<PAGE>   1
   As filed with the Securities and Exchange Commission on September 3, 1998
                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

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

                                   ----------

                        IDEC PHARMACEUTICALS CORPORATION
             (Exact name of registrant as specified in its charter)

                 DELAWARE                               33-0112644
       (State or other jurisdiction         (IRS Employer Identification No.)
     of incorporation or organization)

                              11011 TORREYANA ROAD
                           SAN DIEGO, CALIFORNIA 92121
               (Address of principal executive offices) (Zip Code)

                                   ----------

                   AMENDED AND RESTATED 1988 STOCK OPTION PLAN
                  1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
                           (Full titles of the Plans)

                                   ----------

                           WILLIAM H. RASTETTER, PH.D.
                 CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                        IDEC PHARMACEUTICALS CORPORATION
                    11011 TORREYANA ROAD, SAN DIEGO, CA 92121
                     (Name and address of agent for service)
                                 (619) 550-8500
          (Telephone number, including area code, of agent for service)

                                   ----------

                         CALCULATION OF REGISTRATION FEE


<TABLE>
<CAPTION>
                                                                  Proposed             Proposed
                                                                   Maximum              Maximum
                                         Amount to be           Offering Price     Aggregate Offering       Amount of
Title of Securities to be Registered    Registered(1)            per Share(2)           Price(2)          Registration Fee
===================================================================================================================================
<S>                                     <C>                     <C>                <C>                   <C>
Amended and Restated 1988 Stock
Option Plan

Common Stock, $0.001 par value          855,000 shares          $        19.50       $   16,672,500       $     4,918.39
                                                                --------------       --------------       --------------

1993 Non-Employee Directors
Stock Option Plan

Common Stock, $0.001 par value          120,000 shares          $        19.50       $    2,340,000       $       630.30
                                                                --------------       --------------       --------------

                                                                                   Aggregate Filing Fee:  $     5,548.69
                                                                                                          --------------

===================================================================================================================================
</TABLE>


(1)     This Registration Statement shall also cover any additional shares of
        Common Stock which become issuable under the Amended and Restated 1988
        Stock Option Plan and/or the 1993 Non-Employee Director 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, (the "1933 Act") on the basis of the
        average of the high and low selling prices per share of Registrant's
        Common Stock on August 31, 1998 as reported by the Nasdaq National
        Market.




<PAGE>   2

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

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

     (a)  The Registrant's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1997 filed with the Commission on February 27, 1998, as
          amended on Form 10-K/A filed with the Commission on March 3, 1998,
          pursuant to Section 13 of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act");

     (b)  The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
          ended June 30, 1998 filed with the Commission on August 14, 1998
          pursuant to Section 13 of the Exchange Act;

     (c)  The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
          ended March 31, 1998 filed with the Commission on May 15, 1998
          pursuant to Section 13 of the Exchange Act; and

     (d)  The Registrant's Registration Statement No. 0-19311 on Form 8-B filed
          with the Commission on June 2, 1997, in which there is described the
          terms, rights and provisions applicable to the Registrant's
          outstanding Common Stock.

     All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which is also deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.


ITEM 4. DESCRIPTION OF SECURITIES

     Not applicable.


ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

     Not applicable.




<PAGE>   3

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Registrant's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except for liability
for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law or (iv) any transaction from which
the director derived an improper personal benefit.

     The Registrant's Bylaws provide that the Registrant shall indemnify its
directors and may indemnify its officers and employees and other agents to the
fullest extent permitted by law. The Registrant believes that indemnification
under its Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. The Registrant's Bylaws also permit it to secure insurance
on behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in such capacity, regardless of whether the
Bylaws have the power to indemnify him or her against such liability under the
General Corporation Law of Delaware. The Registrant currently has secured such
insurance on behalf of its directors and officers.

     The Registrant has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in the
Registrant's Bylaws. These agreements, among other things, indemnify the
Registrant's directors and executive officers for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Registrant, arising out of such person's services as a director or executive
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant. The Registrant believes that these provisions and agreements are
necessary to attract and retain qualified persons as directors and executive
officers.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED

     Not applicable.

ITEM 8. EXHIBITS


<TABLE>
<CAPTION>
   Exhibit Number         Exhibit
   --------------         -------
<S>                       <C>
     4                    Instruments Defining Rights of Stockholders.  Reference is made to Registrant's Registration
                          Statement No. 0-19311 on Form 8-B, including exhibits thereto, which is incorporated herein
                          by reference pursuant to Item 3(c).
     5.1                  Opinion of Brobeck, Phleger & Harrison LLP.
     23.1                 Consent of Independent Auditors - KPMG Peat Marwick LLP.
     23.2                 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.1.
     24                   Power of Attorney.  Reference is made to page II-4 of this Registration Statement.
     99.1                 Amended and Restated 1988 Stock Option Plan (Amended and Restated February 20, 1998).
     99.2*                Form of Notice of Grant.
     99.3*                Form of Stock Option Agreement.
     99.4                 1993 Non-Employee Directors Stock Option Plan (Amended and Restated February 20, 1998).
     99.5**               Form of Notice of Grant of Automatic Stock Option (New Director).
     99.6**               Form of Notice of Grant of Automatic Stock Option (Continuing Director).
     99.7**               Form of Stock Option Agreement.
</TABLE>




                                      II-2

<PAGE>   4

*    Exhibits 99.22 and 99.3 are incorporated herein by reference to Exhibits
     28.2 and 28.3, respectively, of Registrant's Registration Statement No.
     33-45172 on Form S-8 which was filed with the Commission on January 21,
     1992.

**   Exhibits 99.5, 99.6 and 99.7 are incorporated herein by reference to
     Exhibits 99.2, 99.3 and 99.4, respectively, of Registrant's Registration
     Statement No. 33-93794 on Form S-8 which was filed with the Commission on
     June 25, 1995.


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 Exchange 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 amendment any of
the securities being registered which remain unsold at the termination of the
Registrant's Amended and Restated 1988 Stock Option Plan and/or 1993
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 Exchange 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 indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.



                                      II-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 San Diego, State of California, on this 31st day of
August, 1998.

