PHARMACYCLICS INC, S-8, 2000-02-10

PHARMACYCLICS INC
S-8, 2000-02-10
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1

As filed with the Securities and Exchange Commission on February 10, 2000
Registration No. 333-__________
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933

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

PHARMACYCLICS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 94-3148201
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

995 EAST ARQUES AVENUE
SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices) (Zip Code)

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

PHARMACYCLICS, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1995 STOCK OPTION PLAN
(Full title of the Plan)

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

RICHARD A. MILLER, M.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PHARMACYCLICS, INC.
995 EAST ARQUES AVENUE, SUNNYVALE, CA 94086
(Name and address of agent for service)
(408) 774-0330
(Telephone number, including area code, of agent for service)

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

This Registration Statement shall become effective immediately upon filing
with the Securities and Exchange Commission and sales of the
registered securities will begin as soon as reasonably
practicable after such effective date.

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===============================================================================================
Amount of
Title of Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) per Share Offering Price Fee(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 Stock Option Plan
Common Stock 1,174,862 shares $65.63 $77,106,194 $20,356.04

Non-Employee Directors
Stock Option Plan
Common Stock 30,000 shares $65.63 $ 1,968,900 $ 519.79

Aggregate Filing Fee: $20,875.83
===============================================================================================
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the 1995 Stock Option
Plan and Non-Employee Directors Stock Option Plan by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the Registrant's receipt of consideration which results in
an increase in the number of the outstanding shares of Registrant's Common
Stock.

(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Registrant's Common Stock on February 7,
2000 as reported by the Nasdaq National Market.

<PAGE> 2

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference

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

(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 1999, filed with the SEC on
September 27, 1999, as amended on Form 10-K/A filed with
the SEC on October 25, 1999;

(b) The Registrant's Quarterly Report on Form 10-Q for the
period ended September 30, 1999, filed with the SEC on
November 12, 1999; and

(c) The Registrant's Registration Statement No. 00-27066 on
Form 8-A filed with the SEC on October 20, 1995 pursuant
to Section 12 of the Securities Exchange Act of 1934
(the "1934 Act"), which describes 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 also is deemed to be incorporated by reference herein modifies or
supersedes such statement.

Item 4. Description of Securities

Not Applicable.

Item 5. Interests of Named Experts and Counsel

Not Applicable.

Item 6. Indemnification of Directors and Officers

Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "1933 Act"). The Registrant's Bylaws
(the "Bylaws") provide that the Registrant shall indemnify its directors and
officers if such officer or director acted (i) in good faith, (ii) in a manner
reasonably believed to be in or not opposed to the best interests of the
Registrant, and (iii) with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The Registrant believes
that indemnification under its Bylaws covers at least negligence and gross
negligence, and requires the Registrant to advance litigation expenses in the
case of stockholder derivative actions or other actions, against an undertaking
by the directors and officers to repay such advances if it is ultimately
determined that the director is not entitled to indemnification. The Bylaws
further provide that rights conferred under such Bylaws shall not be deemed to
be exclusive of any other right such persons may have or acquire under any
agreement, vote of stockholders or disinterested directors, or otherwise.

In addition, the Registrant's Certificate of Incorporation (the
"Certificate of Incorporation") provides that, pursuant to Delaware law, none of
its directors shall be liable for monetary damages for breach of his or her
fiduciary duty of care to the Registrant and its stockholders. This provision in
the Certificate of Incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to

II-1
<PAGE> 3

be subject to liability for breach of the director's duty of loyalty to the
Registrant for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.
The Certificate of Incorporation further provides that the Registrant shall
indemnify its directors and officers to the fullest extent permitted by law and
requires the Registrant to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
director to repay such advances if it is ultimately determined that the director
is not entitled to indemnification. The Certificate of Incorporation also
provides that rights conferred under such Certificate of Incorporation shall not
be deemed to be exclusive of any other right such persons may have or acquire
under any statute, the Certificate of Incorporation, the Bylaws, agreement, vote
of stockholders or disinterested directors, or otherwise.

The Registrant has obtained a liability insurance policy for the
officers and directors that, subject to certain limitations, terms and
conditions, will insure them against losses arising from wrongful acts (as
defined by the policy) in their capacity as directors or officers.

