GASONICS INTERNATIONAL CORP, S-8, 1997-05-21

GASONICS INTERNATIONAL CORP
S-8, 1997-05-21
SPECIAL INDUSTRY MACHINERY, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1997
REGISTRATION NO. 333-

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

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

------------------------------
GASONICS INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)

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

Delaware 94-2159729
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

2730 Junction Avenue
San Jose, California 95134
(Address of principal executive offices) (zip code)

------------------------------
GASONICS INTERNATIONAL CORPORATION
1994 Stock Option/Stock Issuance Plan
Employee Stock Purchase Plan
(Full Title of the Plans)

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

Dave Toole
President and Chief Executive Officer
GASONICS INTERNATIONAL CORPORATION
2730 Junction Avenue, San Jose, California 95134
(408) 944-0212
(Telephone number, including area code, of agent for service)

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

<TABLE>
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
Proposed
Proposed maximum maximum Amount of
Amount to be offering price per aggregate registration fee
Title of securities to be registered registered(1) share(2) offering price(2)
<S> <C> <C> <C> <C>

Options to Purchase Common Stock
(1994 Stock Option/Stock Issuance Plan) 500,000 N/A N/A N/A

Common Stock, $0.001 par value
(1994 Stock Option/Stock Issuance Plan) 500,000 $10.25 $5,125,000 $1,553.03

Common Stock, $0.001 par value
(Employee Stock Purchase Plan) 400,000 $10.25 $4,100,000 $1,242.42

Aggregate Filing Fee $2,796.00
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1994 Stock Option/Stock Issuance
Plan and the Employee Stock Purchase Plan by reason of any stock dividend,
stock split, recapitalization or any other similar transaction without
receipt of consideration which results in an increase in the number of
outstanding shares of Common Stock of GaSonics International Corporation.

(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 Common Stock of GaSonics International
Corporation on May 16, 1997, as reported on the Nasdaq National Market.

<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE

GaSonics International Corporation (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"Commission"):

(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, filed with the Commission on December 24, 1996;

(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended December 31, 1996 and March 31, 1997, filed with the
Commission on February 11, 1997 and May 7, 1997, respectively; and

(c) The Registrant's Registration Statement No. 0-23372 on Form 8-A filed
with the Commission on February 4, 1994 pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "1934 Act"), together with
Amendment No. 1 to the Form 8-A filed with the Commission on March 9,
1994, 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 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 is also deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Registration
Statement.

Item 4. DESCRIPTION OF SECURITIES

Not applicable.

Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

Not applicable.

Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145(a) of the Delaware General Corporation Law (the
"Corporation Law") provides in relevant part that "[a] corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other

II-1.
<PAGE>

enterprise against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful."
With respect to derivative actions, Section 145(b) of the Corporation Law
provides in relevant part that "[a] corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor...[by reason of his service in one of the
capacities specified in the preceding sentence] against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper."

The Registrant's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by the Corporation Law, and the
Registrant's Bylaws provide that each person who is or was a director of the
Registrant shall be indemnified by the Registrant to the full extent
permitted by the Corporation Law. Such Certificate also provides that the
Registrant may, but is not required to, indemnify its officers, employees and
agents (other than directors and executive officers) to the extent and in the
manner permitted by the Corporation Law. The Registrant has entered into
indemnification agreements with its officers and directors. The
indemnification agreements provide the Registrant's officers and directors
with further indemnification to the maximum extent permitted by the
Corporation Law.

Item 7. EXEMPTION FROM REGISTRATION CLAIMED

Not Applicable.

Item 8. EXHIBITS

Exhibit Number Exhibit
- -------------- -------

II-2.
<PAGE>

99.8** Form of Notice of Grant (Non-Employee Director - Initial
Grant) to be generally used in connection with the
automatic grant program of the 1994 Stock Option/Stock
Issuance Plan.
99.9** Form of Notice of Grant (Non-Employee Director -
Subsequent Grant) to be generally used in connection with
the automatic grant program of the 1994 Stock Option/Stock
Issuance Plan.
99.10* Form of Stock Option Agreement (Non-Employee Director) to be
generally used in connection with the automatic grant program
of the 1994 Stock Option/Stock Issuance Plan.
99.11* Form of Stock Issuance Agreement to be generally used in
connection with the 1994 Stock Option/Stock Issuance Plan.
99.12* Addendum to Stock Issuance Agreement (Involuntary
Termination).
99.13* Addendum to Stock Issuance Agreement (Special Tax Elections).
99.14 Employee Stock Purchase Plan (as amended and restated
effective December 17, 1996).
99.15** Form of Stock Purchase Agreement.
99.16** Form of Enrollment/Change Form.

* Exhibits 99.2 through 99.7 and Exhibits 99.10 through 99.13 are
incorporated herein by reference to Exhibits 99.2 through 99.7 and Exhibits
99.10 through 99.13, respectively, of Registrant's Registration Statement
No. 33-76698 on Form S-8 which was filed with the SEC on March 21, 1994.

** Exhibits 99.8, 99.9, 99.15 and 99.16 are incorporated by reference to
Exhibits 99.8, 99.9, 99.15 and 99.16 respectively, on Registrant's
Registration Statement No. 333-01948 on Form S-8 which was filed with the
SEC on March 5, 1996.

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 the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; PROVIDED, however, that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by 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 at the
termination of the GaSonics International Corporation 1994 Stock Option/Stock
Issuance Plan and/or 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 the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the indemnity provisions summarized

II-3.
<PAGE>

in Item 6 above or otherwise, the Registrant has been informed that in the
opinion of the Commission 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-4.
<PAGE>

SIGNATURES

Pursuant to the requirements of the 1933 Act, 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 San Jose, State of California, on May 19, 1997.

GASONICS INTERNATIONAL CORPORATION

By: /S/ DAVE TOOLE
-----------------------------------------
Dave Toole, President and Chief
Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned officers and directors of GaSonics
International Corporation, a Delaware corporation, do hereby constitute and
appoint Monte M. Toole and Dave Toole, and each of them, the lawful
attorneys-in-fact and agents, with full power and authority to do any and all
acts and things and to execute any and all instruments which said attorneys
and agents, and any one of them, determine may be necessary or advisable or
required to enable said corporation to comply with the 1933 Act, and any
rules or regulations or requirements of the 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 to amendments
or supplements thereof, and each of the undersigned hereby ratifies and
confirms all that said attorneys and agents, or any one of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.

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

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

SIGNATURE TITLE DATE
--------- ----- ----

/S/ MONTE M. TOOLE Chairman of the Board of Directors May 19, 1997
- -----------------------
Monte M. Toole

/S/ DAVE TOOLE President, Chief Executive Officer May 19, 1997
- ----------------------- and Director
Dave Toole (Principal Executive Officer)

/S/ TERRY R. GIBSON Vice President, Finance May 19, 1997
- ----------------------- (Principal Financial and
Terry R. Gibson Accounting Officer)

/S/ KENNETH L. SCHROEDER Director May 19, 1997
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Kenneth L. Schroeder

/S/ F. JOSEPH VN POPPELEN Director May 19, 1997
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F. Joseph Van Poppelen

II-5.
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

EXHIBITS

FORM S-8

UNDER

SECURITIES ACT OF 1933

GASONICS INTERNATIONAL CORPORATION

<PAGE>

EXHIBIT INDEX

Exhibit
Number Exhibit
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4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 0-23372 on
Form 8-A and Amendment No. 1 thereto, which are
incorporated herein by reference pursuant to Item 3(c) of
this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Arthur Andersen 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-5 of this
Registration Statement.
99.1 GaSonics International Corporation 1994 Stock Option/Stock
Issuance Plan (as amended and restated effective December
17, 1996).
99.2* Form of Notice of Grant to be generally used in connection
with the 1994 Stock Option/Stock Issuance Plan.
99.3* Form of Stock Option Agreement to be generally used in
connection with the 1994 Stock Option/Stock Issuance Plan.
99.4* Addendum to Stock Option Agreement (Financial Assistance).
99.5* Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.6* Addendum to Stock Option Agreement (Involuntary
Termination).
99.7* Addendum to Stock Option Agreement (Special Tax Elections).
99.8** Form of Notice of Grant (Non-Employee Director - Initial
Grant) to be generally used in connection with the
automatic grant program of the 1994 Stock Option/Stock
Issuance Plan.
99.9** Form of Notice of Grant (Non-Employee Director -
Subsequent Grant) to be generally used in connection with
the automatic grant program of the 1994 Stock Option/Stock
Issuance Plan.
99.10* Form of Stock Option Agreement (Non-Employee Director) to be
generally used in connection with the automatic grant program
of the 1994 Stock Option/Stock Issuance Plan.
99.11* Form of Stock Issuance Agreement to be generally used in
connection with the 1994 Stock Option/Stock Issuance Plan.
99.12* Addendum to Stock Issuance Agreement (Involuntary
Termination).
99.13* Addendum to Stock Issuance Agreement (Special Tax Elections).
99.14 Employee Stock Purchase Plan (as amended and restated
effective December 17, 1996).
99.15** Form of Stock Purchase Agreement.
99.16** Form of Enrollment/Change Form.