                                            IDEC PHARMACEUTICALS CORPORATION


                                            By /s/WILLIAM H. RASTETTER, PH.D.
                                               ---------------------------------
                                               William H. Rastetter, Ph.D.
                                               Chairman, President and Chief 
                                               Executive Officer

                                POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

     That the undersigned officers and directors of IDEC Pharmaceuticals
Corporation, a Delaware corporation, do hereby constitute and appoint William H.
Rastetter and Phillip M. Schneider, and each of them, the lawful attorneys and
agents, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and any one of
them, determines may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, and 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>
Signatures                                  Title                                             Date
- ----------                                  -----                                             ----

<S>                                         <C>                                               <C>
/s/WILLIAM H. RASTETTER, PH.D.              Chairman, President and                           August 31, 1998
- ------------------------------              Chief Executive Officer                                 
William H. Rastetter, Ph.D.                 (Principal Executive Officer)
                                            


/S/PHILLIP M. SCHNEIDER                     Vice President and Chief                          August 31, 1998
- --------------------------------------      Financial Officer (Principal                            
Phillip M. Schneider                        Financial and Accounting Officer)
                                            
</TABLE>




                                      II-4

<PAGE>   6


<TABLE>
<CAPTION>
Signatures                                  Title                                             Date
- ----------                                  -----                                             ----

<S>                                         <C>                                               <C>
/S/CHARLES C. EDWARDS, M.D.                 Director                                          August 31, 1998
- --------------------------------------                                                              
Charles C. Edwards, M.D.



/S/ALAN B. GLASSBERG, M.D.                  Director                                          August 31, 1998
- --------------------------------------                                                              
Alan B. Glassberg, M.D.



                                            Director                                          August   , 1998
- --------------------------------------                                                              ----
John Groom



                                            Director                                          August   , 1998
- --------------------------------------                                                              ----
Kazuhiro Hashimoto



/S/FRANKLIN P. JOHNSON, JR.                 Director                                          August 31, 1998
- --------------------------------------                                                              
Franklin P. Johnson, Jr.



/S/LYNN SCHENK                              Director                                          August 31, 1998
- --------------------------------------                                                             
Lynn Schenk



/S/WILLIAM D. YOUNG                         Director                                          August 31, 1998
- --------------------------------------                                                              
William D. Young



/S/ROBERT W. PANGIA                         Director                                          August 31, 1998
- --------------------------------------                                                              
Robert W. Pangia



/S/BRUCE R. ROSS                            Director                                          August 31, 1998
- --------------------------------------                                                              
Bruce R. Ross
</TABLE>




                                      II-5

<PAGE>   7

                                  EXHIBIT INDEX



<TABLE>
<CAPTION>
   Exhibit Number         Exhibit
   --------------         -------
<S>                       <C>
     4                    Instruments Defining Rights of Stockholders.  Reference is made to Registrant's Registration
                          Statement No. 0-19311 on Form 8-B, including exhibits thereto, which is incorporated herein
                          by reference pursuant to Item 3(c).
     5.1                  Opinion of Brobeck, Phleger & Harrison LLP.
     23.1                 Consent of Independent Auditors - KPMG Peat Marwick LLP.
     23.2                 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.1.
     24                   Power of Attorney.  Reference is made to page II-4 of this Registration Statement.
     99.1                 Amended and Restated 1988 Stock Option Plan (Amended and Restated February 20, 1998).
     99.2*                Form of Notice of Grant.
     99.3*                Form of Stock Option Agreement.
     99.4                 1993 Non-Employee Directors Stock Option Plan (Amended and Restated February 20, 1998).
     99.5**               Form of Notice of Grant of Automatic Stock Option (New Director).
     99.6**               Form of Notice of Grant of Automatic Stock Option (Continuing Director).
     99.7**               Form of Stock Option Agreement.
</TABLE>


*    Exhibits 99.2 and 99.3 are incorporated herein by reference to Exhibits
     28.2 and 28.3, respectively, of Registrant's Registration Statement No.
     33-45172 on Form S-8 which was filed with the Commission on January 21,
     1992.

**   Exhibits 99.5, 99.6 and 99.7 are incorporated herein by reference to
     Exhibits 99.2, 99.3 and 99.4, respectively, of Registrant's Registration
     Statement No. 33-93794 on Form S-8 which was filed with the Commission on
     June 25, 1995.








<PAGE>   1

                                                                     EXHIBIT 5.1

                                August 31 , 1998

IDEC Pharmaceuticals Corporation
11011 Torreyana Road
San Diego, CA  92121

     Re:  IDEC Pharmaceuticals Corporation Registration Statement on Form S-8
          for 975,000 Shares of Common Stock and Related Stock Options

Ladies and Gentlemen:

     We have acted as counsel to IDEC Pharmaceuticals Corporation, 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
(i) an additional 855,000 shares of common stock for issuance under the
Company's Amended and Restated 1988 Stock Option Plan (the "Incentive Plan") and
(ii) an additional 120,000 shares of common stock for issuance under the 1993
Non-Employee Directors Stock Option Plan (the "Non-Employee Directors Plan").

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

     We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment and
amendment of the Incentive Plan and the Non-Employee Director Plan. Based on
such review, we are of the opinion that, if, as and when the shares of common
stock are issued
 and sold (and the consideration therefor received) pursuant to
(a) the provisions of option agreements duly authorized under the Incentive Plan
and in accordance with the Registration Statement, (b) duly authorized direct
stock issuances effected in accordance with the provisions of the Incentive Plan
and the Registration Statement or (c) the provisions of the Non-Employee
Director Plan and the option agreements authorized thereunder and in accordance
with the Registration Statement, such shares will be duly authorized, legally
issued, fully paid and non-assessable.

     We consent to the filing of this opinion letter as Exhibit 5.1 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
Incentive Plan or the Non-Employee Director Plan or the shares of common stock
issuable under such plans.

                                            Very truly yours,

                                            /s/ BROBECK, PHLEGER & HARRISON LLP

                                            BROBECK, PHLEGER & HARRISON LLP






<PAGE>   1

                                                                    EXHIBIT 23.1



                          INDEPENDENT AUDITORS' CONSENT




The Board of Directors
IDEC Pharmaceuticals Corporation:


     We consent to the use of our report incorporated herein by reference in the
registration statement on Form S-8 of IDEC Pharmaceuticals Corporation.