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

Item 7. Exemption from Registration Claimed

Not Applicable.

Item 8. Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference is made
to Registrant's Registration Statement No. 00-27066 on Form 8-A,
which is incorporated herein by reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1995 Stock Option Plan
99.2 Non-Employee Directors Stock Option Plan.
</TABLE>

Item 9. Undertakings.

A. The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in 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 this 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

II-2
<PAGE> 4

amendment any of the securities being registered which remain unsold at the
termination of the Registrant's 1995 Stock Option Plan or Non-Employee Directors
Stock Option Plan.

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

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

II-3
<PAGE> 5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sunnyvale, State of California, on
this 31st day of January, 2000.

PHARMACYCLICS, INC.

By: /s/ Richard A. Miller, M.D.
-----------------------------------
Richard A. Miller, M.D.
President, Chief Executive Officer and
Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned officers and directors of Pharmacyclics,
Inc., a Delaware corporation, do hereby constitute and appoint Richard A.
Miller, M.D. and Marc L. Steuer 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 Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all 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 Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>

/s/ Richard A. Miller, M.D. President, Chief Executive January 31, 2000
- ------------------------------ Officer and Director (Principal
Richard A. Miller, M.D. Executive Officer)

/s/ Leiv Lea Vice President, Finance January 31, 2000
- ------------------------------ and Administration and Chief
Leiv Lea Financial Officer (Principal
Financial and Accounting
Officer)

/s/ Phyllis I. Gardner, M.D. Director January 31, 2000
- ------------------------------
Phyllis I. Gardner, M.D.
</TABLE>

II-4
<PAGE> 6

<TABLE>
<S> <C> <C>
/s/ Joseph S. Lacob Director January 31, 2000
- ------------------------------
Joseph S. Lacob

/s/ Craig C. Taylor Director January 31, 2000
- ------------------------------
Craig C. Taylor

/s/ Joseph C. Scodari Director January 31, 2000
- ------------------------------
Joseph C. Scodari
</TABLE>

II-5
<PAGE> 7

EXHIBIT INDEX

<PAGE> 1

EXHIBIT 5

OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP

February 10, 2000

Pharmacyclics, Inc.
995 East Arques Avenue
Sunnyvale, CA 94086

Re: Pharmacyclics, Inc. - Registration Statement for
Registration of an Aggregate of 1,204,862 Shares of Common
Stock

Ladies and Gentlemen:

We have acted as counsel to Pharmacyclics, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
an aggregate of 1,204,862 shares of common stock (the "Shares") and related
stock options under the Company's 1995 Stock Option Plan and Non-Employee
Directors Stock Option Plan (the "Plans").

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

We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the Plans and the
options outstanding thereunder. Based on such review, we are of the opinion that
if, as and when the Shares are issued and sold (and the consideration therefore
received) pursuant to the provisions of option agreements duly authorized under
he Plans and in accordance with the Registration Statement, such Shares will be
duly authorized, legally issued, fully paid and nonassessable.

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

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

Very truly yours,

/s/ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated July 23, 1999 relating to the
financial statements of Pharmacyclics, Inc., which appears in Pharmacyclics,
Inc.'s Annual Report on Form 10-K/A for the year ended June 30, 1999.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP

San Jose, California
February 8, 2000

<PAGE> 1
EXHIBIT 99.1

PHARMACYCLICS, INC.
1995 STOCK OPTION PLAN

(AS AMENDED AND RESTATED THROUGH OCTOBER 14, 1999)

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 1995 Stock Option Plan is intended to promote the interests
of Pharmacyclics, Inc., a Delaware corporation, by providing eligible persons
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.

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

II. STRUCTURE OF THE PLAN

Under the Plan, eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common Stock.

III. ADMINISTRATION OF THE PLAN

A. The Primary Committee shall have sole and exclusive authority
to administer the Plan with respect to Section 16 Insiders.

B. Administration of the Plan with respect to all other persons,
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 the Plan with respect
to all such persons who are not Section 16 Insiders. The members of the
Secondary Committee may be Board members who are Employees eligible to receive
discretionary option grants or direct stock issuances under the Plan or any
stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).

C. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and shall be
subject to removal 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.

D. The 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 Plan and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any outstanding options

1.
<PAGE> 2

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 Plan under
its jurisdiction or any option thereunder.

