<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>a2048718zex-99_1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
 
<PAGE>
 
                                  Exhibit 99.1
 
                            SILICON LABORATORIES INC.
                            2000 STOCK INCENTIVE PLAN
 
                 AS AMENDED AND RESTATED EFFECTIVE MARCH 8, 2001
 
 
 
                                   ARTICLE ONE
 
                               GENERAL PROVISIONS
 
         I.       PURPOSE OF THE PLAN
 
                  This 2000 Stock Incentive Plan is intended to promote the
interests of Silicon Laboratories 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
 
                  A.    The Plan shall be divided into four separate equity
programs:
 
                           (i)      the Discretionary Option Grant Program
         under which eligible persons may, at the discretion of the Plan
         Administrator, be granted options to purchase shares of Common Stock,
 
                           (ii)     the Salary Investment Option Grant Program
         under which eligible employees may elect to have a portion of their
         base salary invested each year in special options,
 
                           (iii)    the Stock Issuance Program under which
         eligible persons may, at the discretion of the Plan Administrator, be
         issued shares of Common Stock directly, either through the immediate
         purchase of such shares or as a bonus for services rendered the
         Corporation (or any Parent or Subsidiary), and
 
                           (iv)     the Automatic Option Grant Program under
         which eligible non-employee Board members shall automatically receive
         options at periodic intervals to purchase shares of Common Stock.
 
                  B.    The provisions of Articles One and Six shall apply to
all equity programs under the Plan and shall govern the interests of all
persons under the Plan.
 
<PAGE>
 
         III.     ADMINISTRATION OF THE PLAN
 
                  A.    Prior to the Section 12 Registration Date, the
Discretionary Option Grant and Stock Issuance Programs shall be administered
by the Board unless otherwise determined by the Board. Beginning with the
Section 12 Registration Date, the following provisions shall govern the
administration of the Plan:
 
                           (i)      The Board shall have the authority to
         administer the Discretionary Option Grant and Stock Issuance Programs
         with respect to Section 16 Insiders but may delegate such authority
         in whole or in part to the Primary Committee.
 
                           (ii)     Administration of the Discretionary Option
         Grant and Stock Issuance Programs with respect to all other persons
         eligible to participate in those programs may, at the Board's
         discretion, be vested in the Primary Committee or a Secondary
         Committee, or the Board may retain the power to administer those
         programs with respect to all such persons.
 
                           (iii)    The Board shall have the authority to
         determine which Section 16 Insiders and other highly compensated
         Employees shall be eligible to participate in the Salary Investment
         Program for one or more calendar years but may delegate such
         authority to the Primary Committee. However, all option grants under
         that program shall be made in accordance with the terms of that
         program.
 
                           (iv)     Administration of the Automatic Option
         Grant Program shall be self-executing in accordance with the terms of
         that program.
 
                  B.    Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:
 
                           (i)      to establish such rules as it may deem
         appropriate for proper administration of the Plan, to make all
         factual determinations, to construe and interpret the provisions of
         the Plan and the awards thereunder and to resolve any and all
         ambiguities thereunder;
 
                           (ii)     to determine, with respect to awards made
         under the Discretionary Option Grant and Stock Issuance Programs,
         which eligible persons are to receive such awards, the time or times
         when such awards are to be made, the number of shares to be covered
         by each such award, the vesting schedule (if any) applicable to the
         award, the status of a granted option as either an Incentive Option
         or a Non-Statutory Option and the maximum term for which the option
         is to remain outstanding;
 
                           (iii)    to amend, modify or cancel any outstanding
         award with the consent of the holder or accelerate the vesting of
         such award; and
 
                           (iv)     to take such other discretionary actions
         as permitted pursuant to the terms of the applicable program.
 
 
                                       2
 
<PAGE>
 
Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.
 
                  C.    Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and
may be removed by the Board at any time. 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.    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 options or
stock issuances under the Plan.
 
         IV.      ELIGIBILITY
 
                  A.    The persons eligible to participate in the
Discretionary Option Grant and Stock Issuance Programs 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.    Only Employees who are Section 16 Insiders or other
highly compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.
 
                  C.    Only non-employee Board members shall be eligible to
participate in the Automatic Option Grant Program.
 
         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 initially reserved for issuance over the term of the
Plan shall not exceed 7,851,847 shares. Such authorized share reserve consists
of (i) the number of shares which remain available for issuance, as of the
Section 12 Registration Date, under the Predecessor Plan, including the shares
subject to the outstanding options to be incorporated into the Plan and the
additional shares which would otherwise be available for future grant
(collectively estimated to be 3,389,498 shares), (ii) an increase of 2,000,000
shares authorized by the Board and approved by the stockholders prior to the
Section 12 Registration Date, (iii) 962,349 shares added to the reserve
pursuant to the automatic share increase effected in January 2001, plus (iv)
an increase of 1,500,000 shares authorized by the Board and subsequently
approved by the stockholders.
 