                                            /s/ KPMG PEAT MARWICK LLP

                                            KPMG PEAT MARWICK LLP




San Diego, California
August 31, 1998








<PAGE>   1
                                                                    EXHIBIT 99.1

                        IDEC PHARMACEUTICALS CORPORATION
                             1988 STOCK OPTION PLAN

                (AMENDED AND RESTATED THROUGH FEBRUARY 20, 1998)


     I. PURPOSES OF THE PLAN

          (a) This Stock Option Plan (the "Plan") is intended to promote the
interests of IDEC Pharmaceuticals Corporation, a Delaware corporation (the
"Corporation"), by providing a method whereby (i) key employees (including
officers and directors) of the Corporation (or its parent or subsidiary
corporations) responsible for the management, growth and financial success of
the Corporation (or its parent or subsidiary corporations), (ii) the
non-employee members of the Corporation's Board of Directors (or any parent or
subsidiary corporations) and (iii) independent consultants and advisors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations) may be offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation and continue to render services to the Corporation
(or its parent or subsidiary corporations).

          (b) The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:

                         (i) Any
 corporation (other than the Corporation) in an
                    unbroken chain of corporations ending with the Corporation
                    shall be considered to be a PARENT corporation of the
                    Corporation, provided each such corporation in the unbroken
                    chain (other than the Corporation) owns, at the time of the
                    determination, stock possessing fifty percent (50%) or more
                    of the total combined voting power of all classes of stock
                    in one of the other corporations in such chain.

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

     II. ADMINISTRATION OF THE PLAN

          (a) The Corporation's Board of Directors (the "Board") shall appoint a
committee ("Committee") of two (2) or more non-employee Board members to assume
full responsibility for the administration of the Plan. Members of the Committee
shall serve for such period of time as the Board may determine and shall be
subject to removal by the Board at any time.




<PAGE>   2

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

     III. ELIGIBILITY FOR OPTION GRANTS

          (a) The persons eligible to receive option grants under the Plan are
as follows:

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

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

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

          (b) The Plan Administrator shall have full authority to determine
which eligible individuals are to receive option grants under the Plan, the
number of shares to be covered by each such grant, whether the granted option is
to be an incentive stock option ("Incentive Option") which satisfies the
requirements of Section 422 of the Internal Revenue Code or a non-statutory
option not intended to meet such requirements, the time or times at which each
such option is to become exercisable, and the maximum term for which the option
is to be outstanding.

     IV. STOCK SUBJECT TO THE PLAN

          (a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The maximum
number of shares which may be issued under the Plan shall not exceed 6,335,000
shares.* The total number of shares

- --------

* Adjusted to reflect (i) the 1 for 2.5 reverse Common Stock split effected by
the Company on August 18, 1991, (ii) the 670,000 share increase authorized by
the Board on March 18, 1992 and approved by the shareholders at the 1992 Annual
Meeting, (iii) the 700,000 share increase 



                                       2.

<PAGE>   3

issuable under the Plan shall be subject to adjustment from time to time in
accordance with Section IV(d) of the Plan.

          (b) In no event may the aggregate number of shares of Common Stock for
which any one individual participating in the Plan may be granted stock options
and separately exercisable stock appreciation rights exceed 1,250,000 shares in
the aggregate over the remaining term of the Plan, subject to adjustment from
time to time in accordance with Section IV(d) of the Plan. For purposes of such
limitation, no stock options or stock appreciation rights granted prior to
January 1, 1994 shall be taken into account.

          (c) Should an option expire or terminate for any reason prior to
exercise in full (including options cancelled in accordance with the
cancellation-regrant provisions of Section VIII of the Plan), the shares subject
to the portion of the option not so exercised shall be available for subsequent
option grants under the Plan. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the option 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 option grants under the Plan. Shares subject to any option
cancelled in accordance with Section IX of the Plan shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grants under this Plan. In addition, should the exercise price
of an outstanding 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 actually issued
to the option holder.

          (d) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, then appropriate
adjustments shall be made to (I) the maximum number and/or class of securities
issuable under the Plan, (II) the maximum number and/or class of securities

- ----------

authorized by the Board on January 13, 1993 and approved by the shareholders at
the 1993 Annual Meeting, (iv) the 650,000 share increase authorized by the Board
on February 28, 1994 and approved by the shareholders at the 1994 Annual
Meeting, (v) the 500,000 share increase authorized by the Board on January 25,
1995, and approved by the shareholders at the 1995 Annual Meeting, (vi) the
1,200,000 share increase authorized by the Board on January 24, 1996, and
approved by the shareholders at the 1996 Annual Meeting, (vii) the 800,000 share
increase authorized by the Board on February 24, 1997, and approved by the
shareholders at the 1997 Annual Meeting and (viii) the 855,000 share increase
authorized by the Board on February 20, 1998, subject to shareholder approval at
the 1998 Annual Meeting. In no event, however, shall more than 4,993,901 shares
of Common Stock be issued under the Plan after February 28, 1998, subject to
adjustment under Section IV(d) in the event of changes in the Company's capital
structure.



                                       3.

<PAGE>   4

for which stock options and separately exercisable stock appreciation rights may
be granted to any one participant in the aggregate after December 31, 1993 and
(III) the number and/or class of securities and exercise price per share in
effect under each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

     V. TERMS AND CONDITIONS OF OPTIONS

          Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees (as defined in Section V.3.D below) may only be granted non-statutory
options. Each granted option shall be evidenced by one or more instruments in
the form approved by the Plan Administrator; provided, however, that each such
instrument shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section VI.

               1. Option Price.

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

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

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

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

                         (iii) full payment through a combination of shares of
                    Common Stock held by the optionee for the requisite period
                    necessary to avoid a charge to the Corporation's reported
                    earnings and valued at fair market value on the Exercise
                    Date and cash or check payable to the Corporation; or

                         (iv) full payment effected through a broker-dealer sale
                    and remittance procedure pursuant to which the optionee
                    shall provide irrevocable instructions (I) to a
                    Corporation-designated brokerage firm to (A) effect the
                    immediate sale of a sufficient number of the purchased
                    shares to enable such firm



                                       4.

<PAGE>   5

                    to remit to the Corporation, out of the sale proceeds
                    available on the settlement date, sufficient funds to cover
                    the aggregate option price payable for the purchased shares
                    plus all applicable Federal and State income and employment
                    taxes required to be withheld by the Corporation in
                    connection with such purchase and (B) remit those funds to
                    the Corporation on the settlement date, and (II) to the
                    Corporation to deliver the certificates for the purchased
                    shares directly to such brokerage firm.

                    For purposes of this subparagraph B, the Exercise Date shall
be the date on which written notice of the option exercise is received by the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.