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

IV. ELIGIBILITY

A. The persons eligible to participate in the Plan are as
follows:

(i) Employees,

(ii) non-employee members of the Board or the board
of directors of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or Subsidiary).

B. The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine, with respect to the option grants, which
eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each option is to become
exercisable and the vesting schedule (if any) applicable to the option shares
and the maximum term for which the option is to remain outstanding.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired 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 3,387,460
shares, subject to adjustment from time to time in accordance with the
provisions of this Section V. Such authorized share reserve is comprised of (i)
the number of shares which remained available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the Corporation's
stockholders prior to such date, including the shares subject to the outstanding
options incorporated into the Plan and any other shares which would have been
available for future option grants under the Predecessor Plan, (ii) the
automatic increase of 85,178 shares effected on January 2, 1996, the automatic
increase of 91,503 shares effected in January 1997, the automatic increase of
102,042 shares effected in January, 1998 and the automatic increase of 123,856
shares effected in January 1999 pursuant to Section V.B. below, (iii) the
750,000-share increase approved by the Board on August 1, 1996 and approved by
the stockholders at the 1996 Annual Meeting, (iv) the 500,000-share increase

2.
<PAGE> 3

approved by the Board on September 11, 1997 and approved by the stockholders at
the 1997 Annual Meeting, (v) the 400,000-share increase approved by the Board on
September 24, 1998 and approved by the stockholders at the 1998 Annual Meeting
and (vi) the 500,000 share increase approved by the Board on October 14, 1999,
subject to approval by the stockholders at the 1999 Annual Meeting.

B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of each
calendar year during the term of the Plan, beginning with the 1996 calendar
year, by an amount equal to one percent (1%) of the shares of Common Stock
outstanding on December 31 of the immediately preceding calendar year; but in no
event shall any such annual increase exceed 500,000 shares. No Incentive Options
may be granted on the basis of the additional shares of Common Stock resulting
from such annual increases.

C. No one person participating in the Plan may receive options
and separately exercisable stock appreciation rights for more than 750,000
shares of Common Stock in the aggregate over the term of the Plan.

D. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
(including any options incorporated from the Predecessor Plan) expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan (including unvested shares issued under
the Predecessor Plan) and subsequently repurchased by the Corporation, at the
original exercise price paid per share, pursuant to the Corporation's repurchase
rights under the Plan, shall be added back to the number of shares of Common
Stock reserved for issuance under the Plan and shall accordingly be available
for reissuance through one or more subsequent options under the Plan. Shares
subject to any stock appreciation rights exercised under the Plan and all shares
issued under the Plan (included shares issued upon exercise of options
incorporated from the Predecessor Plan), shall reduce on a share-for-share basis
the number of shares of Common Stock available for subsequent issuance under the
Plan. However, should the exercise price of an option under the Plan (including
any option incorporated from the Predecessor Plan) be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option 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, and not by the net
number of shares of Common Stock issued to the holder of such option.

E. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the maximum number and/or class of securities for which the
share reserve is to increase automatically each year, (iii) the number and/or
class of securities for which any one person may be granted options and
separately exercisable stock appreciation rights over the term of the Plan, and
(iv) the number and/or class of securities and the exercise

3.
<PAGE> 4

price per share in effect under each outstanding option (including any option
incorporated from the Predecessor Plan) in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

4.
<PAGE> 5

ARTICLE TWO

GRANT OF OPTIONS

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

A. Exercise Price.

1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Three and the documents evidencing the option, be payable in one or more
of the forms specified below:

(i) cash or check made payable to the Corporation,

(ii) 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, or

(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable written
instructions to (a) 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 by reason of
such exercise and (b) the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.

Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

B. Exercise and Term of Options. Each option shall be exercisable
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.

5.
<PAGE> 6

C. Effect of Termination of Service.

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

(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain exercisable
for such period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option, but
no such option shall be exercisable after the expiration of the option
term.

(ii) Any option exercisable in whole or in part by
the Optionee at the time of 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.

(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is exercisable on the
date of the Optionee's cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service.

(iv) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.