 
                                       3
 
<PAGE>
 
                  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 2002
calendar year, by an amount equal to five percent (5%) of the shares of Common
Stock outstanding on the last trading day of the immediately preceding
calendar year, but in no event shall such annual increase exceed Three Million
(3,000,000) shares.
 
                  C.    No one person participating in the Plan may receive
options, separately exercisable stock appreciation rights and direct stock
issuances for more than One Million (1,000,000) shares of Common Stock in the
aggregate per calendar year, beginning with the 2000 calendar year.
 
                  D.    Shares of Common Stock subject to outstanding options
(including options incorporated into this Plan from the Predecessor Plan)
shall be available for subsequent issuance under the Plan to the extent those
options expire, terminate or are cancelled for any reason prior to exercise in
full. Unvested shares issued under the Plan and subsequently repurchased by
the Corporation, at the original exercise or 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 options or direct stock issuances under the Plan. Unvested shares
issued under the Predecessor Plan and subsequently repurchased by the
Corporation, at the original exercise price or issue price paid per share,
pursuant to the Corporation's repurchase rights under the Predecessor Plan
shall also be added back to the number of shares of Common Stock reserved for
issuance under the Plan but in no event shall such number exceed in the
aggregate 3,357,204 shares. However, should the exercise price of an option
under the Plan be paid with shares of Common Stock or should shares of Common
Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the
number of shares of Common Stock available for issuance under the Plan shall
be reduced by the gross number of shares for which the option is exercised or
which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock issuance. Shares of
Common Stock underlying one or more stock appreciation rights exercised under
the Plan shall NOT be available for subsequent issuance.
 
                  E.    If any change is 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 by which
the share reserve is to increase each calendar year pursuant to the automatic
share increase provisions of the Plan, (iii) the number and/or class of
securities for which any one person may be granted options, separately
exercisable stock appreciation rights and direct stock issuances under the
Plan per calendar year, (iv) the number and/or class of securities for which
grants are subsequently to be made under the Automatic Option Grant Program to
new and continuing non-employee Board members, (v) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan and (vi) the number and/or class of securities and
 
                                       4
 
<PAGE>
 
price per share in effect under each outstanding option incorporated into this
Plan from the Predecessor Plan. Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options. The adjustments determined
by the Plan Administrator shall be final, binding and conclusive.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                       5
<PAGE>
 
                                  ARTICLE TWO
 
                       DISCRETIONARY OPTION GRANT PROGRAM
 
 
         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 at the time of the option grant and may be less
than, equal to or greater than 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 II of Article Six and the documents evidencing the option, be payable
in one or more of the following forms:
 
                                 (i)      in 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 instructions to (a) a Corporation-approved 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.
 
                                       6
 
<PAGE>
 
                  C.    CESSATION OF SERVICE.
 
                        1.       The following provisions shall govern the
exercise of any options outstanding at the time of the Optionee's 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 his or her Beneficiary.
 
                                 (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 the option is not otherwise at that time
         exercisable for vested shares.
 
                                 (iv)     Should the Optionee's Service be
         terminated for Misconduct or should the Optionee engage in Misconduct
         while his or her options are outstanding, then all such options shall
         terminate immediately and cease to be outstanding.
 
                        2.       The Plan Administrator shall have complete
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding:
 
                                 (i)      to extend the period of time for
         which the option is to remain exercisable following the Optionee's
         cessation of Service to such period of time as the Plan Administrator
         shall deem appropriate, but in no event beyond the expiration of the
         option term, and/or
 
                                 (ii)     to permit the option to be
         exercised, during the applicable post-Service exercise period, for
         one or more additional installments in which the Optionee would have
         vested had the Optionee continued in Service.
 
                  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
 
                                       7
 
<PAGE>
 
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, Incentive Options shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the Optionee's death.
Non-Statutory Options shall be subject to the same restrictions, except that a
Non-Statutory Option may, to the extent permitted by the Plan Administrator,
be assigned in whole or in part during the Optionee's lifetime (i) as a gift
to one or more members of the Optionee's immediate family, to a trust in which
Optionee and/or one or more such family members hold more than fifty percent
(50%) of the beneficial interest or to an entity in which more than fifty
percent (50%) of the voting interests are owned by one or more such family
members or (ii) pursuant to a domestic relations order. 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.
 