                    C. The fair market value per share of Common Stock on any
relevant date under subparagraph A or B (and for all other valuation purposes
under the Plan) shall be determined in accordance with the following provisions:

                         (i) If the Common Stock is not at the time listed or
                    admitted to trading on any national stock exchange but is
                    traded on the Nasdaq National Market, the fair market value
                    shall be the closing selling price per share of Common Stock
                    on the date in question, as reported by the National
                    Association of Securities Dealers on the Nasdaq National
                    Market. If there is no reported closing selling price for
                    the Common Stock on the date in question, then the closing
                    selling price on the last preceding date for which such
                    quotation exists shall be determinative of fair market
                    value.

                         (ii) If the Common Stock is at the time listed or
                    admitted to trading on any national 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 reported sale of Common Stock
                    on such exchange on the date in question, then the fair
                    market value shall be the closing selling price on the
                    exchange on the last preceding date for which such quotation
                    exists.

               2. Term and Exercise of Options. Each option granted under the
Plan 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 instrument evidencing such option; provided, however, that no such
option shall have a term in excess of ten (10) years from the grant date.



                                       5.

<PAGE>   6

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

               4. Effect of Termination of Service.

                    A. Should an optionee cease to remain in Service (as defined
in subparagraph D below) for any reason (including death or permanent disability
as defined in Section 22(e)(3) of the Internal Revenue Code) while the holder of
one or more outstanding options granted to such optionee under the Plan, then
such option or options shall not (except to the extent otherwise provided
pursuant to Section XI below) remain exercisable for more than a thirty-six
(36)-month period (or such shorter period determined by the Plan Administrator
and specified in the instrument evidencing the grant) following the date of such
cessation of Service. Under no circumstances, however, shall any such option be
exercisable after the specified expiration date of the option term. Each such
option shall, during such thirty-six (36)-month or shorter period, be
exercisable only to the extent of the number of shares (if any) for which the
option is exercisable on the date of the optionee's cessation of Service. Upon
the expiration of such thirty-six (36)-month or shorter period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be exercisable. However, the option shall, immediately upon the optionee's
cessation of Service for any reason, terminate and cease to be outstanding for
any option shares for which the option is not otherwise at that time
exercisable.

                    B. Any outstanding option held by the optionee and
exercisable in whole or in part on the date of his or her death may be
subsequently exercised, but only to the extent of the number of shares (if any)
for which the option is exercisable on the date of the optionee's cessation of
Service (less any option shares subsequently purchased by the optionee prior to
death), by the personal representative of the optionee's estate or by the person
or persons to whom the option is transferred pursuant to the optionee's will or
in accordance with the laws of descent and distribution. The right to exercise
the option for those shares shall terminate upon the earlier of (i) the third
anniversary of the date of the optionee's cessation of Service or (ii) the
specified expiration date of the option term.

                    C. Notwithstanding subparagraphs A and B above, the Plan
Administrator shall have complete discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to permit
one or more options held by the optionee under the Plan to be exercised, during
the limited period of exercisability provided under



                                       6.

<PAGE>   7

Section V.4.A above, not only with respect to the number of shares for which
each such option is exercisable at the time of the optionee's cessation of
Service but also with respect to one or more subsequent installments for which
the option would otherwise have become exercisable had such cessation of Service
not occurred.

               D. For purposes of the foregoing provisions of this Section V.4
(and all other provisions of the Plan), the optionee shall be deemed to remain
in the SERVICE of the Corporation for so long as such individual renders
services on a periodic basis to the Corporation or any parent or subsidiary
corporation in the capacity of an Employee, a non-employee member of the board
of directors or an independent consultant or advisor, unless the option
agreement evidencing the option grant and/or the purchase agreement evidencing
the purchased option shares specifically provides otherwise. The optionee shall
be considered to be an EMPLOYEE for so long as such individual remains in the
employ of the Corporation or one or more of its parent or subsidiary
corporations, subject to the control and direction of the employer entity as to
the work to be performed and as to the manner and method of performance.

          5. Stockholder Rights. An optionee shall have none of the rights of a
stockholder with respect to any shares covered by the option until such
individual shall have exercised the option and paid the option price for the
purchased shares.

          6. Repurchase Rights. Unvested shares of Common Stock may be issued
under the Plan which are subject to repurchase by the Corporation in accordance
with the following provisions:

               (a) Upon the optionee's cessation of Service while holding
          unvested shares under the Plan, the Corporation shall have the right
          to repurchase any or all of those unvested shares at the option price
          paid per share. The terms and conditions upon which such repurchase
          right shall be exercisable (including the period and procedure for
          exercise and the appropriate vesting schedule for the purchased
          shares) shall be established by the Plan Administrator and set forth
          in the instrument evidencing such repurchase right.

               (b) All of the Corporation's outstanding repurchase rights shall
          automatically terminate, and all shares subject to such terminated
          rights shall immediately vest in full, upon the occurrence of any
          Corporate Transaction under Section VII of this Plan, except to the
          extent: (i) any such repurchase right is to be assigned to the
          successor corporation (or parent thereof) in connection with the
          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.



                                       7.

<PAGE>   8

               (c) The Plan Administrator shall have the discretionary
          authority, exercisable either before or after the optionee's cessation
          of Service, to cancel the Corporation's outstanding repurchase rights
          with respect to any or all unvested shares purchased or purchasable by
          the optionee under the Plan and thereby accelerate the vesting of
          those shares in whole or in part at any time.

     VI. INCENTIVE OPTIONS.

          The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees. Options which are specifically designated as
"non-statutory" options when issued under the Plan shall not be subject to such
terms and conditions.

          (a) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the date
of grant.

          (b) Dollar Limitation. The aggregate fair market value (determined as
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option plan
of the Corporation or its parent or subsidiary corporations) may for the first
time become exercisable as incentive stock options under the Federal tax laws
during any one calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). To the extent the Employee holds two or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as incentive stock
options under the Federal tax laws shall be applied on the basis of the order in
which such options are granted. Should the number of shares of Common Stock for
which an Incentive Option first becomes exercisable in any calendar year exceed
the applicable One Hundred Thousand Dollar ($100,000) limitation, the option may
nevertheless be exercised for those excess shares in such calendar year as a
non-statutory option.

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

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



                                       8.