<PAGE>

Exhibit 5

Opinion and consent of Brobeck, Phleger & Harrison LLP

May 19, 1997

GaSonics International Corporation
2730 Junction Avenue
San Jose, California 95134

Re: GaSonics International Corporation Registration
Statement for Offering of 900,000 Shares of Common
Stock
---------------------------------------------------

Ladies and Gentlemen:

We refer to your registration on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended, of (i) 500,000 shares of Common
Stock under the GaSonics International Corporation (the "Company") 1994 Stock
Option/Stock Issuance Plan and (ii) 400,000 shares of Common Stock under the
Company's Employee Stock Purchase Plan. We advise you that, in our opinion,
when such shares have been issued and sold pursuant to the applicable
provisions of the 1994 Stock Option/Stock Issuance Plan and the Employee Stock
Purchase Plan and in accordance with the Registration Statement, such shares
will be validly issued, fully paid and nonassessable shares of the Company's
Common Stock.

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

Very truly yours,

/s/ Brobeck, Phleger & Harrison LLP

BROBECK, PHLEGER & HARRISON LLP

<PAGE>
Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTS

As independent publics accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our reports dated
November 4, 1996, included in or incorporated by reference in GaSonics
International Corporation's Form 10-K for the year ended September 30, 1996.

/s/ Arthur Andersen LLP

San Jose, California
May 15, 1997

<PAGE>

GASONICS INTERNATIONAL CORPORATION
1994 STOCK OPTION/STOCK ISSUANCE PLAN

(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 17, 1996)

ARTICLE ONE

GENERAL

I. PURPOSE OF THE PLAN

A. This 1994 Stock Option/Stock Issuance Plan (the "Plan") is
intended to promote the interests of GaSonics International Corporation, a
Delaware corporation or any successor corporation (the "Corporation") adopting
the Plan, by providing (i) key employees (including officers) of the Corporation
(or its parent or subsidiary corporations) who are responsible for the
management, growth and financial success of the Corporation (or its parent or
subsidiary corporations), (ii) the non-employee members of the Board and (iii)
consultants and other independent contractors who provide valuable services to
the Corporation (or its parent or subsidiary corporations) with the opportunity
to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the Service
of the Corporation (or its parent or subsidiary corporations).

B. The Plan became effective upon adoption by the Board of Directors
of Gasonics International Corporation, a California corporation ("Gasonics
California") on January 27, 1994, and such date shall accordingly constitute the
Effective Date of the Plan. The Plan was subsequently assumed by the
Corporation in connection with the merger (the "Merger") of Gasonics California
into the Corporation in February, 1994.

II. DEFINITIONS

A. For purposes of the Plan, the following definitions shall be in
effect:

BOARD: the Corporation's Board of Directors.

CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:

a. the direct or indirect acquisition 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

<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; or

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 (rounded up to the next whole number) ceases, by
reason of one or more contested elections for Board membership, to be
comprised of individuals who either (i) have been Board members
continuously since the beginning of such period or (ii) 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 (i)
who were still in office at the time such election or nomination was
approved by the Board.

CODE: the Internal Revenue Code of 1986, as amended.

COMMON STOCK: shares of the Corporation's common stock, par value
$0.001 per share.

CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:

a. a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Corporation is
incorporated,

b. 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

c. any reverse merger in which the Corporation is the
surviving entity but 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 merger.

EMPLOYEE: an individual who performs services while in the employ of
the Corporation or one or more 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.

EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.

<PAGE>

FAIR MARKET VALUE: the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:

a. If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but is traded
on the Nasdaq National Market, the Fair Market Value shall be the
closing selling price per share on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no
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 national securities exchange, then the Fair Market
Value shall be the closing selling price per share on the date in
question on the securities 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 reported sale of Common Stock on such
exchange on the date in question, then the Fair Market Value shall be
the closing selling price on the exchange on the last preceding date
for which such quotation exists.

c. If the Common Stock is on the date in question neither
listed nor admitted to trading on any national securities exchange nor
traded on the Nasdaq National Market, then the Fair Market Value of
the Common Stock on such date shall be determined by the Plan
Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.

HOSTILE TAKE-OVER: the direct or indirect acquisition 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
which the Board does not recommend such stockholders to accept.

INCENTIVE OPTION: a stock option which satisfies the requirements of
Code Section 422.

1934 ACT: the Securities and Exchange Act of 1934, as amended from
time to time.

<PAGE>

NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.

OPTIONEE: any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program in effect under the
Plan.

PARTICIPANT: any person who receives a direct issuance of Common
Stock under the Stock Issuance Program in effect under the Plan.

PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.

PLAN ADMINISTRATOR: the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.

PRIMARY COMMITTEE: the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to Section 16 Insiders.

SERVICE: the performance of services on a periodic basis to the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option or stock issuance agreement.

SECONDARY COMMITTEE: a committee of one (1) or more Board members
appointed by the Board to administer the Discretionary Option Grant and Stock
Issuance Programs with respect to eligible persons other than Section 16
Insiders.

SECTION 12(g) REGISTRATION DATE: the date on which the initial
registration of the Common Stock under Section 12(g) of the 1934 Act becomes
effective.

SECTION 16 INSIDER: an executive officer of the Company or a member
of the Board subject to the short-swing liability provisions of Section 16(b) of
the 1934 Act.

TAKE-OVER PRICE: the GREATER of (a) the Fair Market Value per share
of Common Stock on the date the particular option to purchase such stock is
surrendered to the Corporation in connection with a Hostile Take-Over or (b) the
highest reported price

<PAGE>

per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive
Option, the Take-Over Price shall not exceed the clause (a) price per share.

B. The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:

Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered
to be a PARENT 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.

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 in the unbroken chain (other than the last 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.

III. STRUCTURE OF THE PLAN

A. STOCK PROGRAMS. The Plan shall be divided into three (3)
separate components: the Discretionary Option Grant Program specified in
Article Two, the Automatic Option Grant Program specified in Article Three and
the Stock Issuance Program specified in Article Four. Under the Discretionary
Option Grant Program, eligible individuals may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two. Under the Automatic Option Grant
Program, non-employee members of the Board will receive special option grants at
periodic intervals to purchase shares of Common Stock in accordance with the
provisions of Article Three. Under the Stock Issuance Program, eligible
individuals may be issued shares of Common Stock directly, either through the
immediate purchase of such shares at a price not less than eighty-five percent
(85%) of the Fair Market Value of the shares at the time of issuance or as a
bonus tied to the performance of services or the Corporation's attainment of
financial objectives.

B. GENERAL PROVISIONS. Unless the context clearly indicates
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.

<PAGE>

IV. ADMINISTRATION OF THE PLAN

A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs shall be limited to the following:

(i) Employees of the Corporation or any parent or
subsidiary, whether now existing or subsequently established,

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

(iii) consultants and other independent advisors who
provide services to the Corporation (or any parent or subsidiary
corporation).

B. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders.

C. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. The member or
members of the Secondary Committee may be comprised of one or more Board members
who are Employees eligible to receive discretionary option grants or direct
stock issuances under the Plan or any other stock option, stock appreciation,
stock bonus or other stock plan of the Corporation (or any Parent or
Subsidiary).

D. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

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

<PAGE>

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

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

V. STOCK SUBJECT TO THE PLAN

A. Shares of Common Stock shall be available for issuance under
the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The
maximum number of shares of Common Stock which may be issued over the term of
the Plan shall not exceed 2,700,000 shares(1), subject to adjustment from
time to time in accordance with the provisions of this Section VI. Such
share reserve includes the 500,000-share increase authorized by the Board on
December 17, 1996, subject to stockholder approval at the 1997 Annual
Stockholders Meeting.

