory Note is paid; and

c. entitled to receive only fifty percent (50%) of the gain on any
sale of the Purchased Shares, and the remaining fifty percent
(50%) of that gain shall be paid to the Corporation
simultaneously with the sale.

If the Participant's Service is involuntarily terminated by the
Corporation for any reason or if the Participant voluntarily resigns from
Service, then he or she will have six (6) months to repay the entire outstanding
balance on his or her Promissory Note.

9. CHANGE IN CONTROL

Immediately prior to the consummation of a Change in Control, the
restrictions on the sale of the Purchased Shares specified in Section 5.a shall
lapse. In addition, the following special provisions shall be in effect for
each Participant who continues in Service through the effective date of such
Change in Control:

- each such Participant shall be deemed to have continued in Service
until the first anniversary of the Purchase Date (should the Change in
Control occur before the first anniversary of the Purchase Date), and

- each such Participant shall be deemed to have sold the Purchased
Shares after the third anniversary of the Purchase Date for purposes of
Section 6 (should the sale of the Purchased Shares occur before the third
anniversary of the Purchase Date).

For purposes of the Program, a Change in Control shall be deemed to
occur upon a change in ownership or control of the Corporation effected through
any of the following transactions:

a. the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of 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 Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's
stockholders,

A-5
<PAGE>

b. a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority
of the Board members ceases, by reason of one or more contested
elections for Board membership, 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 a
majority 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, or

c. the consummation of a Corporate Transaction.

10. LOSS SHARING IMPLEMENTATION

Should the Participant sell any portion of the Purchased Shares at a
loss (as determined by the provisions of Section 6) while his or her Promissory
Note is outstanding, then the Corporation shall assume the portion (if any) of
that loss for which the Participant is not responsible pursuant to the loss
sharing provisions of Section 6. The Corporation shall satisfy such obligation
by delivering a check payable to the Participant in an amount equal to that
portion ("Risk Sharing Payment") simultaneously with the Participant's payment
of the outstanding unpaid balance of his or her Promissory Note.

The Corporation anticipates that the Risk Sharing Payment will
constitute compensation income to the Participant, subject to the Corporation's
collection of all applicable income and employment withholding taxes. The
Corporation also anticipates that the Risk Sharing Payment will be deductible
for federal income tax purposes as compensation in the taxable year in which
such payment is made. If the Corporation determines that it is not entitled to
a current income tax deduction for the Risk Sharing Payment by reason of the
limitations imposed under Internal Revenue Code Section 162(m) and the related
Treasury Regulations, the Corporation will not make the Risk Sharing Payment to
the Participant in connection with the repayment of his or her Promissory Note.
Instead the Participant shall be entitled to receive deferred compensation equal
to the Risk Sharing Payment at a time and in a form which will allow the
Corporation to obtain an income tax deduction for such payment. The Plan
Administrator shall have the sole discretion to implement a deferred
compensation arrangement to the extent necessary or desirable to achieve the
intent of the preceding sentence.

11. EFFECT OF PROGRAM

The Program shall be governed by the provisions of the Plan, except as
otherwise expressly stated in this Special Addendum.

12. DISCRETIONARY AUTHORITY

The Plan Administrator shall have the discretionary authority to waive
any and all transfer restrictions, Service requirements or holding period
requirements otherwise applicable to the Program under such circumstances as the
Plan Administrator may deem appropriate.

A-6

<PAGE>

EXHIBIT 99.7

MATRIX PHARMACEUTICAL, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN

I. PURPOSE OF THE PLAN

This Employee Stock Purchase Plan is intended to promote the interests
of Matrix Pharmaceutical, Inc., a Delaware Corporation, 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 Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. 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 number of shares of Common Stock
reserved for issuance over the term of the Plan shall be limited to 700,000
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, (iii) the maximum number and class of
securities purchasable by all Participants in the aggregate on any one Purchase
Date and (iv) 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 shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.

<PAGE>

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 of such offering period. However, the initial offering period shall
have a duration of twenty-five (25) months and shall begin on July 1, 1999 and
terminate on the last business day in July 2001. The next offering period shall
commence on the first business day in August 2001, and subsequent offering
periods shall commence as designated by the Plan Administrator.