<PAGE>   9

     VII. CORPORATE TRANSACTION/CHANGE IN CONTROL

          (a) In the event of any of the following transactions (a "Corporate
Transaction"):

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

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

                         (iii) any reverse merger in which the Corporation is
                    the surviving entity but in which fifty percent (50%) or
                    more of the Corporation's outstanding voting stock is
                    transferred to persons different from those who held the
                    stock immediately prior to such merger,

          each outstanding option under the Plan shall automatically accelerate
so that each such option shall, immediately prior to the specified effective
date for the Corporate Transaction, become exercisable for the total number of
shares of Common Stock at the time subject to such option and may be exercised
for all or any portion of those shares as fully-vested shares of Common Stock.
However, an outstanding option under the Plan 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 be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof or (ii) the acceleration of such option
is subject to other applicable limitations imposed by the Plan Administrator at
the time of grant. The determination of comparability under clause (i) above
shall be made by the Plan Administrator and its determination shall be final,
binding and conclusive.

          (b) Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided the aggregate
option price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan on both an
aggregate and per participant basis shall be appropriately adjusted to reflect
the effect of the Corporate Transaction upon the Corporation's capital
structure.



                                       9.

<PAGE>   10

          (c) In connection with any Change in Control (as defined below), the
Plan Administrator shall have full power and authority, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of each outstanding
option under the Plan so that each such option shall, immediately prior to the
effective date of the Change in Control, become exercisable for the total number
of shares at the time subject to such option and may be exercised for all or any
portion of those shares as fully-vested shares of Common Stock. The Plan
Administrator shall also have full power and authority to condition such option
acceleration, and the termination of any of the Corporation's repurchase rights
with respect to any unvested shares purchased or purchasable under the Plan,
upon the subsequent termination of the optionee's Service within a designated
period following the Change in Control.

          A CHANGE IN CONTROL shall be deemed to occur in the event:

                         (i) twenty-five percent (25%) or more of the
                    Corporation's outstanding voting stock is acquired pursuant
                    to a tender or exchange offer (A) which is made directly to
                    the Corporation's stockholders 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) and (B) which
                    the Board does not recommend the stockholders to accept; or

                         (ii) there is a change in the composition of the Board
                    over a period of twenty-four (24) consecutive months or less
                    such that a majority of the Board members ceases, by reason
                    of one or more proxy contests for the election of Board
                    members, 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.

          (d) Immediately following the consummation of a Corporate Transaction,
all outstanding options under the Plan shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company. Upon a Change in Control, each outstanding option accelerated
pursuant to subsection VII(c) above shall remain fully exercisable until the
expiration or sooner termination of the option term specified in the agreement
evidencing such grant.

          (e) The exercisability as incentive stock options under the Federal
tax laws of any options accelerated in connection with a Corporate Transaction
or Change in Control shall remain subject to the dollar limitation of Section
VI(b) of the Plan. To the extent such dollar limitation is exceeded, the
accelerated option shall be exercisable as a non-statutory option under the
Federal tax laws.



                                       10.

<PAGE>   11

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

     VIII. CANCELLATION AND REGRANT OF OPTIONS

          The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than (i) eighty-five percent (85%) of the fair market value per share of the
Common Stock on the new grant date or (ii) one hundred percent (100%) of such
fair market value in the case of an Incentive Option or (iii) one hundred and
ten percent (110%) of such fair market value in the case of an Incentive Option
granted to a 10% Stockholder.

     IX. STOCK APPRECIATION RIGHTS

          (a) Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
IX, one or more optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under the Plan in exchange for a distribution from the
Corporation in an amount equal to the excess of (i) the fair market value (on
the option surrender date) of the number of shares in which the optionee is at
the time vested under the surrendered option (or surrendered portion thereof)
over (ii) the aggregate option price payable for such vested shares.

          (b) No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the optionee shall accordingly become entitled under this
Section IX may be made in shares of Common Stock valued at fair market value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.

          (c) 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
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.

          (d) One or more officers of the Corporation subject to the short-swing
profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan.



                                       11.

<PAGE>   12

Upon the occurrence of a Hostile Take-Over, each outstanding option with such a
limited stock appreciation right shall automatically be cancelled, to the extent
such option is at the time exercisable for fully-vested shares of Common Stock
(including any shares which may vest in connection with such Hostile Take-Over).
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
vested shares of Common Stock at the time subject to the cancelled option (or
cancelled portion of such option) over (ii) the aggregate exercise price payable
for such shares. The cash distribution payable upon such cancellation shall be
made within five (5) days following the consummation of the Hostile Take-Over.
The Plan Administrator shall pre-approve, at the time the limited stock
appreciation right is granted, the subsequent exercise of that right in
accordance with the terms of the grant and the provisions of this Section IX(d).
No additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option cancellation and cash distribution. The balance
of the option (if any) shall continue to remain outstanding and exercisable in
accordance with the terms and conditions of the instrument evidencing such
grant.

          (e) For purposes of Section IX(d), the following definitions shall be
in effect:

               A HOSTILE TAKE-OVER shall be deemed to occur in the event any
          person or related group of persons (other than the Corporation or a
          person that directly or indirectly controls, is controlled by, or is
          under common control with, the Corporation) directly or indirectly
          acquires beneficial ownership (within the meaning of Rule 13d-3 of the
          Securities Exchange Act of 1934) of securities possessing more than
          twenty-five percent (25%) 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.

               The TAKE-OVER PRICE per share shall be deemed to be equal to the
          greater of (a) the fair market value per share on the date of
          cancellation, as determined pursuant to the valuation provisions of
          Section V.1.C, or (b) the highest reported price per share paid by the
          acquiring entity in effecting such Hostile Take-Over. However, to the
          extent the cancelled option is an Incentive Option, the Take-Over
          Price shall not exceed the clause (a) price per share.

          (f) The shares of Common Stock subject to any option surrendered or
cancelled for an appreciation distribution pursuant to this Section IX shall NOT
be available for subsequent option grant under the Plan.

     X. LOANS OR INSTALLMENT PAYMENTS

          The Plan Administrator may, in its discretion, assist any optionee
(including any officer or director of the Corporation) in the exercise of one or
more options granted to such individual under the Plan, including the
satisfaction of any Federal and State income and employment tax obligations
arising therefrom, by (i) authorizing the extension of a loan from the



                                       12.

<PAGE>   13

Corporation to such optionee or (ii) permitting the optionee to pay the option
price for the purchased Common Stock in installments over a period of years. The
terms of any such loan or installment method of payment (including the interest
rate and terms of repayment) will be upon such terms as the Plan Administrator
specifies in the applicable option agreement or otherwise deems appropriate
under the circumstances. Loans or installment payments may be granted with or
without security or collateral (other than to individuals who are independent
consultants or advisors, in which event the loan must be adequately secured by
collateral other than the purchased shares). However, the maximum credit
available to the optionee may not exceed the option price of the acquired shares
(less the par value of those shares) plus any Federal and State income and
employment tax liability incurred by the optionee in connection with the
exercise of the option.