B. In no event shall the aggregate number of shares of Common
Stock for which any one individual participating in the Plan may be granted
stock options and direct stock issuances exceed 825,000 shares(1) over the
term of the Plan.

C. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the shares subject to the portion of each
option not so exercised shall be available for subsequent issuance under the
Plan. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation at the original option or issue price paid per share will be added
back to the share reserve and will accordingly be made available for subsequent
issuance under the Plan. Shares subject to any option or portion thereof
surrendered in accordance with Section V of Article Two or Section III of
Article Three shall not be available for subsequent issuance under the Plan. In
addition, should the exercise price of an outstanding option under the Plan be
paid with shares of Common Stock or should shares of Common Stock otherwise
issuable under the Plan be withheld by

- ----------------------
(1) Each number reflects the 3-for-2 split of the Common Stock effected by
the Corporation on November 20, 1995. In no event, however, may more than
2,604,008 shares of Common Stock be issued under the Plan after November 15,
1996, including the shares subject to options outstanding under the Plan on
that date.

<PAGE>

the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding option under the Plan or the
vesting of a direct share issuance made under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced
by the gross number of shares for which the option is exercised or which vest
under the share issuance, and not by the net number of shares of Common Stock
actually issued to the holder of such option or share issuance.

D. Should any change be made to the Common Stock issuable under the
Plan 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, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options and direct stock issuances in the aggregate over the term of the
Plan, (iii) the number and/or class of securities for which automatic option
grants are to be subsequently made per newly-elected or continuing non-employee
Board member under the Automatic Option Grant Program and (iv) the number and/or
class of securities and price per share in effect under each option outstanding
under the Discretionary Option Grant or Automatic Option Grant Program. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

<PAGE>

ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I. TERMS AND CONDITIONS OF OPTIONS

Options granted under the Discretionary Option Grant Program shall be
authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or Non-Statutory
Options. 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 II of this Article Two.

A. EXERCISE PRICE.

1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:

a. The exercise 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 such Common Stock
on the grant date.

b. The exercise price per share of the Common Stock
subject to a Non-Statutory Option shall in no event be less than
eighty-five percent (85%) of the Fair Market Value of such Common
Stock on the grant date.

2. The exercise price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of Article
Five and the instrument evidencing the grant, shall be payable in one of the
alternative forms specified below:

a. full payment in cash or check made payable to the
Corporation's order;

b. full payment in shares of Common Stock held 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;

<PAGE>

c. full payment in a combination of shares of Common
Stock held 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 made payable
to the Corporation's order; or

d. to the extent the option is exercised for vested
shares, full payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee shall provide concurrent
irrevocable written instructions (i) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by
the Corporation in connection with such purchase and (ii) to the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale
transaction.

Except to the extent the sale and remittance procedure is utilized in
connection with the exercise of the option, payment of the exercise price for
the purchased shares must accompany such notice.

B. TERM AND EXERCISE OF OPTIONS. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set forth
in the instrument evidencing the grant. No such option, however, shall have a
maximum term in excess of ten (10) years measured from the grant date.

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, a Non-Statutory
Option 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.

10.

<PAGE>

D. TERMINATION OF SERVICE.

1. The following provisions shall govern the exercise period
applicable to any outstanding options held by the Optionee at the time of
cessation of Service or death.

a. Should an Optionee cease Service for any reason
(including death or Permanent Disability) while holding one or more
outstanding options under this Article Two, then none of those options
shall (except to the extent otherwise provided pursuant to
subparagraph 3 below) remain exercisable for more than a thirty-six
(36)-month period (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant)
measured from the date of such cessation of Service.

b. Any option held by the Optionee under this Article
Two and exercisable in whole or in part on the date of his or her
death may be subsequently exercised 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. However, the right to exercise
such option shall lapse upon the EARLIER of (i) the third anniversary
of the date of the Optionee's death (or such shorter period determined
by the Plan Administrator and set forth in the instrument evidencing
the grant) or (ii) the specified expiration date of the option term.
Accordingly, upon the occurrence of the earlier event, the option
shall terminate and cease to remain outstanding.

c. Under no circumstances shall any such option be
exercisable after the specified expiration date of the option term.

d. During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares (if any) in which the Optionee is vested at the
time of his or her cessation of Service. Upon the expiration of the
limited post-Service exercise period or (if earlier) upon the
specified expiration date of the option term, each such option shall
terminate and cease to remain outstanding with respect to any vested
shares for which the option has not otherwise been exercised.
However, each outstanding option shall immediately terminate and cease
to remain outstanding, at the time of the Optionee's cessation of
Service, with respect to any shares for which the option is not
otherwise at that time exercisable or in which the Optionee is not
otherwise vested.

11.

<PAGE>

e. Should (i) the Optionee's Service be terminated
for misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (ii) the Optionee make
any unauthorized use or disclosure of confidential information or
trade secrets of the Corporation or its parent or subsidiary
corporations, then in any such event all outstanding options held by
the Optionee under this Article Two shall terminate immediately and
cease to remain outstanding.

2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under this paragraph C., not only with respect to the number
of vested shares of Common Stock for which each such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to one or
more subsequent installments of vested shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.

3. The Plan Administrator shall also have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of Service or
death from the limited period in effect under subparagraph 1. above to such
greater period of time as the Plan Administrator shall deem appropriate. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.

E. STOCKHOLDER RIGHTS. An Optionee shall have no stockholder rights
with respect to any shares covered by the option until such individual shall
have exercised the option and paid the exercise price for the purchased shares.

F. REPURCHASE RIGHTS. The shares of Common Stock acquired upon the
exercise of any Article Two option grant may be subject to repurchase by the
Corporation in accordance with the following provisions:

1. The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this Article
Two. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the exercise price paid per share. The terms and conditions upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
instrument evidencing such repurchase right.

12.

<PAGE>

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

3. The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the Optionee under this
Discretionary Option Grant Program and thereby accelerate the vesting of such
shares in whole or in part at any time.

II. INCENTIVE OPTIONS

The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees. Options which are specifically
designated as Non-Statutory Options when issued under the Plan shall NOT be
subject to such terms and conditions.

A. 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 stock options under the Federal tax
laws during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two (2) 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 are granted. Should the number of shares of
Common Stock for which any Incentive Option first becomes exercisable in any
calendar year exceed the applicable One Hundred Thousand Dollar ($100,000)
limitation, then that option may nevertheless be exercised in such calendar year
for the excess number of shares as a non-statutory option under the Federal tax
laws.

B. 10% STOCKHOLDER. If any individual to whom an Incentive Option
is granted is the owner of stock (as determined under Section 424(d) of the
Code) possessing ten percent (10%) or more of the total combined voting power of
all classes of stock of the Corporation or any one of its parent or subsidiary
corporations, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the grant date, and the option term shall not exceed five (5) years, measured
from the grant date.

13.

<PAGE>

Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction, each option which is
at the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. However, an outstanding
option under this Article Two 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, (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such option or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.

B. Immediately following the consummation of the Corporate
Transaction, all outstanding options under this Article Two shall terminate and
cease to remain outstanding, except to the extent assumed by the successor
corporation or parent company.

C. Each outstanding option under this Article Two which is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, PROVIDED the aggregate exercise price payable
for such securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.

D. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide (upon such terms as it may deem appropriate) for (i) the
automatic acceleration of one or more outstanding options granted under the Plan
which are assumed or replaced in the Corporate Transaction and do not otherwise
accelerate at that time and/or (ii) the subsequent termination of one or more of
the Corporation's outstanding repurchase rights

14.

<PAGE>

which are assigned in connection with the Corporate Transaction and do not
otherwise terminate at that time, in the event Optionee's Service should
subsequently terminate within a designated period following such Corporate
Transaction.

E. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the immediate termination
of one or more of the Corporation's outstanding repurchase rights under this
Article Two) upon the occurrence of a Change in Control. The Plan Administrator
shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.

F. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.

G. The grant of options under this Article Two 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.

H. The portion of any Incentive Option accelerated under this
Section III in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an incentive stock option under the Federal tax laws
only to the extent the dollar limitation of Section II of this Article Two is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a non-statutory option under the
Federal tax laws.