C. Each offering period shall be comprised of a series of one or
more successive Purchase Intervals. Purchase Intervals shall run from the first
business day in February each year to the last business day in July of the same
year and from the first business day in August each year to the last business
day in January of the following year. However, the first Purchase Interval in
effect under the initial offering period shall commence on July 1, 1999 and end
on the last business day in January 2000.

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 (24) months, unless a shorter
duration is established by the Plan Administrator within five (5) business days
following the start date of that offering period.

V. ELIGIBILITY

A. Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date or on any subsequent Semi-Annual Entry Date within that offering period,
provided he or she remains an Eligible Employee.

B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.

C. The date an individual 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 a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.

2.
<PAGE>

VI. PAYROLL DEDUCTIONS

A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Cash Earnings 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
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:

(i) The Participant may, at any time during the offering period,
reduce his or her rate of payroll deduction to become effective as soon as
possible after filing the appropriate form with the Plan Administrator.
The Participant may not, however, effect more than one (1) such reduction
per Purchase Interval.

(ii) The Participant may, prior to the commencement of any new
Purchase Interval within the offering period, increase the rate of his or
her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the fifteen percent
(15%) maximum) shall become effective on the start date of the first
Purchase Interval following the filing of such form.

B. Payroll deductions shall begin on the first pay day
administratively feasible following the Participant's Entry Date into 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 required to 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

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 over
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.

3.
<PAGE>

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 successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant 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 three thousand (3,000) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization. In addition, the
maximum aggregate number of shares of Common Stock purchasable by all
Participants on any one Purchase Date shall not exceed one hundred seventy-five
thousand (175,000) shares, subject to periodic adjustments in the event of
certain changes in the Corporation's capitalization. However, the Plan
Administrator shall have the discretionary authority, exercisable prior to the
start of any offering period under the Plan, to increase or decrease the
limitations to be in effect for the number of shares purchasable per Participant
and in the aggregate by all Participants on each Purchase Date during that
offering period.

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 per Participant or in the
aggregate on the Purchase Date shall be promptly refunded.

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

4.
<PAGE>

(i) A Participant may, at any time prior to the next scheduled
Purchase Date in the offering period, terminate his or her outstanding
purchase right 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, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next Purchase Date. If
no such election is made at the time such purchase right is terminated,
then the payroll deductions collected with respect to the terminated right
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) on or before his or her scheduled 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) while his
or her purchase right remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's payroll deductions for
the Purchase Interval in which the 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 (x) within ninety (90) days following the commencement of
such leave or (y) prior to the expiration of any longer period for which
such Participant's right to reemployment with the Corporation is guaranteed
by either statute or contract, his or her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the leave
began, unless the Participant withdraws from the Plan prior to his or her
return. An individual who returns to active employment following a leave of
absence which exceeds in duration the applicable (x) or (y) time period
will be treated as a new Employee for purposes of subsequent participation
in the Plan and must accordingly re-enroll in the Plan (by making a timely
filing of the prescribed enrollment forms) on or before his or her
scheduled Entry Date into the offering period.

G. CHANGE IN CONTROL. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control 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

5.
<PAGE>

on the Participant's Entry Date into the offering period in which such Change in
Control occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Change in Control. However, the
applicable limitation on the number of shares of Common Stock purchasable per
Participant shall continue to apply to any such purchase, but not the limitation
applicable to the maximum number of shares of Common Stock purchasable in the
aggregate.

The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.

H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares
of Common Stock 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 ($25,000.00) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share 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 the 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 on which such right remains
outstanding.

6.
<PAGE>

(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
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 ($25,000.00) 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, any 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 March 2, 1999 and shall
become effective on July 1, 1999, PROVIDED no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation at the 1999 Annual Meeting and (ii) the Corporation shall have
complied with all applicable requirements of the 1933 Act (including the
registration of the shares of Common Stock issuable under the Plan on a Form S-8
registration statement filed with the Securities and Exchange Commission), all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock is listed for trading and all
other applicable requirements established by law or regulation. In the event
such stockholder approval is not obtained, or such compliance is not effected,
within twelve (12) months after the date on which the Plan is adopted by the
Board, the Plan shall terminate and have no further force or effect, and all
sums collected from Participants during the initial offering period hereunder
shall be refunded.