         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 Six 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
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as Incentive
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.
 
                                       8
 
<PAGE>
 
         III.     CHANGE IN CONTROL/HOSTILE TAKE-OVER
 
                  A.    Each option outstanding at the time of a Change in
Control but not otherwise fully-vested shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Change
in Control, become exercisable for all of the shares of Common Stock at the
time subject to that 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 Change in Control, assumed or otherwise continued in full
force and effect by the successor corporation (or parent thereof) pursuant to
the terms of the Change in Control, (ii) such option is replaced with a cash
incentive program of the successor corporation which preserves the spread
existing at the time of the Change in Control on the shares of Common Stock
for which the option is not otherwise at that time exercisable and provides
for subsequent payout in accordance with the same vesting schedule applicable
to those option shares or (iii) the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of the option
grant. Each option outstanding at the time of the Change in Control shall
terminate as provided in Section III.C. of this Article Two.
 
                  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 Change in Control,
except to the extent: (i) those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
 
                  C.    Immediately following the consummation of the Change
in Control, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise expressly continued in full force and effect
pursuant to the terms of the Change in Control.
 
                  D.    Each option which is assumed in connection with a
Change in Control shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of securities which would
have been issuable to the Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control.
Appropriate adjustments to reflect such Change in Control shall also be made
to (i) the exercise price payable per share under each outstanding option,
PROVIDED the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number
and/or class of securities for which any one person may be granted options,
separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor
corporation may, in connection with the assumption of the outstanding options
under the Discretionary Option Grant Program, substitute one or more shares of
its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in Control.
 
                                       9
 
<PAGE>
 
                  E.    The Plan Administrator may at any time provide that
one or more options will automatically accelerate in connection with a Change
in Control, whether or not those options are assumed or otherwise continued in
full force and effect pursuant to the terms of the Change in Control. Any such
option shall accordingly become exercisable, immediately prior to the
effective date of such Change in Control, for all of the shares of Common
Stock at the time subject to that option and may be exercised for any or all
of those shares as fully-vested shares of Common Stock. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall not be assignable in connection with such Change in
Control and shall terminate upon the consummation of such Change in Control.
 
                  F.    The Plan Administrator may at any time provide that
one or more options will automatically accelerate upon an Involuntary
Termination of the Optionee's Service within a designated period (not to
exceed eighteen (18) months) following the effective date of any Change in
Control in which those options do not otherwise accelerate. 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.
In addition, the Plan Administrator may at any time provide that one or more
of the Corporation's repurchase rights shall immediately terminate upon such
Involuntary Termination.
 
                  G.    The Plan Administrator may at any time provide that
one or more options will automatically accelerate in connection with a Hostile
Take-Over. Any such option shall become exercisable, immediately prior to the
effective date of such Hostile Take-Over, for all of the shares of Common
Stock at the time subject to that option and may be exercised for any or all
of those shares as fully-vested shares of Common Stock. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall terminate automatically upon the consummation of such
Hostile Take-Over. Alternatively, the Plan Administrator may condition such
automatic acceleration and termination upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of such Hostile Take-Over. Each option so
accelerated shall remain exercisable for fully-vested shares until the
expiration or sooner termination of the option term.
 
                  H.    The portion of any Incentive Option accelerated in
connection with a Change in Control or Hostile Take Over shall remain
exercisable as an Incentive Option only to the extent the applicable One
Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent
such dollar limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Non-Statutory Option under the Federal tax laws.
 
         IV.      STOCK APPRECIATION RIGHTS
 
                  The Plan Administrator may, subject to such conditions as it
may determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights 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 Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may
 
                                      10
 
<PAGE>
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                      11
<PAGE>
 
                                  ARTICLE THREE
 
                     SALARY INVESTMENT OPTION GRANT PROGRAM
 
 
         I.       OPTION GRANTS
 
                  The Primary Committee may implement the Salary Investment
Option Grant Program for one or more calendar years beginning after the
Underwriting Date and select the Section 16 Insiders and other highly
compensated Employees eligible to participate in the Salary Investment Option
Grant Program for each such calendar year. Each selected individual who elects
to participate in the Salary Investment Option Grant Program must, prior to the
start of each calendar year of participation, file with the Plan Administrator
(or its designate) an irrevocable authorization directing the Corporation to
reduce his or her base salary for that calendar year by an amount not less than
Five Thousand Dollars ($5,000.00) nor more than Fifty Thousand Dollars
($50,000.00). The Primary Committee shall have complete discretion to determine
whether to approve the filed authorization in whole or in part. To the extent
the Primary Committee approves the authorization, the individual who filed that
authorization shall be granted an option under the Salary Investment Grant
Program on the first trading day in January for the calendar year for which the
salary reduction is to be in effect.
 