IV. CANCELLATION AND REGRANT 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 this Article Two and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an exercise price per share not less
than (i) eighty-five percent (85%) of the Fair Market Value per share of Common
Stock on the new grant date or (ii) one hundred percent (100%) of such Fair
Market Value in the case of an Incentive Option.

V. STOCK APPRECIATION RIGHTS

A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan

15.

<PAGE>

Administrator may establish, to surrender all or part of an unexercised
option under this Article Two in exchange for a distribution from the
Corporation in an amount equal to the excess of (i) the Fair Market Value (on
the option surrender date) of the number of shares in which the Optionee is
at the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate exercise price payable for such vested
shares.

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

C. 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 Two. Upon
the occurrence of a Hostile Take-Over, the officer shall have a thirty
(30)-day period in which he or she may surrender any outstanding options with
such a limited stock appreciation right to the Corporation, to the extent
such option is at the time exercisable for fully vested shares of Common
Stock. The officer shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the vested shares of Common Stock at the time subject to each surrendered
option (or surrendered portion of such option) over (ii) the aggregate
exercise price payable for such shares. The cash distribution shall be made
within five (5) days following the date the option is surrendered to the
Corporation. The Plan Administrator shall pre-approve, at the time the
limited right is granted, the subsequent exercise of that right in accordance
with the terms of the grant and the provisions of this Section V. No
additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option surrender and cash distribution. Any
unsurrendered portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument evidencing
such grant.

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

16.

<PAGE>

ARTICLE THREE

AUTOMATIC OPTION GRANT PROGRAM

I. ELIGIBILITY

ELIGIBLE DIRECTORS. The individuals eligible to receive automatic
option grants pursuant to the July 19, 1995 restated provisions of this Article
Three program shall be limited to (i) those individuals who are continuing to
serve as non-employee Board members on July 19, 1995 and (ii) those individuals
who are first elected or appointed as non-employee Board members on or after
July 19, 1995. A non-employee Board member who has previously been in the
employ of the Corporation (or any parent or subsidiary) shall not be eligible to
receive an option grant under the Automatic Option Grant Program at the time he
or she first becomes a non-employee Board member, but such individual shall be
eligible to receive periodic option grants under the Automatic Option Grant
Program upon his or her continued service as a non-employee Board member. Any
non-employee Board member eligible to participate in the Automatic Option Grant
Program pursuant to the foregoing criteria shall be designated an Eligible
Director for purposes of this Article Three.

II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

A. GRANT DATES. Option grants shall be made pursuant to the July
19, 1995 restated provisions of this Article Three on the dates specified below:

INITIAL GRANT. Each individual who first becomes an Eligible
Director on or after July 19, 1995, whether through election by the
stockholders or appointment by the Board, shall automatically be granted,
at the time of such initial election or appointment (the "Initial Grant
Date"), a Non-Statutory Option to purchase 30,000 shares(2) of Common Stock
upon the terms and conditions of this Article Three.

ANNUAL GRANT. Each Eligible Director who receives an initial
30,000-share option grant shall automatically be granted, on each
successive anniversary of the Initial Grant Date on which he or she
continues to serve as an Eligible Director, beginning with the fourth
anniversary of such Initial Grant Date, a Non-Statutory

- -----------------------------
(2) This number reflects the 3-for-2 split of the Common Stock effected by the
Corporation on November 20, 1995.

17.

<PAGE>

Option to purchase an additional 7,500 shares(3) of Common Stock upon the
terms and conditions of this Article Three. In addition, each
individual who is an Eligible Director on July 19, 1995 but who is not
otherwise to receive an initial 30,000-share grant on such date shall
automatically be granted, on July 19, 1995 and each subsequent
anniversary of that grant date on which he or she continues to serve as
an Eligible Director, a Non-Statutory Option to purchase an additional
7,500 shares of Common Stock upon the terms and conditions of this
Article Three. Any Eligible Director previously in the Corporation's
employ shall receive his or her initial 7,500-share option grant under
this Article Three at the first Annual Stockholders Meeting at which he
is she is elected as a non-employee Board member and shall automatically
be granted, on the date of each succeeding Annual Stockholders Meeting
at which he or she is re-elected as a non-employee Board member, a
Non-Statutory Option to purchase an additional 7,500 shares of Common
Stock upon the terms and conditions of this Article Three.

There shall be no limit on the number of such 7,500-share option
grants any one Eligible Director may receive over his or her period of Board
service. The number of shares for which the automatic option grants are to be
made to each newly-elected or continuing Eligible Director shall be subject to
periodic adjustment pursuant to the applicable provisions of Section VI.C. of
Article One.

B. EXERCISE PRICE. The exercise price per share of Common Stock
subject to each automatic option grant made under this Article Three shall be
equal to one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the automatic grant date.

C. PAYMENT. The exercise price shall be payable in one of the
alternative forms specified below:

1. full payment in cash or check made payable to the
Corporation's order;

2. full payment in shares of Common Stock held 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;

3. full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair

- -----------------------------
(3) This number reflects the 3-for-2 split of the Common Stock effected by the
Corporation on November 20, 1995.

18.

<PAGE>

Market Value on the Exercise Date and cash or check made payable to
the Corporation's order; or

4. full payment through a sale and remittance procedure
pursuant to which the non-employee Board member shall provide
concurrent irrevocable written instructions (i) to a Corporation-
designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares and (ii)
to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.

D. OPTION TERM. Each automatic grant under this Article Three shall
have a maximum term of ten (10) years measured from the automatic grant date.

E. EXERCISABILITY. Option grants made under this Article Three
shall become exercisable as specified below:

INITIAL GRANT. Each initial 30,000-share automatic grant shall
become exercisable in four (4) successive equal annual installments upon
the Optionee's completion of each year of Board service over the four
(4)-year period measured from the Initial Grant Date.

ANNUAL GRANT. Each annual 7,500-share automatic grant shall
become exercisable upon the Optionee's completion of one (1) year of Board
service measured from the grant date.

Each option granted under this Article Three shall automatically
accelerate and become fully exercisable for all of the shares of Common Stock at
the time subject to the option:

- should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, or

- should there occur an acceleration event specified in
Section III of this Article Three.

F. LIMITED TRANSFERABILITY. During the lifetime of the Optionee,
each automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee other than a transfer of the
option to one or more immediate family members or a trust established
exclusively for one or more such family members. The assigned portion of may
only be exercised by the person or persons who acquire a

19.

<PAGE>

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 fit.

G. TERMINATION OF BOARD SERVICE.

1. Should the Optionee cease to serve as a Board member for any
reason other than death or Permanent Disability while holding one or more
automatic option grants under this Article Three, then each of those options
may, during the twelve (12)-month period measured from the date of such
cessation of Board service (the "Post-Service Exercise Period"), be exercised in
accordance with the following parameters:

INITIAL 30,000-SHARE GRANT

a. Should the Optionee cease Board service prior to the
fourth anniversary of the Initial Grant Date, then the Optionee may,
at any time during the Post-Service Exercise Period, exercise the
option for any or all of the option shares for which the option is
exercisable at the time of such cessation of Board service. In
addition, the option shall become exercisable for an additional
twenty-five percent (25%) of the option shares on the next anniversary
of the Initial Grant Date following the Optionee's cessation of Board
service and shall remain so exercisable until the expiration date of
the Post-Service Exercise Period.

b. If the Optionee ceases Board service on or after the
fourth anniversary of the Initial Grant Date, then the Optionee may,
at any time during the Post-Service Exercise Period, exercise the
option for any or all of the option shares for which the option is
exercisable at the time of such cessation of Board service.

c. However, the option shall, immediately upon the
Optionee's cessation of Board service, terminate and cease to be
outstanding with respect to any and all option shares for which the
option is not otherwise at that time exercisable or for which it is
not otherwise to become exercisable in accordance with clause a.
above.

ANNUAL 7,500-SHARE GRANT

a. The option shall become exercisable for all of the
option shares on the first anniversary of the grant date, whether or
not the Optionee continues in Board service, and shall remain so
exercisable for any or all of those shares until the expiration date
of the Post-Service Exercise Period.

20.