B. Unless sooner terminated by the Board, the Plan shall terminate
upon the EARLIEST of (i) the last business day in July 2009, (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

A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any

7.
<PAGE>

compensation expense in connection with the shares of Common Stock offered for
purchase under the Plan, should the financial accounting rules applicable to the
Plan on July 1, 1999 be subsequently revised so as to require the Corporation to
recognize compensation expense in the absence of such amendment or termination.

B. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan,
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 the Plan or (iii) modify the eligibility requirements for participation in
the Plan.

XI. GENERAL PROVISIONS

A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.

B. 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.

C. 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.

8.
<PAGE>

SCHEDULE A

CORPORATIONS PARTICIPATING IN

EMPLOYEE STOCK PURCHASE PLAN
AS OF JULY 1, 1999

Matrix Pharmaceutical, Inc.

<PAGE>

APPENDIX

The following definitions shall be in effect under the Plan:

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

B. CASH EARNINGS shall mean the (i) 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 (ii)
all overtime payments, bonuses, profit-sharing distributions and other
incentive-type payments received during such period. Such Cash Earnings shall
be calculated before deduction of (A) any income or employment tax withholdings
or (B) any and all contributions made by the Participant to any Code Section
401(k) salary deferral plan or Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate. However,
Cash Earnings shall NOT include any contributions made on the Participant's
behalf by the Corporation or any Corporate Affiliate to any employee benefit or
welfare plan now or hereafter established (other than Code Section 401(k) or
Code Section 125 contributions deducted from such Cash Earnings).

C. CHANGE IN CONTROL shall mean a change in ownership of the
Corporation pursuant to any of the following transactions:

(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, or

(iii) the acquisition, directly or indirectly by an person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by or is under common
control with the Corporation) of 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 Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders.

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

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

A-1.
<PAGE>

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.

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

H. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).

I. ENTRY DATE shall mean the date an Eligible Employee first
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be July 1, 1999.

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

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

M. 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 for the offering period commencing July
1, 1999 are listed in attached Schedule A.

A-2.
<PAGE>

N. PLAN shall mean the Corporation's 1999 Employee Stock Purchase
Plan, as set forth in this document.

O. PLAN ADMINISTRATOR shall mean the committee of two (2) or more
Board members appointed by the Board to administer the Plan.

P. PURCHASE DATE shall mean the last business day of each Purchase
Interval.

Q. PURCHASE INTERVAL shall mean each successive six (6)-month period
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.

R. SEMI-ANNUAL ENTRY DATE shall mean the first business day in
February and August each year on which an Eligible Employee may first enter an
offering period.

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

A-3.

<PAGE>

EXHIBIT 99.8

MATRIX PHARMACEUTICAL, INC.
EMPLOYEE STOCK PURCHASE PLAN ("ESPP")

ENROLLMENT/CHANGE FORM
<TABLE>
<S><C>
- ------------------
SECTION 1: Action Complete Sections:
- ------------------ ------------------------------------ --------------------------------------------------
ACTION / / New Enrollment 2, 3, 7 and sign attached Stock Purchase Agreement
/ / Change Payroll Deduction 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 Payroll Deduction Amount: _______% of my cash earnings*
- ------------------ Interval Beginning:

NEW ENROLLMENT / / February 1, ______ * Must be a multiple of 1% up to a maximum of 15% of cash
/ / August 1, ______ earnings
/ / Initial Offering Period
- ---------------------------------------------------------------------------------------------------------------------------------
- ------------------
SECTION 4: Effective with the I authorize the following new level of payroll
- ------------------ Pay Period Beginning: deduction: ________% of my cash earnings*
CHANGE ----------------------------------
PAYROLL Month, Day and Year * Must be a multiple of 1% up to a maximum of 15%
DEDUCTIONS of cash earnings

NOTE: You may reduce your rate of payroll deductions once per purchase interval to become effective
---- as soon as possible following the filing of the change form. You may also increase your rate of
payroll deductions to become effective as of the start date of the next purchase interval.
- ---------------------------------------------------------------------------------------------------------------------------------
- ------------------
SECTION 5: Effective with the Your election to terminate your payroll
- ------------------ Pay Period Beginning: deductions for the balance of the offering period
TERMINATE --------------------------------- cannot be changed, and you may not rejoin the
PAYROLL Month, Day and Year current offering period at a later date. You will
DEDUCTIONS not be able to resume participation in the ESPP
until a new 2-year offering period begins.