         II.      OPTION TERMS
 
                  Each option shall be a Non-Statutory Option 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.
 
                  A.    EXERCISE PRICE.
 
                        1.       The exercise price per share shall be
thirty-three and one-third percent (33-1/3%) 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
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.
 
                  B.    NUMBER OF OPTION SHARES. The number of shares of
Common Stock subject to the option shall be determined pursuant to the
following formula (rounded down to the nearest whole number):
 
                        X = A divided by (B x 66-2/3%), where
 
                        X is the number of option shares,
 
                        A is the dollar amount of the approved reduction in
                  the Optionee's base salary for the calendar year, and
 
                                      12
 
<PAGE>
 
                        B is the Fair Market Value per share of Common Stock
                  on the option grant date.
 
                  C.    EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the
calendar year for which the salary reduction is in effect. Each option shall
have a maximum term of ten (10) years measured from the option grant date.
 
                  D.    CESSATION OF SERVICE. Each option outstanding at the
time of the Optionee's cessation of Service shall remain exercisable, for any
or all of the shares for which the option is exercisable at the time of such
cessation of Service, until the EARLIER of (i) the expiration of the option
term or (ii) the expiration of the three (3)-year period following the
Optionee's cessation of Service. To the extent the option is held by the
Optionee at the time of his or her death, the option may be exercised by his
or her Beneficiary. However, the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to remain outstanding with respect
to any and all shares of Common Stock for which the option is not otherwise at
that time exercisable.
 
         III.     CHANGE IN CONTROL/HOSTILE TAKE-OVER
 
                  A.    In the event of any Change in Control or Hostile
Take-Over while the Optionee remains in Service, each outstanding option shall
automatically accelerate so that each such option shall, immediately prior to
the effective date of the Change in Control or Hostile Take-Over, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall terminate upon the Change in
Control, except to the extent assumed by the successor corporation (or parent
thereof) or otherwise continued in full force and effect pursuant to the terms
of the Change in Control. Each such option accelerated in connection with a
Hostile Take-Over shall remain exercisable until the expiration or sooner
termination of the option term.
 
                  B.    Each option which is assumed in connection with a
Change in Control shall be appropriately adjusted to apply to the number and
class of securities which would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised
immediately prior to such Change in Control. Appropriate adjustments shall
also be made to the exercise price payable per share under each outstanding
option, PROVIDED the aggregate exercise price payable for such securities
shall remain the same. To the extent the actual holders of the Corporation's
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in
connection with the assumption of the outstanding options under the Salary
Investment Option Grant Program, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration
paid per share of Common Stock in such Change in Control.
 
                  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 of his or her outstanding options. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an
 
                                      13
 
<PAGE>
 
amount equal to the excess of (i) the Option Surrender Value of the shares of
Common Stock at the time subject to each 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.
 
         IV.      REMAINING TERMS
 
                  The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
options made under the Discretionary Option Grant Program.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                      14
 
<PAGE>
 
                                  ARTICLE FOUR
 
                             STOCK ISSUANCE PROGRAM
 
 
         I.       STOCK ISSUANCE TERMS
 
                  Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening options.
Shares of Common Stock may also be issued under the Stock Issuance Program
pursuant to share right awards which entitle the recipients to receive those
shares upon the attainment of designated performance goals or Service
requirements. Each such award shall be evidenced by one or more documents which
comply with the terms specified below.
 
                  A.    PURCHASE PRICE.
 
                        1.       The purchase price per share of Common Stock
subject to direct issuance shall be fixed by the Plan Administrator and may be
less than, equal to or greater than the Fair Market Value per share of Common
Stock on the issue date.
 
                        2.       Subject to the provisions of Section II of
Article Six, shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:
 
                                 (i)      cash or check made payable to the
         Corporation, or
 
                                 (ii)     past services rendered to the
         Corporation (or any Parent or Subsidiary).
 
                  B.    VESTING/ISSUANCE PROVISIONS.
 
                        1.       The Plan Administrator may issue shares of
Common Stock which are fully and immediately vested upon issuance or which are
to vest in one or more installments over the Participant's period of Service
or upon attainment of specified performance objectives. Alternatively, the
Plan Administrator may issue share right awards which shall entitle the
recipient to receive a specified number of vested shares of Common Stock upon
the attainment of one or more performance goals or Service requirements
established by the Plan Administrator.
 