<PAGE>

b. Should the Optionee die after his or her cessation of
Board service but while holding one or more automatic option grants
under this Article Three, then the personal representative of the
Optionee's estate or 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 shall have the remainder of the
applicable Post-Service Exercise Period in which to exercise each such
option in accordance with the parameters established for the Optionee
in Paragraph 1.

c. Should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability while holding one or more
automatic option grants under this Article Three, then such individual
(or 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) shall have a twelve (12)-month period following the date
of such cessation of Board service in which to exercise each such
option for any or all of the option shares at the time subject to the
option, whether or not the option would otherwise at that time be
exercisable for those shares.

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

H. STOCKHOLDER RIGHTS. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.

I. REMAINING TERMS. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form Automatic Stock Option
Agreement attached as Exhibit A.

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

A. In the event of any Corporate Transaction, each Article Three
option, to the extent outstanding at the time but not otherwise fully
exercisable, shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares as
fully-vested shares. Immediately following the consummation of the Corporate
Transaction, all automatic option grants under this Article Three shall
terminate and cease to be outstanding, except to the extent assumed by the
acquiring company (or parent thereof).

21.

<PAGE>

B. In connection with any Change in Control of the Corporation, each
Article Three option, to the extent outstanding at the time but not otherwise
fully exercisable, shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Change in
Control, become exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of such
shares as fully-vested shares. Each such option shall remain so exercisable for
all the option shares following the Change in Control, until the expiration or
sooner termination of the option term.

C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
Article Three option held by him or her. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the option is otherwise at the
time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. At the time of
each Article Three option grant, the Board shall concurrently pre-approve any
subsequent surrender of that option in accordance with the provisions of this
Section III.C, and no additional approval of the Board or any Plan Administrator
shall accordingly be required at the time of the actual option surrender and
cash distribution. The shares of Common Stock subject to each option
surrendered in connection with the Hostile Take-Over shall NOT be available for
subsequent issuance under the Plan.

D. The automatic option grants outstanding under this Article Three
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.

22.

<PAGE>

ARTICLE FOUR

STOCK ISSUANCE PROGRAM

I. TERMS AND CONDITIONS OF STOCK ISSUANCES

Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock option
grants. The issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the terms and conditions of this
Article Four.

A. CONSIDERATION.

1. Shares of Common Stock drawn from the Corporation's
authorized but unissued shares of Common Stock ("Newly Issued Shares") shall be
issued under the Stock Issuance Program for one or more of the following items
of consideration which the Plan Administrator may deem appropriate in each
individual instance:

a. full payment in cash or check made payable to the
Corporation's order;

b. a promissory note payable to the Corporation's
order in one or more installments, which may be subject to
cancellation in whole or in part upon terms and conditions established
by the Plan Administrator; or

c. past services rendered to the Corporation or any
parent or subsidiary corporation.

2. Newly Issued Shares may, in the absolute discretion of the
Plan Administrator, be issued for consideration with a value less than one
hundred percent (100%) of the Fair Market Value of such shares at the time of
issuance, but in no event less than eighty-five percent (85%) of such Fair
Market Value.

3. Shares of Common Stock reacquired by the Corporation and
held as treasury shares ("Treasury Shares") may be issued under the Stock
Issuance Program for such consideration (including one or more of the items of
consideration specified in subparagraph 1 above) as the Plan Administrator may
deem appropriate, whether such consideration is in an amount less than, equal to
or greater than the Fair Market Value of the Treasury Shares at the time of
issuance. Treasury Shares may, in lieu of any cash consideration, be issued
subject to such vesting requirements tied to the Participant's period

23.

<PAGE>

of future Service or the Corporation's attainment of specified performance
objectives as the Plan Administrator may establish at the time of issuance.

B. VESTING PROVISIONS.

1. Shares of Common Stock issued under the Stock Issuance
Program may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program, namely:

a. the Service period to be completed by the
Participant or the performance objectives to be achieved by the
Corporation,

b. the number of installments in which the shares are
to vest,

c. the interval or intervals (if any) which are to
lapse between installments, and

d. the effect which death, Permanent Disability or
other event designated by the Plan Administrator is to have upon the
vesting schedule,

shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.

2. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
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 or by reason of any Corporate Transaction shall be
issued, subject to (i) the same vesting requirements applicable to his or her
unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.

3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Stock Issuance
Program, then those shares shall be immediately surrendered to the Corporation
and made available for

24.

<PAGE>

subsequent issuance. The Participant shall have no further stockholder
rights with respect to those shares. To the extent the surrendered shares
were previously issued to the Participant for consideration paid in cash or
cash equivalent (including the Participant's purchase-money promissory note),
the Corporation shall repay to the Participant the cash consideration paid
for the surrendered shares and shall cancel the unpaid principal balance of
any outstanding purchase-money note of the Participant attributable to such
surrendered shares. The surrendered shares may, at the Plan Administrator's
discretion, be retained by the Corporation as Treasury Shares or may be
retired to authorized but unissued share status.

4. The Plan Administrator may in its discretion elect to
waive the surrender and cancellation of one or more unvested shares of Common
Stock (or other assets attributable thereto) which would otherwise occur upon
the non-completion of the vesting schedule applicable to such shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may
be effected at any time, whether before or after the Participant's cessation
of Service or the attainment or non-attainment of the applicable performance
objectives.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. Upon the occurrence of any Corporate Transaction, all unvested
shares of Common Stock at the time outstanding under this Stock Issuance Program
shall immediately vest in full and the Corporation's repurchase rights shall
terminate, except to the extent: (i) any such repurchase right is expressly
assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other limitations
imposed in the Issuance Agreement.

B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the stock issuance is made or at any time while
that issuance remains outstanding, to provide for the automatic vesting of one
or more unvested shares outstanding under the Stock Issuance Program (and the
immediate termination of the Corporation's repurchase rights with respect to
those shares) at the time of a Change in Control. The Plan Administrator shall
also have full power and authority to condition any such accelerated vesting
upon the subsequent termination of the Participant's Service within a specified
period following the Change in Control.

III. TRANSFER RESTRICTIONS/SHARE ESCROW

A. Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing such unvested shares. To the extent an
escrow arrangement is utilized, the unvested shares and any securities or other
assets distributed with respect to such shares (other than regular cash
dividends) shall be delivered in escrow to the Corporation to be held until the
Participant's

25.

<PAGE>

interest in such shares (or the distributed securities or assets) vests. If
the unvested shares are issued directly to the Participant, the restrictive
legend on the certificates for such shares shall read substantially as
follows:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II)
CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE
CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS
AND CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH
IN A STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED
____________, 199__, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION."

B. The Participant shall have no right to transfer any unvested
shares of Common Stock issued to him or her under the Stock Issuance Program.
For purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift or other disposition
of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be cancelled in accordance with
substantially the same procedure in effect under Section I.B.3 of this Article
Four, and neither the Participant nor the proposed transferee shall have any
rights with respect to such cancelled shares. However, the Participant shall
have the right to make a gift of unvested shares acquired under the Stock
Issuance Program to his or her spouse or issue, including adopted children, or
to a trust established for such spouse or issue, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by all the
provisions of the Stock Issuance Program and the Issuance Agreement applicable
to the gifted shares.

26.

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ARTICLE FIVE

MISCELLANEOUS

I. LOANS OR INSTALLMENT PAYMENTS

A. The Plan Administrator may, in its discretion, assist any
Optionee or Participant, to the extent such Optionee or Participant is an
Employee (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 Discretionary Option Grant Program or the purchase of one or more
shares issued to such Participant under the Stock Issuance Program, including
the satisfaction of any Federal, state and local income and employment tax
obligations arising therefrom, 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 exercise price or purchase price for the
purchased shares in installments over a period of years. The terms of any
loan or installment method of payment (including the interest rate and terms
of repayment) shall be upon such terms as the Plan Administrator specifies in
the applicable option or issuance agreement or otherwise deems appropriate
under the circumstances. Loans or installment payments may be authorized
with or without security or collateral. However, the maximum credit
available to the Optionee or Participant may not exceed the exercise or
purchase price of the acquired shares (less the par value of such shares)
plus any Federal, state and local income and employment tax liability
incurred by the Optionee or Participant in connection with the acquisition of
such shares.

B. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under this financial assistance
program shall be subject to forgiveness by the Corporation in whole or in
part upon such terms and conditions as the Plan Administrator may deem
appropriate.