(v) In the event of a Corporate Transaction, the
provisions of Section III of this Article Two shall govern the period
for which the outstanding options are to remain exercisable following
the Optionee's cessation of Service and shall supersede any provisions
to the contrary in this section.

2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

(i) extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of Service from
the period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event
beyond the expiration of the option term, and/or

(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the
Optionee would have vested under the option had the Optionee continued
in Service.

6.
<PAGE> 7

D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms 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 document evidencing such
repurchase right.

F. Limited Transferability of Options. During the lifetime of the
Optionee, the option 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.

G. Beneficiary Designation. An Optionee may file a written
beneficiary designation indicating the person entitled to exercise Optionee's
outstanding options on the Optionee's behalf at the time of his/her death. Such
beneficiary designation may be changed by the Optionee at any time by filing the
appropriate form with the Plan Administrator.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Three shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.

A. Eligibility. Incentive Options may only be granted to
Employees.

B. Exercise Price. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

C. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1) 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

7.
<PAGE> 8

first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

D. 10% Stockholder. If any Employee to whom an Incentive Option
is granted is a 10% Stockholder, 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 option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall NOT so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares 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. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

C. 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 for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed or replaced (or those repurchase rights
are to be assigned) in the Corporate Transaction.

D. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the

8.
<PAGE> 9

number and class of securities which would have been issuable to the Optionee in
consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to (i) the number and class of securities available for issuance
under the Plan on both an aggregate and per Optionee basis following the
consummation of such Corporate Transaction and (ii) the exercise price payable
per share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.

F. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.

G. 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 (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Change in Control or (ii)
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent Involuntary Termination of the Optionee's
Service within a specified period following the effective date of such Change in
Control. Any options accelerated in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.

H. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation 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.

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

9.
<PAGE> 10

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 option holders, the
cancellation of any or all outstanding options under the Plan (including
outstanding options incorporated from the Predecessor Plan) and to grant in
substitution new options covering the same or different number of shares of
Common Stock but with an exercise price per share based on the Fair Market Value
per share of Common Stock on the new option grant date.

V. STOCK APPRECIATION RIGHTS

A. The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.

B. The following terms shall govern the grant and exercise of
tandem stock appreciation rights:

(i) One or more Optionees may be granted the right,
exercisable upon such terms as the Plan Administrator may establish, to
elect between the exercise of the underlying option for shares of Common
Stock and the surrender of that option in exchange for a distribution
from the Corporation in an amount equal to the excess of (A) 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 (B) the aggregate exercise price
payable for such shares.

(ii) No such option surrender shall be effective
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the Optionee shall be entitled
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.

(iii) If the surrender of an option is rejected by
the Plan Administrator, then the Optionee shall retain whatever rights
the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (A) five (5) business days after the
receipt of the rejection notice or (B) the last day on which the option
is otherwise exercisable in accordance with the terms of the documents
evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the option grant date.

C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:

(i) One or more Section 16 Insiders may be granted
limited stock appreciation rights with respect to their outstanding
options.

10.
<PAGE> 11

(ii) Upon the occurrence of a Hostile Take-Over, each
such individual holding one or more options with such a limited stock
appreciation right in effect shall have the unconditional right
(exercisable for a thirty (30)-day period following such Hostile
Take-Over) to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for vested shares of Common
Stock. In return for the surrendered option, the Optionee shall receive
a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock which
are at the time vested under each surrendered option (or surrendered
portion thereof) over (B) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days
following the option surrender date.

(iii) Neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with such
option surrender and cash distribution.

(iv) The balance of the option (if any) shall
continue in full force and effect in accordance with the documents
evidencing such option.

11.
<PAGE> 12

ARTICLE THREE

MISCELLANEOUS

I. FINANCING

A. The Plan Administrator may permit any Optionee to pay the
option exercise price under the Plan by delivering a promissory note payable in
one or more installments. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Promissory notes may be authorized with or
without security or collateral. In all events, the maximum credit available to
the Optionee may not exceed the sum of (i) the aggregate option exercise price
payable for the purchased shares plus (ii) any Federal, state and local income
and employment tax liability incurred by the Optionee in connection with the
option exercise.

B. The Plan Administrator may, in its discretion, determine that
one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.