In connection with my voluntary termination of payroll deductions, I elect the following action regarding
my ESPP payroll deductions to date in the current six (6)-month purchase interval:
/ / Purchase shares of Matrix Pharmaceutical, Inc. at end of the interval
OR
/ / Refund ESPP payroll deductions collected
NOTE: If your employment terminates for any reason or your eligibility status changes (< 20 hrs/wk or
---- < 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: In connection with my unpaid leave of absence, I elect the following action with respect to my ESPP payroll
- ------------------ deductions to date in the current purchase Interval:
LEAVE OF / / Purchase shares of Matrix Pharmaceutical, Inc. at end of the interval
ABSENCE 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
when you went on leave.
- ---------------------------------------------------------------------------------------------------------------------------------
- ------------------
SECTION 7:
- ------------------
AUTHORIZATION I HEREBY AUTHORIZE THE SPECIFIC ACTION OR ACTIONS INDICATED ABOVE.

- ------------------------------------------------------ --------------------------------------------------------
Date Signature of Employee
</TABLE>

<PAGE>

EXHIBIT 99.9
MATRIX PHARMACEUTICAL, INC.
STOCK PURCHASE AGREEMENT

I hereby elect to participate in the 1999 Employee Stock Purchase Plan
(the "ESPP") for the offering period specified below, and I hereby subscribe to
purchase shares of common stock of Matrix Pharmaceutical, 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 offering period in the 1% multiple of my total cash earnings (not
to exceed a maximum of 15%) specified in my attached Enrollment Form.

The offering period is divided into a series of consecutive purchase
intervals. With the exception of the initial purchase interval which will begin
on July 1, 1999 and end on July 31, 2001, those purchase intervals will each be
of six months duration and will run from first business day of February to the
last business day of July each year and from the first business day of August
each year to the last business day of January in the following year. My
participation will automatically remain in effect from one purchase interval to
the next in accordance with 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 reduce the rate of my payroll deductions on
one occasion per purchase interval, and I may increase my rate of payroll
deductions to become effective at the beginning of any subsequent purchase
interval.

My payroll deductions will be accumulated for the purchase of shares
of common stock on the last business day of each purchase interval within the
offering period. The purchase price per share will be equal to 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 purchase date. I
will also be subject to ESPP restrictions (i) limiting the maximum number of
shares which I may purchase per purchase interval, (ii) limiting the maximum
number of shares which may be purchased in the aggregate per purchase interval
and (iii) 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 at any time prior to the last business
day of a purchase interval and elect either to have the Corporation refund all
my payroll deductions for that interval or to have such payroll deductions
applied to the purchase of common stock at the end of such 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. If my re-employment is guaranteed by either law or contract, or if I
return to active service within ninety (90) days, then upon my return my payroll
deductions will automatically resume at the rate in effect when my leave began.

The Corporation will issue a stock certificate for the shares
purchased on my behalf after the end of each purchase interval. The certificate
will be issued in street name and will be deposited directly in my
Corporation-designated brokerage account. I will notify the Corporation of any
disposition of shares purchased under the ESPP, and I will satisfy all
applicable income and employment tax withholding requirements at the time of
such disposition.

The Corporation has the right, exercisable in its sole discretion, to
amend or terminate all outstanding purchase rights under the ESPP at any time,
with such amendment or termination to become effective immediately following the
end of any purchase interval. However, such purchase rights may be amended or
terminated with an immediate effective date to the extent necessary to avoid the
Corporation's recognition of compensation expense for financial reporting
purposes, should the accounting principles applicable to the ESPP change. Upon
any such termination, I will cease to have any further rights to purchase shares
of common stock under this Agreement.

I have read this Agreement 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: ,
------------------ --------

Signature of Employee:
--------------------------------
Printed Name:
-------------------

Applicable Offering Period: July 1, 1999 to the last business day in July
2001

Actual Entry Date into Offering Period: , _________