II. AMENDMENT OF THE PLAN AND AWARDS

A. The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, no such amendment or modification shall adversely affect
rights and obligations with respect to options at the time outstanding under
the Plan, nor adversely affect the rights of any Participant with respect to
Common Stock issued under the Stock Issuance Program prior to such action,
unless the Optionee or Participant consents to such amendment. In addition,
certain amendments may require stockholder approval in accordance with
applicable laws and regulations.

27.

<PAGE>

B. (i) Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and (ii) shares of Common Stock may
be issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option Grant
Program or the Stock Issuance Program are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess option grants or
excess share issuances are made, then (i) any unexercised excess options shall
terminate and cease to be exercisable and (ii) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.

III. TAX WITHHOLDING

A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options for such shares or the vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.

B. The Plan Administrator may, in its discretion and in accordance
with the provisions of this Section III and such supplemental rules as the Plan
Administrator may from time to time adopt (including the applicable safe-harbor
provisions of Securities and Exchange Commission Rule 16b-3), provide any or all
holders of Non-Statutory Options (other than the automatic option grants made
pursuant to Article Three of the Plan) or unvested shares under the Plan with
the right to use shares of the Corporation's Common Stock in satisfaction of all
or part of the Federal, state and local income and employment tax liabilities
incurred by such holders in connection with the exercise of their options or the
vesting of their shares (the "Taxes"). Such right may be provided to any such
holder in either or both of the following formats:

STOCK WITHHOLDING: The holder of the Non-Statutory Option or
unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value to exceed one
hundred percent (100%) of the applicable Taxes.

STOCK DELIVERY: The Plan Administrator may, in its discretion,
provide the holder of the Non-Statutory Option or the unvested shares with
the election to deliver to the Corporation, at the time the Non-Statutory
Option is exercised or the shares vest, one or more shares of Common Stock
previously acquired by such individual (other than in connection with the
option exercise or share vesting

28.

<PAGE>

triggering the Taxes) with an aggregate Fair Market Value not to
exceed one hundred percent (100%) of the Taxes incurred in connection
with such option exercise or share vesting.

IV. EFFECTIVE DATE AND TERM OF PLAN

A. This Plan became effective immediately upon adoption by the Board
of Directors of Gasonics California. This Plan was subsequently assumed by the
Corporation in connection with the Merger. Stock options and share issuances
may be made under Articles Two and Four of the Plan from and after the Effective
Date.

B. The Plan was amended by the Board on September 21, 1994 to (i)
increase the number of shares of Common Stock issuable under the Plan by an
additional 500,000 shares(4) and (ii) increase the maximum number of shares
of Common Stock for which any one individual may be granted stock options and
direct stock issuances under the Plan by an additional 250,000 shares(4) (the
"1994 Amendment"). The stockholders approved the 1994 Amendment at the 1995
Annual Meeting which was held on February 14, 1995. The Plan was
subsequently restated by the Board on July 19, 1995 to revise the provisions
of the Automatic Option Grant Program in effect under Article III (the "June
1995 Restatement") and was amended in November 1995 to increase the number of
shares available for issuance under the Plan by an additional 750,000 shares
(the "November 1995 Increase"). Both the June 1995 and the November 1995
Share Increases were approved by the stockholders at the 1996 Annual Meeting.
The Plan was subsequently amended on December 17, 1996 (the "December 1996
Amendment") to effect the following changes: (i) increase the number of
shares of Common Stock authorized for issuance over the term of the Plan by
an additional 500,000 shares, (ii) render the non-employee Board members
eligible to receive option grants and direct stock issuances under the
Discretionary Option Grant and Stock Issuance Programs, (iii) allow unvested
shares issued under the Plan and subsequently repurchased by the Corporation
at the option exercise price or issue price paid per share to be reissued
under the Plan and (iv) effect a series of technical changes to the
provisions of the Plan in order to take advantage of the recent amendments to
Rule 16b-3 of the Securities Exchange Act of 1934 which exempts certain
officer and director transactions under the Plan from the short-swing
liability provisions of the federal securities laws. The December 1996
Amendment is subject to stockholder approval at the 1997 Annual Meeting, and
no option grants made on the basis of the December 1996 share increase shall
become exercisable in whole or in part unless and until the December 1996
Amendment is approved by the stockholders. Should such stockholder approval
not be obtained at the 1997 Annual Meeting, then each option grant made
pursuant to the

- ----------------------
(4) The numbers DO NOT reflect the 3-for-2 split of the Common Stock effected
by the Corporation on November 20, 1995.

29.

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December 1996 share increase shall terminate and cease to remain outstanding,
and no further option grants shall be made on the basis of that share
increase. However, the provisions of the Plan as in effect immediately prior
to the December 1996 Amendment shall automatically be reinstated, and option
grants and direct stock issuances may thereafter continue to be made pursuant
to the reinstated provisions of the Plan. All option grants and direct stock
issuances made prior to the December 1996 Amendment shall remain outstanding
in accordance with the terms and conditions of the respective instruments
evidencing those options or issuances, and nothing in the December 1996
Amendment shall be deemed to modify or in any way affect those outstanding
options or issuances. 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.

C. The Plan was amended on February 1, 1996 to authorize the
appointment of the Secondary Committee for purposes of administering the
Discretionary Option Grant and Stock Issuance Programs with respect to
individuals who are non Section 16 Insiders. The Primary Committee shall
also retain separate but concurrent authority to administer the Discretionary
Option Grant and Stock Issuance Programs with respect to such individuals.

D. The Plan shall terminate upon the EARLIER of (i) December 31,
2003 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 Plan or the issuance of shares
(whether vested or unvested) under the Stock Issuance Program. If the date
of termination is determined under clause (i) above, then all option grants
and unvested share issuances outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the
instruments evidencing such grants or issuances.

V. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the Plan shall be
used for general corporate purposes.

VI. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any stock
option or stock appreciation right under the Plan, the issuance of any shares
under the Stock Issuance Program and the issuance of Common Stock upon the
exercise 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 stock options and stock appreciation rights granted under it and the
Common Stock issued pursuant to it.

30.

<PAGE>

B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.

VII. NO EMPLOYMENT/SERVICE RIGHTS

Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in the
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 Service at any time and for any reason, with or without cause.

VIII. MISCELLANEOUS PROVISIONS

A. Except to the extent otherwise expressly provided in the Plan,
the right to acquire Common Stock or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by any Optionee or Participant.

B. The provisions of the Plan relating to the exercise of options
and the vesting of shares shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules, as such laws
are applied to contracts entered into and performed in such State.

C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.

31.

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GASONICS INTERNATIONAL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN

(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 17, 1996)

I. PURPOSE

A. The GaSonics International Corporation Employee Stock Purchase
Plan (the "Plan") is intended to provide eligible employees of the
Corporation and one or more of its Corporate Affiliates 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.

B. The Plan was adopted on January 27, 1994 by the Board of
Directors of Gasonics International Corporation, a California corporation
("Gasonics California"). The Plan was subsequently assumed by the Corporation
in connection with the merger of Gasonics California with and into the
Corporation in February 1994.

II. DEFINITIONS

For purposes of administration of the Plan, the following terms shall
have the meanings indicated:

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

BOARD means the Board of Directors of the Corporation.

CODE means the Internal Revenue Code of 1986, as periodically amended.

COMMON STOCK means shares of the Corporation's common stock, par value
$0.001 per share.

<PAGE>

CORPORATE AFFILIATE means any parent or subsidiary corporation of the
Corporation (as determined in accordance with Code Section 424), including any
parent or subsidiary corporation which becomes such after the Effective Time.

CORPORATION means GaSonics International Corporation, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of GaSonics International Corporation which shall by
appropriate action adopt the Plan.

EFFECTIVE TIME means the time at which the Underwriting Agreement
for the initial public offering of the Common Stock is executed and finally
priced. The initial offering period under the Plan shall start at the time of
such execution and pricing of the Underwriting Agreement. Any Corporate
Affiliate which becomes a Participating Corporation in the Plan after such
Effective Time shall designate a subsequent Effective Time with respect to
its employee-Participants.

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

ENTRY DATE means the Semi-Annual Entry Date on which an Eligible
Employee first joins the offering period in effect under the Plan. However,
the first Entry Date for the initial offering period under the Plan shall be
the Effective Time.