     XI. EXTENSION OF EXERCISE PERIOD

          The Plan Administrator shall have full power and authority, to extend
the period of time for which the option is to remain exercisable following the
optionee's cessation of Service from the thirty-six (36) month or shorter period
set forth in the option agreement to such greater period of time as the Plan
Administrator shall deem appropriate. In no event, however, shall such option be
exercisable after the specified expiration date of the option term.

     XII. 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 whatsoever; provided, however,
that no such amendment or modification shall, without the consent of the
holders, adversely affect rights and obligations with respect to options at the
time outstanding under the Plan. In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.

     XIII. EFFECTIVE DATE AND TERM OF PLAN

          (a) The Plan was initially adopted by the Board on July 19, 1988 and
approved by the Corporation's stockholders on March 29, 1989. The Plan was
subsequently amended by the Board on July 18, 1990, and such amendment was
approved by the Corporation's stockholders in October, 1990. In January 1991,
the Plan was again amended to increase by 480,000 shares the number of shares of
Common Stock issuable under the Plan, and such share increase was approved by
the Corporation's stockholders on March 20, 1991. The Board further amended the
Plan on May 22, 1991, with such amendments to become effective as of the date
the Corporation's Common Stock first became traded on the Nasdaq National
Market, in order to revise certain provisions previously required when the Plan
was subject to the permit requirements of the California Corporations
Department. On March 18, 1992, the Plan was amended and restated in its
entirety, including an increase of 670,000 shares to the number of shares of
Common Stock issuable thereunder. The 1992 restatement, including the
670,000-share increase, was approved by the stockholders at the 1992 Annual
Meeting. On January 13, 1993, the Board amended the Plan to increase by an
additional 700,000 shares the number of shares of



                                       13.

<PAGE>   14

Common Stock issuable under the Plan, and such share increase was approved by
the stockholders at the 1993 Annual Meeting. On February 28, 1994, the Board
amended the Plan to increase by an additional 650,000 shares the number of
shares of Common Stock issuable under the Plan, and such increase was approved
by the stockholders at the 1994 Annual Meeting. On January 25, 1995, the Board
amended the Plan to increase by an additional 500,000 shares the number of
shares of Common Stock issuable under the Plan, and such increase was approved
by the stockholders at the 1995 Annual Meeting. On January 24, 1996, the Board
adopted an amendment which increased the number of shares of Common Stock
issuable under the Plan by an additional 1,200,000 shares, and such increase was
approved by the stockholders at the 1996 Annual Meeting.

          On February 24, 1997, the Board adopted a series of amendments to the
Plan (the "1997 Amendments") which (i) increased the number of shares of Common
Stock reserved for issuance over the term of the Plan by an additional 800,000
shares, (ii) rendered non-employee Board members serving as Plan Administrator
eligible to receive option grants under the Plan, (iii) allowed 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, (iv) removed
certain restrictions on the eligibility of non-employee Board members to serve
as Plan Administrator, (v) extended the term of the Option Plan from July 19,
1998 to December 31, 2002 and (vi) effected a series of additional changes to
the provisions of the Plan (including the stockholder approval requirements, the
transferability of non-statutory stock options and the elimination of the six
(6)-month holding period requirement as a condition to the exercise of stock
appreciation rights) in order to take advantage of the recent amendments to Rule
16b-3 of the 1934 Act which exempts certain officer and director transactions
under the Plan from the short-swing liability provisions of the federal
securities laws. The 1997 Amendments were approved by the Corporation's
stockholders at the 1997 Annual Meeting.

          On February 20, 1998, the Board authorized an increase of 855,000
shares of Common Stock to the share reserve under the Plan, and the stockholders
approved such increase at the 1998 Annual Meeting.

          (b) The provisions of the 1992 restatement and of each subsequent
amendment to the Plan shall apply only to stock options and stock appreciation
rights granted under the Plan from and after the applicable effective date of
such restatement or amendment. All stock options and stock appreciation rights
issued and outstanding under the Plan immediately prior to each such effective
date shall continue to be governed by the terms and conditions of the Plan (and
the respective agreements evidencing each such option or stock appreciation
right) as in effect on the date each such option or stock appreciation right was
previously granted, and nothing in the 1992 restatement or in any subsequent
amendment shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such prior options or stock appreciation rights
with respect to their acquisition of shares of Common Stock under such options
or their exercise of such stock appreciation rights. However, the Plan
Administrator may, in its discretion, modify stock option or stock appreciation
right issued and outstanding immediately prior to the effective



                                       14.

<PAGE>   15


date of the 1992 restatement or any subsequent amendment to include one or more
provisions to the Plan added by such restatement or amendment.

          (c) Unless sooner terminated in accordance with Section VII, the Plan
shall terminate upon the earlier of (i) December 31, 2002 or (ii) the date on
which all shares available for issuance under the Plan shall have been issued or
cancelled pursuant to the exercise, surrender of cash-out of the stock options
and stock appreciation rights granted hereunder. If the date of termination is
determined under clause (i) above, then each stock option or stock appreciation
right outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
grant.

          (d) Options may be granted under this Plan to purchase shares of
Common Stock 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 stockholder approval is obtained for a sufficient increase in the
number of shares available for issuance under the Plan. If such stockholder
approval is not obtained within twelve (12) months after the date the first such
excess option grants are made, then (I) any unexercised excess options shall
terminate and cease to be exercisable and (II) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.

     XIV. USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.

     XV. REGULATORY APPROVALS

          The implementation of the Plan, the granting of any stock option or
stock appreciation right hereunder, and the issuance of stock upon the exercise
of any such option or stock appreciation right shall be subject to the
procurement by the Corporation of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options and stock
appreciation rights granted under it and the stock issued pursuant to it.



                                       15.



<PAGE>   1
                                                                    EXHIBIT 99.4

                        IDEC PHARMACEUTICALS CORPORATION

                  1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
                  ---------------------------------------------
                (AMENDED AND RESTATED THROUGH FEBRUARY 20, 1998)

     I. PURPOSE OF THE PLAN

          This 1993 Non-Employee Directors Stock Option Plan (the "Plan") is
intended to promote the interests of IDEC Pharmaceuticals Corporation, a
Delaware corporation (the "Corporation"), by providing the non-employee members
of the Corporation's Board of Directors 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.