II. TAX WITHHOLDING

A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or stock appreciation rights 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, provide any or
all holders of Non-Statutory Options under the Plan with the right to use shares
of Common Stock in satisfaction of all or part of the Taxes incurred by such
holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:

(i) Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such Non-Statutory Option, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of
the Taxes (not to exceed one hundred percent (100%)) designated by the
holder.

(ii) Stock Delivery: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised, one or
more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not
to exceed one hundred percent (100%)) designated by the holder.

12.
<PAGE> 13

III. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan was adopted by the Board on August 2, 1995 and
approved by the Corporation's stockholders on September 11, 1995. The Plan
became effective on the Plan Effective Date and serves as the successor to the
Predecessor Plan. On August 1, 1996, the Board authorized a 750,000-share
increase in the number of shares of Common Stock available for issuance under
the Plan; the increase was approved by the stockholders at the 1996 Annual
Stockholders Meeting.

B. The Plan was amended and restated by the Board on September
11, 1997 (the "1997 Restatement") to effect the following changes: (i) increase
the maximum number of shares of Common Stock authorized for issuance over the
term of the Plan by 500,000 shares, (ii) increase the maximum number of shares
of Common Stock for which options and separately exercisable stock appreciation
rights may be granted to any one individual to 750,000 shares, (iii) render the
non-employee Board members who are serving on the Primary Committee eligible to
receive option grants under the Plan, (iv) allow unvested shares issued under
the Plan and subsequently repurchased by the Corporation at the option exercise
price paid per share to be reissued under the Plan, (v) remove certain
restrictions on the eligibility of non-employee Board members to serve on the
Primary Committee and (vi) effect a series of additional changes to the
provisions of the Plan (including the stockholder approval requirements and the
transferability of Non-Statutory Options) in order to take advantage of the
recent amendments to Rule 16b-3 of the Securities and Exchange Commission which
exempts certain officer and director transactions under the Plan from the
short-swing liability provisions of the federal securities laws. The 1997
Restatement was approved by the stockholders at the 1997 Annual Meeting.

C. The Plan was amended and restated by the Board on September
24, 1998 (the "1998 Restatement") to increase the maximum number of shares of
Common Stock authorized for issuance over the term of the Plan by 400,000
shares. The 1998 Restatement was approved by the stockholders at the 1998 Annual
Meeting.

D. The Plan was amended and restated by the Board on October 14,
1999 (the "1999 Restatement") to increase the maximum number of shares of Common
Stock authorized for issuance over the term of the Plan by 500,000 shares. The
1999 Restatement is subject to stockholder approval at the 1999 Annual Meeting,
and no option grants made on the basis of the 500,000-share increase shall
become exercisable in whole or in part unless and until the 1998 Restatement is
approved by the stockholders. Should such stockholder approval not be obtained,
then any options granted on the basis of the 500,000-share increase shall
terminate without ever becoming exercisable for those shares, and no further
option grants shall be made on the basis of such share increase. However, in the
absence of such stockholder approval, option grants may continue to be made
pursuant to the provisions of the Plan as in effect immediately prior to the
1999 Restatement.

E. The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants shall be made under the Predecessor Plan after the
Plan Effective Date. All options outstanding under the Predecessor Plan as of
such date shall be incorporated into the Plan and treated as outstanding options
under the Plan. However, each outstanding option so incorporated shall continue
to be governed solely by the terms of the documents evidencing such option, and

13.
<PAGE> 14

no provision of the Plan shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such incorporated options with respect
to their acquisition of shares of Common Stock.

F. The option/vesting acceleration provisions of Article Two
relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plan which do not otherwise provide for such acceleration.

G. The Plan shall terminate upon the earliest of (i) August 1,
2005, (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of the options under the Plan,
(iii) the termination of all outstanding options in connection with a Corporate
Transaction, or (iv) termination by the Board. Upon such Plan termination, all
options outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the documents evidencing such
options.

IV. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options or stock appreciation rights at the time outstanding under
the Plan unless the Optionee consents to such amendment or modification. In
addition, certain amendments shall be subject to stockholder approval as
required by applicable laws or regulations.

B. Options to purchase shares of Common Stock may be granted
under the Plan that are in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under the
Plan are held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees the exercise price paid for any excess shares 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, and such
shares shall thereupon be automatically cancelled and cease to be outstanding.

V. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

VI. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any option or
stock appreciation right under the Plan and the issuance of any shares of Common
Stock upon the exercise of any option or stock appreciation right shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction

14.
<PAGE> 15

over the Plan, the options and stock appreciation rights granted under it and
the shares of Common Stock issued pursuant to it.

B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until 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 stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

VII. NO EMPLOYMENT/SERVICE RIGHTS

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

15.
<PAGE> 16

APPENDIX

The following definitions shall be in effect under the Plan:

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

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

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

(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the Board
approved such election or nomination.

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

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

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

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

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

F. CORPORATION shall mean Pharmacyclics, Inc., a Delaware
corporation.

G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

A-1.
<PAGE> 17

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

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

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

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

(iii) For purposes of option grants made on the date
the Underwriting Agreement is executed and the initial public offering
price of the Common Stock is established, the Fair Market Value shall be
deemed to be equal to the established initial offering price per share.

J. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept.

K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

L. INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:

(i) such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or

A-2.
<PAGE> 18

(ii) such individual's voluntary resignation
following (A) a change in his or her position with the Corporation which
materially reduces his or her level of responsibility, (B) a reduction
in his or her level of compensation (including base salary, fringe
benefits and participation in corporate-performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without the individual's consent.

M. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).

N. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

O. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

P. OPTIONEE shall mean any person to whom an option is granted
under the Plan.

Q. PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
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.

R. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee 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.

S. PLAN shall mean the Corporation's 1995 Stock Option Plan, as
set forth in this document.

T. PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Plan with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under the
Plan with respect to the persons under its jurisdiction.

U. PLAN EFFECTIVE DATE shall mean October 23, 1995, the date on
which the Underwriting Agreement was executed and the initial public offering
price of the Common Stock was established.

A-3.
<PAGE> 19

V. PREDECESSOR PLAN shall mean the Corporation's existing 1992
Stock Option Plan.

W. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the Plan with
respect to Section 16 Insiders.

X. SECONDARY COMMITTEE shall mean a committee of two (2) or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.

Y. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

Z. SECTION 12(g) REGISTRATION DATE shall mean the first date on
which the Common Stock is registered under Section 12(g) of the 1934 Act.

AA. SERVICE shall mean the provision of services to the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, or a consultant or independent advisor, except to the extent otherwise
specifically provided in the documents evidencing the option grant.

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

CC. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

DD. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price 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 (i) price per share.

EE. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those options
or the vesting of those shares.

FF. 10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

GG. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

A-4.

<PAGE> 1
EXHIBIT 99.2

PHARMACYCLICS, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

(AS AMENDED AND RESTATED ON OCTOBER 14, 1999)

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This Non-Employee Directors Stock Option Plan is intended to
promote the interests of Pharmacyclics, Inc., a Delaware corporation, by
providing the non-employee members of the Board 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.

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

II. ADMINISTRATION OF THE PLAN

The terms of each option grant (including the timing and pricing
of the option grant) shall be determined by the express terms of the Plan, and
neither the Board nor any committee of the Board shall exercise any
discretionary functions with respect to option grants made pursuant to the Plan.

III. ELIGIBILITY

The individuals eligible to receive option grants under the Plan
shall be (i) those individuals who are serving as non-employee Board members on
the Plan Effective Date or who are first elected or appointed as non-employee
Board members on or after such date, whether through appointment by the Board or
election by the Corporation's stockholders, and (ii) those individuals who
continue to serve as non-employee Board members after one or more Annual
Stockholders Meetings beginning with the 1996 Annual Meeting. 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
Plan on the Plan Effective Date or at the time he or she first becomes a
non-employee Board member, but shall be eligible to receive periodic option
grants under the Plan upon his or her continued service as a non-employee Board
member following one or more Annual Stockholders Meetings.

IV. STOCK SUBJECT TO THE PLAN

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term of the Plan shall not exceed 196,667 shares. Such authorized share reserve
is comprised of (i) the initial share reserve of 166,667 plus (ii) a
30,000-share increase approved by the Board on October 14, 1999, subject to
approval by the stockholders at the 1999 Annual Meeting.