FAIR MARKET VALUE means, for the Effective Time at which the initial
offering period under the Plan begins, the price per share at which the
Common Stock is to be sold in the initial public offering of the Common Stock
pursuant to the Underwriting Agreement. For any subsequent date under the
Plan on which the Common Stock is registered under Section 12(g) of the 1934
Act and traded on the open market, Fair Market Value means the closing
selling price per share of the Common Stock on such date, as officially
quoted on the principal securities exchange on which the Common Stock is at
the time traded or, if not traded on any securities exchange, the closing
selling price per share of the Common Stock on such date, as reported on the
Nasdaq National Market System. If there are no sales of the Common Stock on
such day, then the closing selling price per share on the next preceding day
for which such closing selling price is quoted shall be determinative of Fair
Market Value.

1933 ACT means the Securities Act of 1933, as amended.

1934 ACT means the Securities Exchange Act of 1934, as amended.

<PAGE>

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

PARTICIPATING CORPORATION means the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board
to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan, as of the Effective Time, are listed
in attached Schedule A.

PLAN ADMINISTRATOR shall have the meaning given such term in Article
III.

SEMI-ANNUAL ENTRY DATE means the first business day of January and
July each calendar year within an offering period in effect under the Plan.
However, the first Semi-Annual Entry Date for the initial offering period
under the Plan shall be deemed to be the Effective Time.

SEMI-ANNUAL PERIOD OF PARTICIPATION means each semi-annual period
for which the Participant actually participates in an offering period in
effect under the Plan. There shall be a maximum of four (4) semi-annual
periods of participation within each offering period. The first such
semi-annual period (which may actually be less than six (6) months for the
initial offering period) shall extend from the Effective Time through the
last business day in June 1994. Subsequent semi-annual periods shall be
measured from the first business day of July to the last business day of
December each calendar year and from the first business day of January in the
succeeding calendar year to the last business day of June in that calendar
year.

SEMI-ANNUAL PURCHASE DATE means the last business day of June and
December each calendar year on which shares of Common Stock are automatically
purchased for Participants under the Plan. The initial Semi-Annual Purchase
Date shall be June 30, 1994.

III. ADMINISTRATION

The Plan Administrator shall have sole and exclusive authority to
administer the Plan and shall consist of a committee (the "Plan
Administrator") of two (2) or more non-employee Board members appointed by
the Board. 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 who have an interest in the Plan.

<PAGE>

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 in accordance with Subsection I of Article VII, Subsection A of
Article IX or Subsection B of Article X.

B. Each offering period shall have a maximum duration of
twenty-four (24) months. The duration of each offering period shall be
designated by the Plan Administrator prior to the start date. However, the
initial offering period shall run from the Effective Time to the last
business day in December 1995. The next offering period shall commence on
the first business day in January 1996 and end on the last business day in
December 1997. Subsequent offering periods shall commence as designated by
the Plan Administrator.

C. The 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 Entry Date on which such individual first joins the
offering period in effect under the Plan and shall be automatically exercised
in successive semi-annual installments on the last business day of June and
December of each year. Accordingly, each purchase right may be exercised up
to two (2) times each calendar year it remains outstanding.

D. No purchase rights granted under the Plan shall be exercised,
and no shares of Common Stock shall be issued hereunder, until such time as
(i) the Plan shall have been approved by the stockholders of Gasonics
California 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 securities exchange on which the Common Stock is listed
for trading and all other applicable requirements established by law or
regulation.

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

V. ELIGIBILITY AND PARTICIPATION

A. Each Eligible Employee of a Participating Corporation shall be
eligible to participate in the Plan in accordance with the following
provisions:

- An individual who is an Eligible Employee on the start date of
any offering period under the Plan shall be eligible to commence
participation in that

<PAGE>

offering period on such start date or on any subsequent Semi-Annual Entry
Date within that offering period. The date on which the Eligible
Employee commences participation in the offering period shall constitute
his/her Entry Date for that offering period, and on that date such
individual shall be granted his/her purchase right for the offering period.

- An individual who first becomes an Eligible Employee after the
start date of any offering period under the Plan may enter that offering
period on the first Semi-Annual Entry Date on which he/she is an Eligible
Employee or on any subsequent Semi-Annual Entry Date within that offering
period, provided he/she remains an Eligible Employee. The Semi-Annual
Entry Date on which such Eligible Employee enters the offering period shall
constitute his/her Entry Date for that offering period, and on that date
such individual shall be granted his/her purchase right for the offering
period.

B. 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 purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his/her scheduled Entry Date.

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

- The Participant may, at any time during a Semi-Annual Period
of Participation, reduce his/her rate of payroll deduction to become
effective as soon as possible after filing of the requisite reduction
form with the Plan Administrator. The Participant may not, however,
effect more than one such reduction per Semi-Annual Period of
Participation.

- The Participant may, prior to the commencement of any new
Semi-Annual Period of Participation within the offering period,
increase the rate of his/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
as of the first day of the first Semi-Annual Period of Participation
following the filing of such form.

D. Payroll deductions will automatically cease upon the termination
of the Participant's purchase right in accordance with the applicable provisions
of Section VII below.

<PAGE>

VI. STOCK SUBJECT TO PLAN

A. The Common Stock purchasable under the Plan shall, solely in
the discretion of the Plan Administrator, be made available from either
authorized but unissued shares of Common Stock or from shares of Common Stock
reacquired by the Corporation, including shares of Common Stock purchased on
the open market. The total number of shares of Common Stock which may be
issued under the Plan shall not exceed 1,100,000 shares(1) (subject to
adjustment under Section VI.B below). Such share reserve includes (i) the
400,000 share-increase(1) authorized by the Board on November 6, 1995 and
approved by the stockholders at the 1996 Annual Stockholders Meeting plus
(ii) an additional 400,000 share increase authorized by the Board on December
17, 1996, subject to stockholder approval at the 1997 Annual Stockholders
Meeting. No shares of Common Stock shall be issued under the Plan on the
basis of the December 1996 share increase unless that increase is approved by
the stockholders at the 1997 Annual Meeting, and in no event shall more than
773,695 shares of Common Stock be issued after November 15, 1996, assuming
stockholder approval of the December 1996 share increase.

B. In the event any change is made to the Corporation's outstanding
Common Stock by reason of any stock dividend, stock split, exchange or
combination of shares, recapitalization or any other change affecting the Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made by the Plan Administrator to (i) the class and maximum
number of securities issuable over the term of the Plan, (ii) the class and
maximum number of securities purchasable per Participant on any one Semi-Annual
Purchase Date and (iii) the class and number of securities and the price per
share in effect under each purchase right at the time outstanding under the
Plan. Such adjustments shall be designed to preclude the dilution or
enlargement of rights and benefits under the Plan.

VII. PURCHASE RIGHTS

An Eligible Employee who participates in the Plan for a particular
offering period shall have the right to purchase shares of Common Stock, in a
series of successive semi-annual installments during such offering period, upon
the terms and conditions set forth below and shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may deem advisable.

A. PURCHASE PRICE. Common Stock shall be purchasable on each
Semi-Annual Purchase Period within the offering period at a purchase price
equal to eighty-five percent (85%) of the LOWER of (i) the Fair Market Value
per share of Common Stock on the

- ------------------
(1) Each number reflects the 3-for-2 split of the Common Stock effected by
the Corporation on November 20, 1995.

<PAGE>

Participant's Entry Date into that offering period or (ii) the Fair Market
Value per share on that Semi-Annual Purchase Date. However, for each
Participant whose Entry Date is other than the start date of the offering
period, the clause (i) amount shall in no event be less than the Fair Market
Value of the Common Stock on the start date of that offering period.

B. NUMBER OF PURCHASABLE SHARES. The number of shares
purchasable per Participant on each Semi-Annual 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
Semi-Annual Period of Participation ending with that Semi-Annual Purchase
Date (together with any carryover deductions from the preceding Semi-Annual
Period of Participation) by the purchase price in effect for the Participant
for such Semi-Annual Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any Semi-Annual Purchase Date
shall not exceed One Thousand Eight Hundred (1,800) shares(2), subject to
periodic adjustment under Section VI.B.

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 of its Corporate Affiliates.

C. PAYMENT. Payment for the Common Stock purchased under the Plan
shall be effected by means of the Participant's authorized payroll deductions.
Such deductions shall begin on the first pay day 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 the offering period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in such account. The amounts
collected from the Participant shall not be held in any segregated account or
trust fund and may be commingled with the general assets of the Corporation and
used for general corporate purposes.