     II. DEFINITIONS

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

               BOARD: the Corporation's Board of Directors.

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

               COMMON STOCK: shares of the Corporation's common stock.

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

               a. 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 Securities Exchange Act of 1934, as
          amended) of securities possessing fifty percent (50%) or more 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; or

               b. there is a change in the composition of the Board over a
          period of twenty-four (24) consecutive months or less such that a
          majority of the Board members ceases, by reason of one or more proxy
          contests for the election of Board members, 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.




<PAGE>   2

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

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

               b. the sale, transfer or other disposition of all or
          substantially all of the assets of the Corporation in complete
          liquidation or dissolution of the Corporation, or

               c. any reverse merger in which the Corporation is the surviving
          entity but in which securities possessing fifty percent (50%) or more
          of the total combined voting power of the Corporation's outstanding
          securities are transferred to person or persons different from those
          who held such securities immediately prior to such merger.

          EFFECTIVE DATE: September 14, 1993, the date on which the Plan was
adopted by the Board. This restatement of the Plan has an effective date of
February 20, 1998, the date of adoption by the Board, but such restatement is
subject to stockholder approval at the 1998 Annual Meeting.

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

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

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



                                       2.

<PAGE>   3

          HOSTILE TAKE-OVER: the direct or indirect acquisition by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing fifty
percent (50%) or more 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.

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

          OPTIONEE: any person to whom an option is granted under the Plan.

          PERMANENT DISABILITY OR PERMANENTLY DISABLED: 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.

          SERVICE: the performance of services as a member of the Board.

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

     III. ADMINISTRATION OF THE PLAN

          The terms and conditions of each automatic option grant (including the
timing and pricing of the option grant) shall be determined by the express terms
and conditions 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.

     IV. STOCK SUBJECT TO THE PLAN

          A. Shares of the Corporation's Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 370,000 shares(1), subject to adjustment
from time to time in accordance with the provisions of this Article IV.

- --------

(1)  Includes the 120,000-share increase authorized by the Board on February 20,
     1998, subject to stockholder approval at the 1998 Annual Meeting.



                                       3.

<PAGE>   4

          B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grants under the Plan. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the option 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 option grants under the Plan. Shares subject to any option or
portion thereof surrendered in accordance with Article VII shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grants under the Plan. In addition, should the exercise price
of an outstanding 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 actually issued
to the option holder.

          C. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
for which automatic option grants are to be subsequently made per each newly-
elected or continuing non-employee Board member under the Plan, and (iii) the
number and/or class of securities and price per share in effect under each
option outstanding under the 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
Board shall be final, binding and conclusive.

     V. ELIGIBILITY

          A. Eligible Optionees. The individuals eligible to receive automatic
option grants pursuant to the provisions of this Plan shall be limited to (i)
those individuals who are first elected or appointed as non-employee Board
members after the Effective 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 such Effective Date,
whether or not they commenced Board service prior to such Effective Date. In no
event, however, shall any non-employee Board member be eligible to participate
in the Plan if such individual has previously been in the employ of the
Corporation (or any parent or subsidiary corporation) at any time after December
31, 1989. Each non-employee Board member eligible to participate in the Plan
pursuant to the foregoing criteria shall be designated an Eligible Director for
purposes of the Plan.



                                       4.

<PAGE>   5

     VI. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

          A. Grant Date. Option grants shall be made on the dates specified
below:

               - Each individual who is first elected or appointed as an
          Eligible Director, whether through appointment by the Board or
          election by the Corporation's stockholders, after the Effective Date
          shall automatically be granted, on the date of such initial election
          or appointment, a non-statutory stock option to purchase 17,500 shares
          of Common Stock.

               - On the first Nasdaq trading day in January of each calendar
          year (commencing with the 1994 calendar year), each individual who is
          at the time serving as an Eligible Director shall automatically be
          granted on such date a non-statutory option to purchase 5,000 shares
          of Common Stock, provided such individual has served as a Board member
          for a period of at least six (6) months.

          There shall be no limit on the number of 5,000-share option grants any
one Eligible Director may receive over his or her period of Board service.

          Stockholder approval of this February 20, 1998 restatement at the 1998
Annual Meeting shall constitute pre-approval of each option grant subsequently
made pursuant to the provisions of the Plan and the subsequent exercise of that
option in accordance with its terms.

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

          C. Payment.

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

                         (i) full payment in cash or check made payable to the
                    Corporation's order; or

                         (ii) full payment in shares of Common Stock held for
                    the requisite period necessary to avoid a charge to the
                    Corporation's earnings for financial-reporting purposes and
                    valued at Fair Market Value on the Exercise Date (as such
                    term is defined below); or

                         (iii) full payment in a combination of shares of Common
                    Stock held for the requisite period necessary to avoid a
                    charge to the Corporation's earnings for financial-reporting
                    purposes and valued at Fair Market Value on the Exercise
                    Date and cash or check payable to the Corporation's order;
                    or



                                       5.

<PAGE>   6

                         (iv) to the extent the option is exercised for vested
                    shares, full payment through a broker-dealer sale and
                    remittance procedure pursuant to which the non-employee
                    Board member (I) shall provide irrevocable instructions to a
                    Corporation-designated brokerage firm to effect the
                    immediate sale of the purchased shares and remit to the
                    Corporation, out of the sale proceeds available on the
                    settlement date, sufficient funds to cover the aggregate
                    exercise price payable for the purchased shares and (II)
                    shall concurrently provide directives to the Corporation to
                    deliver the certificates for the purchased shares directly
                    to such brokerage firm in order to complete the sale
                    transaction.

          For purposes of this subparagraph VI.C, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the option price for the purchased shares must accompany the
exercise notice. However, if the option is exercised for any unvested shares,
then the optionee must also execute and deliver to the Corporation a stock
purchase agreement for those unvested shares which provides the Corporation with
the right to repurchase, at the exercise price paid per share, any unvested
shares held by the optionee at the time of cessation of Board service and which
precludes the sale, transfer or other disposition of any shares purchased under
the option, to the extent those shares are subject to the Corporation's
repurchase right.

          D. Option Term. Each automatic grant under the Plan shall have a
maximum term of ten (10) years measured from the automatic grant date.

          E. Exercisability/Vesting. Each automatic grant 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 17,500 share option shall vest,
and the Corporation's repurchase right shall lapse, in a series of four (4)
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
Optionee's completion of one (1) year of Board service measured from the grant
date. Each additional 5,000-share automatic grant shall vest, and the
Corporation's repurchase with respect thereto shall lapse, upon Optionee's
completion of one (1) year of Board service measured from the automatic grant
date. Vesting of the option shares shall be subject to acceleration as provided
in Section VI.G and Article VII. In no event, however, shall any additional
option shares vest after the Optionee's cessation of Board service.