                        2.       Any new, substituted or additional securities
or other property (including money paid other than as a regular cash dividend)
which the Participant may have the right to receive with respect to his or her
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock
and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
 
                                      15
 
<PAGE>
 
                        3.       The Participant shall have full stockholder
rights with respect to the issued shares of Common Stock, whether or not the
Participant's interest in those shares is vested. Accordingly, the Participant
shall have the right to vote such shares and to receive any regular cash
dividends paid on such shares.
 
                        4.       Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock, or should
the performance objectives not be attained with respect to one or more such
unvested shares of Common Stock, then those shares shall be immediately
surrendered to the Corporation for cancellation, and the Participant shall
have no further stockholder rights with respect to those shares. To the extent
the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant's
purchase-money indebtedness), the Corporation shall repay to the Participant
the cash consideration paid for the surrendered shares and shall cancel the
unpaid principal balance of any outstanding purchase-money note of the
Participant attributable to the surrendered shares.
 
                        5.       The Plan Administrator may waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
cessation of the Participant's Service or the non-attainment of the
performance objectives applicable to those shares. Such waiver shall result in
the immediate vesting of the Participant's interest in the shares of Common
Stock as to which the waiver applies. Such waiver may be effected at any time,
whether before or after the Participant's cessation of Service or the
attainment or non-attainment of the applicable performance objectives.
 
                        6.       Outstanding share right awards shall
automatically terminate, and no shares of Common Stock shall actually be
issued in satisfaction of those awards, if the performance goals or Service
requirements established for such awards are not attained. The Plan
Administrator, however, shall have the authority to issue shares of Common
Stock in satisfaction of one or more outstanding share right awards as to
which the designated performance goals or Service requirements are not
attained.
 
         II.      CHANGE IN CONTROL/HOSTILE TAKE-OVER
 
                  A.       All of the Corporation's outstanding repurchase
rights shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the
event of any Change in Control, except to the extent (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) or
otherwise continue in full force and effect pursuant to the terms of the
Change in Control or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase right
is issued.
 
                  B.       The Plan Administrator may at any time provide for
the automatic termination of one or more of those outstanding repurchase
rights and the immediate vesting of the shares of Common Stock subject to
those terminated rights upon (i) a Change in Control or Hostile Take-Over or
(ii) an Involuntary Termination of the Participant's Service within a
designated period (not to exceed eighteen (18) months) following the effective
date of any
 
                                      16
 
<PAGE>
 
Change in Control or Hostile Take-Over in which those repurchase rights are
assigned to the successor corporation (or parent thereof) or otherwise
continue in full force and effect.
 
         III.     SHARE ESCROW/LEGENDS
 
                  Unvested shares may, in the Plan Administrator's discretion,
be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                      17
 
 
<PAGE>
 
                                 ARTICLE FIVE
 
                         AUTOMATIC OPTION GRANT PROGRAM
 
     I.       OPTION TERMS
 
              A.       GRANT DATES.  Options shall be made on the dates
specified below:
 
                       1.      Each individual who is serving as a
non-employee Board member on the Underwriting Date shall automatically
be granted on that date a Non-Statutory Option to purchase 30,000 shares
of Common Stock, provided that individual has not previously been in the
employ of the Corporation (or any Parent or Subsidiary).
 
                       2.      Each individual who is first elected or
appointed as a non-employee Board member at any time after the
Underwriting Date shall automatically be granted, on the date of such
initial election or appointment, a Non-Statutory Option to purchase
30,000 shares of Common Stock, provided that individual has not
previously been in the employ of the Corporation (or any Parent or
Subsidiary).
 
                       3.      On the date of each Annual Stockholders
Meeting beginning with the 2001 Annual Stockholder Meeting, each
individual who is to continue to serve as a non-employee Board member
shall automatically be granted a Non-Statutory Option to purchase Five
Thousand (5,000) shares of Common Stock, provided such individual has
served as a non-employee Board member for at least six (6) months.
 
              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 be payable in
one or more of the alternative forms authorized under the Discretionary
Option Grant Program. Except to the extent the sale and remittance
procedure specified thereunder 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. Each initial 30,000-share option shall vest, and the
Corporation's repurchase right shall lapse, in a series of four (4)
successive equal 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. Each annual 5,000-share option
shall vest,
 
                                       18
 
<PAGE>
 
and the Corporation's repurchase right shall lapse, upon the Optionee's
completion of one (1) year of Board service measured from the option
grant date.
 