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

- A Participant may, at any time prior to the next Semi-Annual
Purchase Date, terminate his/her outstanding purchase right under the Plan
by filing the prescribed notification form with the Plan Administrator (or
its designate), and no

- -----------------
(2) Such number reflects the 3-for-2 split of the Common Stock effected by
the Corporation on November 20, 1995.

<PAGE>

further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions
collected for the Semi-Annual Period of Participation in which such
termination occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the Semi-Annual Purchase
Date immediately following such termination. 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.

- 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 a new stock purchase
agreement and enrollment form) on or before his/her scheduled Entry Date
into that offering period.

- Should the Participant cease to remain an Eligible Employee for
any reason (including death, disability or change in status) while his/her
purchase right remains outstanding, then that purchase right shall
immediately terminate and all of the Participant's payroll deductions for
the Semi-Annual Period of Participation in which such cessation of Eligible
Employee status occurs shall be immediately refunded.

E. STOCK PURCHASE. Shares of Common Stock shall automatically be
purchased on behalf of each Participant (other than Participants whose payroll
deductions have previously been refunded in accordance with the Termination of
Purchase Right provisions above) on each Semi-Annual Purchase Date. The
purchase shall be effected by applying each Participant's payroll deductions for
the Semi-Annual Period of Participation ending on such Semi-Annual Purchase Date
(together with any carryover deductions from the preceding Semi-Annual Period of
Participation) to the purchase of whole shares of Common Stock (subject to the
limitation on the maximum number of purchasable shares imposed under subsection
B. of this Article VII) at the purchase price in effect for the Participant for
that Semi-Annual Purchase Date. Any payroll deductions not applied to such
purchase because they are not sufficient to purchase a whole share shall be held
for the purchase of Common Stock on the next Semi-Annual Purchase Date.
However, any payroll deductions not applied to the purchase of Common Stock by
reason of the limitation on the maximum number of shares purchasable by the
Participant on the Semi-Annual Purchase Date shall be promptly refunded to the
Participant.

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

<PAGE>

excess of the aggregate purchase price payable for the Common Stock pro-rated
to such individual, shall be refunded to such Participant.

G. RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder
rights with respect to the shares subject to his/her outstanding purchase right
until the shares are actually purchased on the Participant's behalf in
accordance with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase.

A Participant shall be entitled to receive, as soon as practicable
after each Semi-Annual Purchase Date, a stock certificate for the number of
shares purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
Alternatively, the Participant may request the issuance of such certificate in
"street name" for immediate deposit in a Corporation-designated brokerage
account.

H. ASSIGNABILITY. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.

I. CHANGE IN OWNERSHIP. Should any of the following transactions (a
"Change in Ownership") occur during the offering period:

- a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the state in which the Corporation is incorporated,

- 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

- any reverse merger in which the Corporation is the surviving
entity but 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 merger,

then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the effective date of such
Change in Ownership by applying the payroll deductions of each Participant
for the Semi-Annual Period of Participation in which such Change in Ownership
occurs to the purchase of whole shares of Common Stock at eighty-five percent
(85%) of the LOWER of (i) the Fair Market Value of

<PAGE>

the Common Stock on the Participant's Entry Date into the offering period in
which such Change in Ownership occurs or (ii) the Fair Market Value of the
Common Stock immediately prior to the effective date of such Change in
Ownership. However, the applicable share limitations of Articles VII and VIII
shall continue to apply to any such purchase, and the clause (i) amount above
shall not, for any Participant whose Entry Date for the offering period is
other than the start date of that offering period, be less than the Fair
Market Value of the Common Stock on such start date.

The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Ownership, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights in accordance with the applicable
provisions of this Article VII.

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 outstanding 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 its Corporate Affiliates,
would otherwise permit such Participant to purchase more than $25,000 worth of
stock of the Corporation or any Corporate Affiliate (determined on the basis of
the fair market value of such stock on the date or dates such rights are
granted) for each calendar year such rights are at any time outstanding.

B. For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:

- The right to acquire Common Stock under each such purchase right
shall accrue in a series of successive semi-annual installments as and when
the purchase right first becomes exercisable for each such installment on
the last business day of each Semi-Annual Period of Participation for which
the right remains outstanding.

- 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 or more
other purchase rights at a rate equal to $25,000 worth of Common Stock
(determined on the basis of the Fair Market Value on the date or dates of
grant) for each calendar year during which one or more of those purchase
rights were at any time outstanding.

- If by reason of such accrual limitations, any purchase right
of a Participant does not accrue for a particular Semi-Annual Period of
Participation,

10.

<PAGE>

then the payroll deductions which the Participant made during that
Semi-Annual Period of Participation with respect to such purchase right
shall be promptly refunded.

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

IX. AMENDMENT AND TERMINATION

A. The Board may alter, amend, suspend or discontinue the Plan
following the close of any Semi-Annual Period of Participation. However, the
Board may not, without the approval of the Corporation's stockholders:

- materially increase the number of shares issuable under the Plan
or the maximum number of shares purchasable per Participant on any one
Semi-Annual Purchase Date, except that the Plan Administrator shall have
the authority, exercisable without such stockholder approval, to effect
adjustments to the extent necessary to reflect changes in the Corporation's
capital structure pursuant to Subsection B of Article VI; or

- alter the purchase price formula so as to reduce the purchase
price payable for the shares purchasable under the Plan; or

- materially increase the benefits accruing to Participants under
the Plan or materially modify the requirements for eligibility to
participate in the Plan.

B. The Corporation shall have the right, exercisable in the sole
discretion of the Plan Administrator, to terminate all outstanding purchase
rights under the Plan immediately following the close of any Semi-Annual Period
of Participation. Should the Corporation elect to exercise such right, then the
Plan shall terminate in its entirety. No further purchase rights shall
thereafter be granted or exercised, and no further payroll deductions shall
thereafter be collected, under the Plan.

X. GENERAL PROVISIONS

A. The Plan was initially adopted by the Board on January 27,
1994 and approved by the stockholders in March 1994. On November 6, 1995,
the Board authorized a 400,000 share(3) increase to the number of shares of
Common Stock available for issuance under the Plan, and stockholders approved
that share increase at the 1996 Annual Stockholders Meeting. On December 17,
1996, the Board amended the Plan to increase the

- ---------------------
(3) As adjusted for the 3-for-2 split of the Common Stock effected on
November 20, 1995.

11.

<PAGE>

number of shares of Common Stock reserved for issuance under the Plan by an
additional 400,000 shares. However, no purchase rights shall be granted
under the Plan on the basis of such share increase, and no shares of Common
Stock shall accordingly be issued on the basis of that increase, unless and
until the increase shall have been approved by the Corporation's stockholders
at the 1997 Annual Stockholders Meeting. Should such stockholder approval
not be obtained, then the 400,000-share increase authorized by the Board on
December 17, 1996 shall not be implemented. However, all outstanding
purchase rights under the Plan which have NOT been granted on the basis of
that 400,000-share increase shall remain outstanding in accordance with the
terms and provisions of the agreements evidencing those grants, whether or
not stockholder approval of such share increase is obtained.

B. On November 6, 1995, the Board also amended the Plan to allow
Eligible Employees to enter an offering period under the Plan on any
Semi-Annual Entry Date within that offering period on which they remain in
Eligible Employee status. Prior to such amendment, Eligible Employees were
only allowed to enter the offering period on the first Semi-Annual Entry Date
on which they satisfied such Eligible Employee requirement. The stockholders
approved such amendment at the 1996 Annual Stockholders Meeting.

C. The Plan shall terminate upon the EARLIER of (i) the last
business day in December 2003 or (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.

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

E. Neither the action of the Corporation in establishing the
Plan, nor any action taken under the Plan by the Board or the Plan
Administrator, nor any provision of the Plan itself shall be construed so as
to grant any person the right to remain in the employ of the Corporation or
any of its Corporate Affiliates for any period of specific duration, and such
person's employment may be terminated at any time, with or without cause.

F. 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.

12.

<PAGE>

SCHEDULE A

CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME

GaSonics International Corporation

GaSonics International Europe Limited

GaSonics International Japan, Kabushiki Kaisha

GaSonics International Korea Corporation

Tekisco, Inc.