          F. Non-Transferability. During the lifetime of the Optionee, each
automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee other than (i) a transfer of
the option effected by will or by the laws of descent and distribution following
Optionee's death or (ii) a transfer of the option during the optionee's lifetime
to one or more members of the optionee's immediate family or to a trust
established exclusively for one



                                       6.

<PAGE>   7

or more such family members, to the extent such transfer is effected pursuant to
the optionee's estate plan. 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 Corporation may
deem appropriate.

          G. Effect of Termination of Board Service.

               1. Should the Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while holding one or more
automatic option grants under the Plan, then such individual shall have a six
(6)-month period following the date of such cessation of Board service in which
to exercise each such option for any or all of the option shares in which the
Optionee is vested at the time of such cessation of Board service. Each such
option shall immediately terminate and cease to be outstanding, at the time of
such cessation of Board service, with respect to any option shares in which the
Optionee is not otherwise at that time vested.

               2. Should the Optionee die within six (6) months after cessation
of Board service, then any automatic option grant held by the Optionee at the
time of death may subsequently be exercised, for any or all of the option shares
in which the Optionee is vested at the time of his or her cessation of Board
service (less any option shares subsequently purchased by the Optionee prior to
death), by the personal representative of the Optionee's estate or by the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution. The right to exercise
each such option shall lapse upon the expiration of the twelve (12)-month period
measured from after the date of the Optionee's death.

               3. Should the Optionee die or become Permanent Disabled while
serving as a Board member, then the shares of Common Stock at the time subject
to each automatic option grant held by such Optionee shall immediately vest in
full (and the Corporation's repurchase right with respect to such shares shall
terminate), and the Optionee (or the representative of the Optionee's estate or
the person or persons to whom the option is transferred upon the Optionee's
death) shall have a twelve (12)-month period following the date of the
Optionee's cessation of Board service in which to exercise such option for any
or all of those vested shares of Common Stock.

               4. In no event shall any automatic grant under this Plan remain
exercisable after the expiration date of the ten (10)-year option term. Upon the
expiration of the applicable post-service exercise period under subparagraphs 1
through 3 above or (if earlier) upon the expiration of the ten (10)-year option
term, the automatic grant shall terminate and cease to be outstanding for any
option shares in which the Optionee was vested at the time of his or her
cessation of Board service but for which such option was not otherwise
exercised.



                                       7.

<PAGE>   8

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

          I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form Non-statutory Stock
Option Agreement attached as Exhibit A.

     VII. 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 for the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
that 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 automatic option grant under the Plan shall
terminate and cease to be outstanding, except to the extent assumed by the
successor entity (or parent thereof).

          B. In connection with any Change in Control of the Corporation, 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 for the Change in
Control, become fully exercisable for all of the shares of Common Stock at the
time subject to that 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
fully exercisable for the option shares which vest in connection with the Change
in Control until the expiration or sooner termination of the option term.

          C. The Optionee shall have the right, exercisable at any time within
the thirty (30)-day period immediately following the effective date of a Hostile
Take-Over, to surrender to the Corporation each automatic option grant held by
him or her under this Plan. 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. Stockholder approval of this
February 20, 1998 restatement at the 1998 Annual Meeting shall constitute the
pre-approval of each option subsequently granted with such a surrender right and
the subsequent exercise of that right in accordance with the provisions of this
Section VII.C. Neither the approval of the Plan Administrator nor the consent of
the Board shall be required at the time of the actual option surrender and cash
distribution.



                                       8.

<PAGE>   9

          D. The shares of Common Stock subject to each option surrendered in
connection with the Hostile Take-Over shall NOT be available for subsequent
option grant under this Plan.

          E. The automatic option grants outstanding 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.

     VIII. AMENDMENT OF THE PLAN AND AWARDS

          The Board has complete and exclusive power and authority to amend or
modify the Plan (or any component thereof) in any or all respects whatsoever.
However, no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan,
unless the affected optionees consent to such amendment. In addition, certain
amendments to the Plan may require stockholder approval pursuant to applicable
law or regulation.

     IX. EFFECTIVE DATE AND TERM OF PLAN

          A. The Plan became effective immediately upon adoption by the Board on
September 14, 1993 and was approved by the Corporation's stockholders at the
1994 Annual Meeting. On January 25, 1995, the Board adopted an amendment to the
Plan which increased the number of shares of Common Stock issuable thereunder by
an additional 100,000 shares, and that amendment was approved by the
stockholders at the 1995 Annual Meeting.

          B. On February 20, 1998, the Board adopted a series of amendments to
the Plan (the "1998 Amendments") which (i) increased the number of shares of
Common Stock reserved for issuance over the term of the Plan by an additional
120,000 shares, (ii) allowed 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 and (iii) effected a series of
additional changes to the provisions of the Plan (including the stockholder
approval requirements, the transferability of non-statutory stock options and
the elimination of the six (6)-month holding period requirement as a condition
to the exercise of stock appreciation rights) in order to take advantage of the
recent amendments to Rule 16b-3 of the 1934 Act which exempts certain
transactions by Board members under the Plan from the short-swing liability
provisions of the federal securities laws. The 1998 Amendments were approved by
the stockholders at the 1998 Annual Meeting.

          C. The Plan shall terminate upon the earlier of (i) September 13, 2003
or (ii) the date on which all shares available for issuance under the Plan shall
have been issued as vested shares or cancelled pursuant to the cash-out
provisions of the Plan. If the date of termination is determined under clause
(i) above, then all option grants outstanding on such date shall thereafter



                                       9.

<PAGE>   10

continue to have force and effect in accordance with the provisions of the
instruments evidencing such grants.

     X. USE OF PROCEEDS

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

     XI. REGULATORY APPROVALS

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

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

     XII. NO IMPAIRMENT OF RIGHTS

          Neither the action of the Corporation in establishing the Plan nor any
provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove any individual from the Board at any time in accordance with the
provisions of applicable law.

     XIII. MISCELLANEOUS PROVISIONS

          A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.

          B. The provisions of the Plan relating to the exercise of options and
the vesting of shares shall be governed by the laws of the State of California,
as such laws are applied to contracts entered into and performed in such State.

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



                                       10.