              E.       CESSATION OF BOARD SERVICE. The following
provisions shall govern the exercise of any options outstanding at the
time of the Optionee's cessation of Board service:
 
                             (i)      Any option outstanding at the time of the
     Optionee's cessation of Board service for any reason shall remain
     exercisable for a twelve (12)-month period following the date of such
     cessation of Board service, but in no event shall such option 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 his or her Beneficiary.
 
                             (iii)    Following the Optionee's cessation of
     Board service, the option may not be exercised in the aggregate for more
     than the number of shares for which the option was exercisable on the
     date of such cessation of Board 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 Board
     service, terminate and cease to be outstanding for any and all shares
     for which the option is not otherwise at that time exercisable.
 
                             (iv)     However, 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 such option may, during the twelve (12)-month exercise period
     following such cessation of Board service, be exercised for all or any
     portion of those shares as fully-vested shares of Common Stock.
 
     II.      CHANGE IN CONTROL/HOSTILE TAKE-OVER
 
              A.       In the event of any Change in Control or Hostile
Take-Over, 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 may, immediately prior to the effective date of such Change in
Control or Hostile Take-Over, became fully exercisable for all of the shares
of Common Stock at the time subject to such option and maybe exercised for
all or any of those shares as fully-vested shares of Common Stock. Each such
option accelerated in connection with a Change in Control shall terminate
upon the Change in Control, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and
effect pursuant to the terms of the Change in Control. Each such option
accelerated in connection with a Hostile Take-Over shall remain exercisable
until the expiration or sooner termination of the option term.
 
              B.       All outstanding repurchase rights shall automatically
terminate and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control or
Hostile Take-Over.
 
                                   19
 
<PAGE>
 
              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 of his or her outstanding options. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Option Surrender Value of the shares of Common
Stock at the time subject to each surrendered option (whether or not the
option is otherwise at the time exercisable for those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the surrender of the option to
the Corporation.
 
              D.       Each option which is assumed in connection with a
Change in Control shall be appropriately adjusted to apply to the number and
class of securities which would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised
immediately prior to such Change in Control. Appropriate adjustments shall
also be made to the exercise price payable per share under each outstanding
option, PROVIDED the aggregate exercise price payable for such securities
shall remain the same. To the extent the actual holders of the Corporation's
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in
connection with the assumption of the outstanding options under the Automatic
Option Grant Program, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share
of Common Stock in such Change in Control.
 
     III.     REMAINING TERMS
 
              The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for options
made under the Discretionary Option Grant Program.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                       20
 
<PAGE>
 
                                   ARTICLE SIX
 
                                  MISCELLANEOUS
 
     I.       NO IMPAIRMENT OF AUTHORITY
 
              Outstanding awards 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.
 
     II.      FINANCING
 
              The Plan Administrator may permit any Optionee or Participant
to pay the option exercise price under the Discretionary Option Grant Program
or the purchase price of shares issued under the Stock Issuance Program by
delivering a full-recourse, interest bearing 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. In no event may the maximum credit
available to the Optionee or Participant exceed the sum of (i) the aggregate
option exercise price or purchase price payable for the purchased shares plus
(ii) any Federal, state and local income and employment tax liability
incurred by the Optionee or the Participant in connection with the option
exercise or share purchase.
 
     III.     TAX WITHHOLDING
 
              A.       The Corporation's obligation to deliver shares of
Common Stock upon the exercise of options or the issuance or vesting of such
shares under the Plan shall be subject to the satisfaction of all applicable
Federal, state and local income and employment tax withholding requirements.
 
              B.       The Plan Administrator may, in its discretion, provide
any or all holders of Non-Statutory Options or unvested shares of Common
Stock under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes incurred by such holders
in connection with the exercise of their options or the vesting of their
shares. Such right may be provided to any such holder in either or both of
the following formats:
 
                       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 or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed one hundred percent
(100%)) designated by the holder.
 
                       STOCK DELIVERY: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such holder
(other than in connection with the option exercise or share vesting
triggering the Withholding 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.
 
                                       21
 
<PAGE>
 
     IV.      EFFECTIVE DATE AND TERM OF THE PLAN
 
              A.       The Plan shall become effective immediately upon the
Plan Effective Date. However, the Salary Investment Option Grant Program
shall not be implemented until such time as the Primary Committee may deem
appropriate. Options may be granted under the Discretionary Option Grant
Program at any time on or after the Plan Effective Date. However, no options
granted under the Plan may be exercised, and no shares shall be issued under
the Plan, until the Plan is approved by the Corporation's stockholders. If
such stockholder approval is not obtained within twelve (12) months after the
Plan Effective Date, then all options previously granted under this Plan
shall terminate and cease to be outstanding, and no further options shall be
granted and no shares shall be issued under the Plan.
 