B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent the options
expire or terminate for any reason prior to exercise in full. Unvested shares
issued under the Plan and subsequently canceled or repurchased by the
Corporation at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan. Shares subject to any option or portion thereof
surrendered in accordance with Section II of Article Two shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent issuance under the Plan. Should the exercise price of an option under
the Plan be paid with shares of Common Stock, 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, and not by the net number of
shares of Common Stock issued to the holder of such option.

C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities for which option
grants are to be subsequently made per Eligible Director and (iii) the number
and/or class of securities and the exercise price per share in effect under each
outstanding option in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments to the outstanding options shall be made by the
Board and shall be final, binding and conclusive.

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ARTICLE TWO

OPTION GRANT PROGRAM

I. OPTION TERMS

A. GRANT DATES. Option grants shall be made on the dates
specified below:

1. Each Eligible Director who is a non-employee Board
member on the Plan Effective Date shall automatically be granted, on the Plan
Effective Date a Non-Statutory Option to purchase 5,000 shares of Common Stock.

2. Each Eligible Director who is first elected or
appointed as a non-employee Board member after the Plan Effective Date shall
automatically be granted a Non-Statutory Option to purchase 10,000 shares of
Common Stock.

3. On the date of each Annual Stockholders Meeting,
beginning with the 1996 Annual Meeting, each individual who is to continue to
serve as an Eligible Director after such meeting, shall automatically be
granted, whether or not such individual is standing for re-election as a Board
member at that Annual Meeting, a Non-Statutory Option to purchase an additional
5,000 shares of Common Stock, provided such individual has served as a
non-employee Board member for at least six (6) months prior to the date of such
Annual Meeting. There shall be no limit on the number of such annual 5,000-share
option grants any one Eligible Director may receive over his or her period of
continued Board service.

B. EXERCISE PRICE.

1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.

2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the forms
specified below:

(i) cash or check made payable to the Corporation,

(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable written
instructions to (A) 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 by

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reason of such exercise and (B) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in
order to complete the sale.

Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

C. OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.

D. EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares.

1. Each 10,000-share grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of five (5) equal and
successive annual installments over the Optionee's period of continued service
as a Board member, with the first such installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.

2. Each 5,000-share grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of twelve (12) equal and
successive monthly installments over the Optionee's period of continued service
as a Board member, with the first such installment to vest upon the Optionee's
completion of one (1) month of Board service measured from the option grant
date.

E. EFFECT OF TERMINATION OF BOARD SERVICE. The following
provisions shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:

(i) Should the Optionee cease to serve as a Board
member for any reason (other than death or Permanent Disability), then
the Board member shall have a twenty-four (24)-month period following
the date of such cessation of Board service in which to exercise each
such option. During the twenty-four (24)-month exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable at the time of the
Optionee's cessation of Board service.

(ii) Should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at
the time subject to the option shall immediately vest so that the option
may, during the twenty-four (24)-month exercise period following such
cessation of Board service, be exercised by the Optionee (or in the
event of the Optionee's death, 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
Optionee's beneficiary designation, or the laws of descent and
distribution) for all or any portion of such shares as fully-vested
shares.

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(iii) In no event shall the option remain
exercisable after the expiration of the option term. Upon the expiration
of the twenty-four (24)-month exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's
cessation of Board service, terminate and cease to be outstanding, to
the extent it is not exercisable for vested shares on the date of such
cessation of Board service.

F. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the option 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, an option may be assigned
in accordance with the terms of a Qualified Domestic Relations Order. The
assigned option may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to such Qualified Domestic Relations
Order. The terms applicable to the assigned option (or portion thereof) 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.

H. BENEFICIARY DESIGNATION. An Optionee may file a written
beneficiary designation indicating the person entitled to exercise Optionee's
outstanding options on the Optionee's behalf at the time of his/her death. Such
beneficiary designation may be changed by the Optionee at any time by filing the
appropriate form with the Plan Administrator.

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

A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the specified effective date of the Corporate Transaction,
become fully 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 of Common Stock. Immediately following the
consummation of the Corporate Transaction, each option grant shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).

B. In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Change in Control, become fully 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 of
Common Stock. Each such option shall remain exercisable for such fully-vested
option shares

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<PAGE> 6

until the expiration of the option term or the surrender of the option in
connection with a Hostile Take-Over.