              B.       The Plan shall serve as the successor to the
Predecessor Plan, and no further options or direct stock issuances shall be
made under the Predecessor Plan after the Section 12 Registration Date. All
options outstanding under the Predecessor Plan on the Section 12 Registration
Date shall be incorporated into the Plan at that time and shall be 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 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.
 
              C.       One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two
relating to Change 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 contain such provisions.
 
              D.       The Plan shall terminate upon the EARLIEST of (i)
January 4, 2010, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as fully-vested shares or (iii) the
termination of all outstanding options in connection with a Change in
Control. Upon such plan termination, all outstanding options and unvested
stock issuances shall thereafter continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.
 
     V.       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 stock options or unvested stock issuances at the
time outstanding under the Plan unless the Optionee or the Participant
consents to such amendment or modification. In addition, certain amendments
may require stockholder approval pursuant to applicable laws or regulations.
 
              B.       The Plan was amended by the Board on March 8, 2001 and
approved by the shareholders at the Annual Shareholders Meeting on April 26,
2001 in order to: (i) increase the maximum number of shares of Common Stock
authorized for issuance under the Plan by One Million Five Hundred Thousand
(1,500,000) Shares, and (ii) amend the automatic share increase
 
                                   22
 
<PAGE>
 
provisions of the Plan to increase the amount by which the share reserve will
increase on the first trading day of each calendar year from an annual
increase in an amount equal to two percent (2%) of the shares of Common Stock
outstanding on the last trading day of the immediately preceding calendar
year (with a maximum annual increase not to exceed One Million (1,000,000)
shares per year) to an annual increase in an amount equal to five percent
(5%) of the shares of Common Stock outstanding on the last trading day of the
immediately preceding calendar year (with a maximum annual increase not to
exceed Three Million (3,000,000) shares per year), beginning with calendar
year 2002.
 
              C.       Options to purchase shares of Common Stock may be
granted under the Discretionary Option Grant and Salary Investment Option
Grant Programs and shares of Common Stock may be issued under the Stock
Issuance Program that are in each instance in excess of the number of shares
then available for issuance under the Plan, provided any excess shares
actually issued under those programs shall be 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 and the Participants the exercise or purchase 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.
 
     VI.      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.
 
     VII.     REGULATORY APPROVALS
 
              A.       The implementation of the Plan, the granting of any
stock option under the Plan and the issuance of any shares of Common Stock
(i) upon the exercise of any granted option or (ii) under the Stock Issuance
Program shall be subject to the Corporation's procurement of all approvals
and permits required by regulatory authorities having jurisdiction over the
Plan, the stock options 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.
 
                                       23
 
<PAGE>
 
     VIII.    NO EMPLOYMENT/SERVICE RIGHTS
 
              Nothing in the Plan shall confer upon the Optionee or the
Participant 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 or the Participant, which rights are hereby expressly
reserved by each, to terminate such person's Service at any time for any
reason, with or without cause.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                       24
 
<PAGE>
 
 
                                    APPENDIX
 
         The following definitions shall be in effect under the Plan:
 
         A.   AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under the Plan.
 
         B.   BENEFICIARY shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by an
Optionee or Participant, pursuant to such procedure, to succeed to such
person's rights under any outstanding awards held by him or her at the time
of death. In the absence of such designation or procedure, the Beneficiary
shall be the personal representative of the estate of the Optionee or
Participant or the person or persons to whom the award is transferred by will
or the laws of descent and distribution.
 
         C.   BOARD shall mean the Corporation's Board of Directors.
 
         D.   CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through any of the following transactions:
 
                   (i)   a merger, consolidation or reorganization approved
         by the Corporation's stockholders, UNLESS securities representing
         more than fifty percent (50%) of the total combined voting power of
         the voting securities of the successor corporation are immediately
         thereafter beneficially owned, directly or indirectly and in
         substantially the same proportion, by the persons who beneficially
         owned the Corporation's outstanding voting securities immediately
         prior to such transaction,
 
                   (ii)  any stockholder-approved transfer or other disposition
         of all or substantially all of the Corporation's assets, or
 
                   (iii) 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 recommends such stockholders accept.
 