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
option held by him or her for a period of at least six (6) months. 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 Optionee
is otherwise at the time vested in 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.
No approval of the Board or any committee of the Board shall be required in
connection with such option surrender and cash distribution.

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

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ARTICLE THREE

MISCELLANEOUS

I. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan shall become effective immediately on the Plan
Effective Date, and was approved by the Corporation's stockholders on
_____________________. On October 14, 1999 the Plan was amended and restated by
the Board to (i) increase the maximum number of shares of Common Stock
authorized for issuance over the term of the Plan by 30,000 shares, (ii) allow
any unvested shares reacquired by the Corporation to be available for future
option grants and (iii) to increase the option exercise period from twelve
months to twenty-four (24) months. The increase is subject to stockholder
approval at the 1999 Annual Meeting. No options granted on the basis of such
increase may be exercised until the increase is approved by the Corporation's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the date of the Board's approval of the amendment, then all options
previously granted on the basis of the increase shall terminate and cease to be
outstanding, any unvested shares reacquired by the Corporation will not be
available for future option grants, and the optionees will have a twelve
(12)-month period following cessation of Board service during which to exercise
outstanding options.

B. The Plan shall terminate upon the earliest of (i) August 1,
2005, (ii) the date on which all shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise or cash-out of the
options under the Plan or (iii) the termination of all outstanding options in
connection with a Corporate Transaction. Upon such Plan termination, all option
grants and unvested stock issuances outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the
documents evidencing such grants or issuances.

II. AMENDMENT OF THE PLAN

The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, (i) the Plan,
together with the option grants outstanding thereunder, may not be amended at
intervals more frequently than once every six (6) months, other than to the
extent necessary to comply with applicable Federal income tax laws and
regulations and (ii) no such amendment or modification shall adversely affect
the rights and obligations with respect to options at the time outstanding under
the Plan unless the Optionee consents to such amendment or modification. In
addition, the Board shall not, without the approval of the Corporation's
stockholders, (i) materially increase the maximum number of shares issuable
under the Plan or the number of shares for which options may be granted to each
Eligible Director, except for permissible adjustments in the event of certain
changes in the Corporation's capitalization, (ii) materially modify the
eligibility requirements for Plan participation or (iii) materially increase the
benefits accruing to Plan participants.

III. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

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<PAGE> 8

IV. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of any shares of Common Stock upon the exercise
of any option shall be subject to the Corporation's procurement of all approvals
and permits required by regulatory authorities having jurisdiction over the
Plan, the options granted under it and the shares of Common Stock issued
pursuant to it.

V. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) and the Corporation's
stockholders or of the Optionee, which rights are hereby expressly reserved by
each, to terminate such person's Service at any time for any reason, with or
without cause.

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APPENDIX

The following definitions shall be in effect under the Plan:

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

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

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

(ii) a change in the composition of the Board over
a period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such
election or nomination was approved by the Board.

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

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

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

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

F. CORPORATION shall mean Pharmacyclics, Inc., a Delaware
corporation.

G. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or
order (including approval of a property settlement agreement) which provides or
otherwise conveys,

<PAGE> 10

pursuant to applicable State domestic relations laws (including community
property laws), marital property rights to any spouse or former spouse of the
Optionee.

H. ELIGIBLE DIRECTOR shall mean a non-employee Board member
eligible to participate in the Plan.

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

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

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

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

K. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the following transaction:

(i) 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)
directly or indirectly acquires beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the 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, and

(ii) more than fifty percent (50%) of the
securities so acquired are accepted from persons other than Section 16
Insiders.

L. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

M. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

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N. OPTIONEE shall mean any person to whom an option is granted
under the Plan.

O. PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
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.

P. PERMANENT DISABILITY shall mean the inability of the Optionee
to perform his or her usual duties as a Board member 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.

Q. PLAN shall mean the Corporation's Non-Employee Directors Stock
Option Plan, as set forth in this document.

R. PLAN EFFECTIVE DATE shall mean the date on which the
Underwriting Agreement is executed and the initial public offering price of the
Common Stock is established.

S. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic
Relations Order which substantially complies with the requirements of Code
Section 414(p).

T. SECTION 16 INSIDERS shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

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

V. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

W. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over.