         E.   CODE shall mean the Internal Revenue Code of 1986, as amended.
 
         F.   COMMON STOCK shall mean the Corporation's common stock.
 
         G.   CORPORATION shall mean Silicon Laboratories Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Silicon Laboratories Inc. which shall by
appropriate action adopt the Plan.
 
         H.   DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary
option grant program in effect under the Plan.
 
 
                                     A-1
<PAGE>
 
 
         I.   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.
 
         J.   EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.
 
         K.   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 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 any option grants made on the
         Underwriting Date, the Fair Market Value shall be deemed to be equal
         to the price per share at which the Common Stock is to be sold in
         the initial public offering pursuant to the Underwriting Agreement.
 
                   (iv)  For purposes of any options made prior to the
         Underwriting Date, the Fair Market Value shall be determined by the
         Plan Administrator, after taking into account such factors as it
         deems appropriate.
 
         L.   HOSTILE TAKE-OVER shall mean:
 
                   (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
 
 
                                     A-2
<PAGE>
 
         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.
 
         M.   INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
 
         N.   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
 
                   (ii)  such individual's voluntary resignation following
         (A) a change in his or her position with the Corporation or Parent
         or Subsidiary employing the individual which materially reduces his
         or her duties and responsibilities or the level of management to
         which he or she reports, (B) a reduction in his or her level of
         compensation (including base salary, fringe benefits and target
         bonus under any 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.
 
         O.   MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized
use or disclosure by such person of confidential information or trade secrets
of the Corporation (or any Parent or Subsidiary), or any intentional
wrongdoing by such person, whether by omission or commission, which adversely
affects the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. This shall not limit the grounds for the
dismissal or discharge of any person in the Service of the Corporation (or
any Parent or Subsidiary).
 
         P.   1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
 
         Q.   NON-STATUTORY OPTION shall mean an option not intended to
satisfy  the requirements of Code Section 422.
 
         R.   OPTION SURRENDER VALUE shall mean the Fair Market Value per
share of Common Stock on the date the option is surrendered to the
Corporation or, in the event of a Hostile Take-Over, effected through a
tender offer, the highest reported price per share of Common Stock paid by
the tender offeror in effecting such Hostile Take-Over, if greater. However,
if the surrendered option is an Incentive Option, the Option Surrender Value
shall not exceed the Fair Market Value per share.
 
         S.   OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant, Salary Investment Option Grant or
Automatic Option Grant.
 
 
                                     A-3
<PAGE>
 
 
         T.   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.
 
         U.   PARTICIPANT shall mean any person who is issued shares of
Common Stock under the Stock Issuance Program.
 
         V.   PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of
twelve (12) months or more. However, solely for purposes of the Automatic
Option Grant Program, Permanent Disability or Permanently Disabled shall mean
the inability of the non-employee Board member 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.
 
         W.   PLAN shall mean the Corporation's 2000 Stock Incentive Plan, as
set forth in this document.
 
         X.   PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction. However, the
Primary Committee shall have the plenary authority to make all factual
determinations and to construe and interpret any and all ambiguities under the
Plan to the extent such authority is not otherwise expressly delegated to any
other Plan Administrator.
 
         Y.   PLAN EFFECTIVE DATE shall mean January 5, 2000, the date on
which the Plan was adopted by the Board.
 
         Z.   PREDECESSOR PLAN shall mean the Corporation's pre-existing 1997
Stock Option/Stock Issuance Plan in effect immediately prior to the Plan
Effective Date hereunder.
 
         AA.  PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program with
respect to all eligible individuals.
 
         BB.  SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the salary
investment grant program in effect under the Plan.
 
         CC.  SECONDARY COMMITTEE shall mean a committee of one (1) or more
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.
 
 
                                     A-4
<PAGE>
 
 
         DD.  SECTION 12 REGISTRATION DATE shall mean the date on which the
Common Stock is first registered under Section 12(g) of the 1934 Act.
 
         EE.  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.
 
         FF.  SERVICE shall mean the performance of services for the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in
the documents evidencing the option grant or stock issuance.
 
         GG.  STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.
 
         HH.  STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.
 
         II.  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.
 
         JJ.  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).
 
         KK.  UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
 
         LL.  UNDERWRITING DATE shall mean the date on which the Underwriting
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.
 
         MM.  WITHHOLDING TAXES shall mean the Federal, state and local
income and employment withholding tax liabilities to which the holder of
Non-Statutory Options or unvested shares of Common Stock may become subject
in connection with the exercise of those options or the vesting of those
shares.
 
 
                                     A-5
 
</TEXT>
</DOCUMENT>